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Im jim cramer. I will see you tomorrow good evening, everyone, im larry kudlow. This is the kudlow report brought to you in washington, d. C. Tonight, a special show. Now we have more taxes, more spending, more of the same. Its been more than four years since the Senate Democrats bothered to put together a budget. And as might be expected, their new budget calls for more than 1 trillion in new taxes over the next decade. What a shock that is. Meanwhile, Senate Liberals spent much of the day challenging president obama on his plans for possible entitlement reform. Will they block any chance for a grand deal . So what do Senate Republicans have to say about all this . Well, we are about to speak with one of the new rising stars of the gop. Senator ted cruise joins us to talk about the budget fight and his promise to do all he can to repeal obamacare. And finally the highlight of our show tonight, my exclusive interview with congressman paul ryan as he unveils his budget plan. The headlines are an Obamacare Repeal, spending cuts, Corporate Tax reform and a balanced budget within ten years. Balancing the budget is not an end of itself, its a means to an end and the means were trying to get to is a progrowth economy, helping people out, reviving upward mobility in this economy. All right. The entire interview coming up later on, the kudlow report begins right now. First up, the fiscal cliff tax hike was not enough for Senate Democrats. They want more. That is shocking. A lot more. 975 billion more in tax hikes. Here now, though, the latest cnbc contributor, robert cost at that, washington editor for the National Review and hes going to do something very rare. Hes going to preview and promo and analyze the democrats. Hello, robert. Good to see you, larry. The democrats today unveiled their budget and whats the top the lead story here . Its 1 trillion in tax hikes. Whats so interesting about this, for four years, democrats have avoided doing a budget. Now Senate Democrats finally have to own up that theyre a tax hiking party, this is going to have 2014 implications, interesting to see if democrats can even get 51 votes on this plan. What is wrong with that party . I believe my good and dear friend who is so bright, jerryd bernstein, who is joining us tonight, is inconceivable he can be a member of that party, a party which makes no sense at all. I understand disagreements. You dont have to be perfect. There are many gradations, but how can the democrats come back with 1 trillion tax hike, no spending cuts and no entitlement cuts . The whole point of the exercise is to get those cuts. Because theyre not ready to do entitlement reform. You see that democrats are avoiding a balanced budget in their plan, avoiding entitlement reform. This is all about stimulus spending and tax hikes. They feel like they won in 2012, might continue to be a liberal party. One thing that amuses me im going get to you gentlemen in a minute. It sounds from reading this i wasnt in the room, obviously, and im not surprised they didnt invite me into the room. They could use a Little Common sense. It sounds like they are, to the left of president obama. Or let me put it differently. It sounds like president obama, compared to his party, is actually centrist. Thats exactly right. We heard a lot this week about president obama having lunch with paul ryan, dinner with republicans. You talked about it on the show. When you look at the document the democrats are putting forward, its their budget. The story of dueling budgets, ryans budget versus murrays budget. Theyre not doing anything innovative here. This is the tax and spend budget, what theyre putting forward. This is Something Like the 19070s. This reminds me of the 1930s, the new deal. I was around partly for the new deal. I mean, this party has moved so far to the left. But it is interesting that obama looks centrist. It really does. And one thing to watch and how the democrats get a lot of this revenue, how they get these tax hikes, tax reform. The democrats are trying to make the argument, so watch for paul ryan and his interview and campaign this week to talk about his budget. Whats he going to do . Win the argument. Democrats are going out now and saying were getting rid of loopholes for corporations, standing up for the common people. Thats coming out in my interview. He and i talked a bit about tax reform. Stick around. Joining us now, distinguished senator from oklahoma, republican tom coburn, and also with us right here in studio, cnbc contributor, jerryd bernstein, who used to be a democrat, and jim peth cukis, party i. D. , hard to say. Mr. Coburn, senator coburn, welcome, sir. I understand you are holding up a continuing resolution. What is on your mind, whats bothering you about the cr . Well, its not whats bothering me, larry. We got this bill at 9 45 last night. And they wanted to start offering amendments on it this morning. And they wanted an agreement to do that. And its almost 600 pages long. Its 1 trillion plus in spending. And, you know, maybe we ought to be given 24 hours to read a bill, to figure out what kind of amendments we want to offer. And whether or not we think that this is the process we want to go forward with. And what about are we going to have amendments . You know, this bill i can tell you, were just about finished. Well be finished late tonight. Well have some amendments to offer. And we have already told them, we would let the bill go, if they want to work tonight, ill go down and work tonight. The problem is, what happens in washington, way too often, is you get an agreement to move forward on a bill that you dont know anything about, and its spending 1 trillion. And we dont have any idea at the time they asked for the permission to go forward with it, what was in it. Sounds like obamacare. Reminds me of obamacare. We tint know what was in that bill until long after the bill was passed. Youre saying with this continuing resolution, to keep the government open, we dont really know whats in there, do we . This isnt a continuing resolution. This is an omnibus spending bill. It has five appropriation bills on it, and then a small section for the rest of the government. So its an omnibus appropriation bill. We should make sure we understand thats what it is. Theres all sorts of authorizations in it. And what i would tell earmarks in. There is also money stolen from the Victims Compensation fund, which arent tax dollars. So theres a lot of problems with it. We would like to be able to address those with amendments. And now that weve had a chance to go through the bill, well be offering those. Senator coburn, can you give me a quick take on the democratic budget about which we were just speaking . Lots of spending. No lots of spending, lots of taxing and no entitlement reform. What are you thinking about this budget . Well, i think it truly represents the views of most of the democrats in the senate, not all of them. Number two, its probably to stake out a position to the left of obama so that if we can actually reach an agreement on something, he looks central and they look to the left and then they can support it. You know, i think some of its positioning. But, you know, our problem, if you look the government has grown 89 in the last ten years. And family median family incomes have declined 5 . I dont think the problem is taxing more. I think its spending. Jerryd bernstein, i just think you can say that the democrats make obama look centrist. And i believe that. And i said that tongue in cheek but i actually believe that. On the other hand, theyve got a lot of democrats running for election in 2014. I do not believe this left wing budget will get voted in. Look, i think with respect to bob, i think the way you described the budget is really very, very misleading, especially with tax increases and i want to get senator coburns view on this. I learned a lot about spending through the tax code, through reading a document called back in black but none other than senator tom coburn. And on the cover of the document, at least on the website, it says were going to cut 1 trillion in spending by cutting spending through the tax code. The same trillion, the same tax code, the same expenditures the democrats are going after. Plus, you completely havent said one word about all the spending cuts. In fact, you just said spending increases. There are spending cuts. Nobody can find them. Wait a second. Entitlement cuts. Thats a good question. But the senator should really speak to this. Let senator coburn leader on cutting tax expenditures. Senator coburn, go ahead, please answer jared bernstein. We know there are tax expenditures, but i thought tax reform, senator, was to lower the rates and then get rid of the loopholes. It is. And hes right. We listed 1 trillion worth of tax earmarks. Thats what they are. Theyre earmarks. But we did that in the conjunction of 8 billion in spending cuts. 8 i mean, 8 trillion in spending cuts. So, you know, will i agree . I would love to reform the tax code to get us growing. But if the president and the democrats will agree to 8 trillion in spending cuts, ill happily agree to 1 trillion in earmarks jared has made a great point, but he has only given us half a loaf when it comes to tax reform. Just given us half a loaf. Can you help me on this . Listen. If you go with this plan and you use all this tax expenditure reform, to pay down deficit, forget it. Those tax rates are going to be locked at those top levels. That tax reform should be used for lowering some of those tax rates, which have been raised way too much. And never going to get answer bobs question. Where is the entitlement reform . Heres a big secret. Democrats dont think we need entitlement not very much. At all. They think the Health Care Problem has been solved basically, and also about medicare reform is just a waste of time. They dont believe in it anymore. Jared might but the rest dont. I think jared brings up a potent point. Democrats are going out in 2013 and 2014 and saying were going to slam the corporations, not going to touch your entitlements. They think they can win seats in the house and senate by being about taxes this is left wing populism, basically. Not what youre describing. What youre describing, jared, on the tax issues, and you are right, okay. And i used to put those books together. Senator coburn is a leader on this. Senator coburn is a leader in this. But, but, but. Its a pot theyre going to go after the corporations and theyre going to go after the upper end loopholes without any offsetting balance on lowering tax rates. No, i think that look. People are starting out where theyre starting out. But i think if in particular, look at the president s Corporate Tax reform. He buys some lower rates by closing some of the loopholes. But it cant be as raises taxes on corporations, too. Well, its cutting tax expenditures. Its something senator coburn has said theres 1 trillion. I want to go you know what has to go. I so totally want to have the Corporate Tax reform discussion, because i agree with you, the president does from time to time, even though he wants to penalize companies offshore, which is completely wrong. But to have Corporate Tax reform, and to get to a 28 rate, would be totally pro growth. The bells and whistles can be taken care. He should get to a 25 rate always see the average and cant do it because he wants to use you guys are on board with revenue. No self respecting supply side no. Revenueneutral. No self representing supply sider disagrees. Lower the rates on the one side and get rid of the loopholes on the other. Youll have a clean code. Revenueneutral. But the lower rates are pro growth incentives. Senator no, no, revenueneutral. Tom coburn, senator coburn, thank you very much. Jared bernstein, jimmy peth cukis and robert cost at that now one of the rising stars of politics. Ted cruz is about to join me to talk about the budget battle and his promise to pull out all the stops in the fight against funding obamacare. And later on, please dont forget my exclusive interview with congressman paul ryan as he unveils his grand budget plan today to balance the budget inside ten years. And can you believe it . Mr. Ryan even happily espoused the kudlow credo. I think the president and his party looks at tax reform as a revenuegenerating exercise. Broader tax base with higher rates. Which is just nothing more than a tax increase to fuel spending. We see tax reform differently. I subscribe to the larry kudlow school, which is lower rates, broaden the base, create the economy. Economic growth. That was completely unrehearsed, that duet we did. But we may do it again and we may find a record producer. The rest of that interview, by the way, is coming up. And please dont forget, free market capitalism is the best path to prosperity. Free markets, limited government and real pro growth tax reform. Im kudlow. We will be right back everyones retirement dream is different; how we get there is not. Were americans. We work. We plan. Ameriprise advisors can help you like theyve helped millions of others. To help you retire your way, with confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Lets get to work. Ameriprise financial. More within reach. Shimmy, shimmy chocolate. Shimmy, shimmy chocolate. We, we chocolate cross over. Yeah, we chocolate cross over. [ male announcer ] introducing fiber one 80 calorie chocolate cereal. Chocolate. 80 calbut i am youre cereal. Rmarket data. I know what youre looking for. Im not chained to your desk anymore. Im faster and smarter now. And so much less expensive. I am your market data. And if i do say so myself, i have never looked better. Superderivatives introduces dgx. Data done differently. Can the new group of Republican Leaders revitalize the grand old party . Meet gop young guns, at least some of them, senator mike lee, marco rubio, rand paul, ted cruz, pat toomey, probably forgetting some. Lets go to one of the key prominent rising stars. Joining me here onset, freshman republican senator ted cruz. Mr. Cruz, as always, great to see you. Youre really a troublemaker. Thats really the bottom line. And one of the troubles youre making is you want to defund obamacare, perish the thought. Tell me about it. Great to be with you, larry, and thanks for everything you do. Look, my numberone priority and what i think the numberone priority should be of every elected representative, republican or democrat, is Economic Growth. The last four years our economy has grown just 0. 8 . We have stagnant growth. And if obamacare is allowed to be implemented right now, were already seeing people losing their health care coverage, were seeing employers forcing employees to work fewer hours, were seeing premiums go up, especially for young people. Last quarter, our economy grew 0. 1 . And if we allow obamacare to go into effect right now, it could easily push us into a recession. Its a jobstopper. Thats exactly right. Its a hiring stopper. Not only is it expensive to hire, but if you dont hire the 50th employee keeping Small Businesses small. Right. You wont let anybody work 30 hours or more because you have to pay up, the mandate or the rules. Let me ask you now, paul ryan tells me later in the show, he agrees with you, he wants to terminate and defund. Whats your defunding strategy . This is an uphill climb in the senate. Well, it is. So the strategy look, i think we should repeal every word of it. That was the first legislation i introduced. But what were doing this week is an amendment to the continuing resolution. That im calling restore growth first. And it says at a minimum we should defund it. We should delay funding obamacare until Economic Growth returns to historic levels. Since world war ii, growth has averaged 3. 3 . And it when the economy is gasing for breath, i think it makes no sense at all. I dont understand that. Suppose suppose you held this thing back. And suppose you restored 3. 5 growth, which is more or less the average. So then you put obamacare in and it will work its negative ways anyway. I mean, the things look. You guys you ran to the defense of rand paul. That was much more than just drone policy in the usa. I looked at that, and i read rands i read rands oped piece in the washington post. Youre saying you want to stop government excess wherever it is. And if any time this was an excessive bill, this obamacare bill is. So why even why at 3. 3 to hell with it. If youre going to stop it, stop it. Look, you are preaching to the choir. The first bill i introduced was to repeal every word of it. Thats what i think we should do. But i also think its important to make the case that everyone should join together. Democrats shouldnt want to send us into a recession. And if they vote against my amendment tomorrow, which i expect they will, what they are saying, effectively is Economic Growth doesnt matter to them. That theyre willing, when the economy is gasping for breath to hit it with massive additional burdens that will kill jobs and kill growth. Honest question. You got any democrats who might go along with you, such as democrats im thinking of begich and prior and some others . They are up for reelection in 2014. Its amazing to me. Obamacare, even now, after the Supreme Court ruling, after obama wins the election, what, were in the third year