Transcripts For CNBC The Kudlow Report 20131003

Story and full coverage of the Government Shutdown on the kudlow report. This is the kudlow report, we are live here at 7 00 p. M. Eastern and 4 00 p. M. Pacific. Lets get right to eamon javers for more on the shocking situation that occurred on capitol hill just a few hours ago. Good evening, eamon. Reporter there were moments of terror, an incident that began as you say over at the white house and made its way down here to the Capitol Building. Shots fired here on the west front of the capitol. The scene just behind me now. We got details just within the past hour here now on exactly how this transpired from the United States secret service. Take a listen to those comments. The sedan struck temporary security fencing and one of our Uniformed Division officers at a check point of the white house at 15th street and e street northwest. The vehicle then fled east on pennsylvania avenue. There were multiple crime scenes as a result of the vehicle fleeing. There were multiple shots fired at several different locations. Now, larry, that vehicle was able to get down pennsylvania avenue being chased by police the whole way. They were able to stop the female driver at this location right behind where im standing here on the west front of the capitol. And thats where our eyewitness we talked to a few moments ago was able to describe the scene for us. Take a listen to what he had to say. They cornered the vehicle on the southwest side of the drive there. Police surrounded the vehicle, had their guns drawn, had the passengers door open telling the person to get out. At that point, the sedan slammed into reverse, smacked the cruiser behind it, did a 180 and peeled off on the south side of the capitol and disappeared around there. By that time, the police had us down on the ground, securing area. And then a couple minutes later, we heard a bang on the opposite side of the capital. Capitol. Reporter larry, stunningly all of that incident was captured on video by a camera crew. Take a look at this video, and you can see what the eyewitness was describing. The black sedan surrounded by police, shots ringing out, the sedan making an escape, looping around garfield circle here on the west side of the capitol. Two loops around the circle and up constitution avenue, past the Capitol Building. The chase ultimately ended with the vehicle stopped at second and maryland avenues right over between the capitol and the Supreme Court building, larry. Thats where the suspect in this case, a woman was shot dead. She was pronounced dead at the scene. Were also told that she had a small child, a small girl in the car with her. Thankfully that girl was able to be rescued by Police Officers in the moments just after the crash up on capitol hill, larry, very, very scary moments today. Let me ask one question. I know its early in the game in the investigation, does anybody have any idea what was motivating this crazy woman . We dont have any idea. What Capitol Hill Police and others have told us is theres no so far no evidence of any link to terrorism here. Theyve also said this appears to be an isolated incident. The immediate fear in washington, of course, when you have an event that happens, a security event that happens at the white house and also happens at the Capitol Building is some kind of coordinated attack. Theyre saying this is an isolated incident apparently just involving this woman. But we do know that police are researching her background right now trying to figure out who she knew, why she might have done this and why she put her child in such a dangerous, dangerous situation today, larry. Incredible. All right. Many, many thanks to eamon javers reporting from washington, d. C. Now, we also have big news on the budget battles today. John boehners office says the speaker is determined to prevent a federal default, which he knows would be disastrous for the economy. And markets welcome this statement. But president obama was still in his bashing mode today choosing to score political points in front of a hand picked adoring audience. Listen to what he was saying. And theres one way out of this reckless and damaging republican shutdown, congress has to pass a budget that funds our government with no partisan strings attached. That Speaker John Boehner wont even let the bill get a yes or no vote because he doesnt want to anger the extremists in his party. Thats all. Thats what this whole thing is about. Have you noticed that . Since theyve taken over the house of representatives, we have one of these crises every three months. Have you noticed . All right. Simple question. How do you make a deal with somebody who is out there talking like that . Really just talking trash to the very people hes supposed to be dealing with . Lets talk to our panel. Cohost of msnbcs the cycle. And of course our ace political reporter robert. Heres a guy who was trash talking the republicans and will not negotiate with the republicans. Now i ask you, doesnt this wind up hardening the gop position and actually preventing any deals from getting made . I think it may be hardening the position for the gop. But at the same time, the emerging news right now on capitol hill is that Speaker Boehner is looking to combine the debt limit negotiations with the continuing resolution to fund the government and try to get some kind of grand fiscal package and thats whats really the chatter right now and what may drive a deal. Is that going to take a couple of weeks and is it i know its hard to estimate. But ive also read paul ryan, chairman of the budget committee, are looking for a grand design. But thats going to take a couple weeks to get underway . Thats exactly right. I think, larry, when i talk to congressmen today at the capitol, they believe the shutdown could last three weeks. If they want to make that concession to not default, they want to win something in return. Maybe a repeal of the medical device tax, maybe getting some entitlement reform. Theyre looking to get some kind of fiscal package. Larry, roberts a great reporter and ive been reading his stuff with great interest, but i think we have to be careful here. Raising the debt ceiling is not a concession. Its not a concession to the white house, its not a concession to wall street. Although anyone who knows anything about the markets understands how vital this is. And theres a problem here and that the Republican Party by being led by a minority of a minority in the overall scheme of government keeps talking like raising the debt ceiling and doing the responsible thing is a concession. Theyre wrong, the supporters know its wrong and increasingly a lot of executives and financiers are going to make sure they know its wrong. Let me go to you on this point. The president today started up on the debt ceiling, basically using it to trash the republicans and scaring people in the economy. The Treasury Department issued an incredible statement talking about catastrophic problems and its going to be worse than it was in the recession of 2008. Theyre just being negative, theyre just trying to scare. Boehner countered that with his point today. Boehner countered that with a very useful point. But the point im making is this, these guys had a chance a year ago to pass the full faith and credit act from senator pat toomey which wouldve by law on paper protected all treasury interest and principle and guess who opposed it . Obama, guess who second to oppose it . Harry reid . All this nonsense could have been put to rest if theyd taken pat toomeys bill and they wouldnt do it, bob. Thats why i think theyre insincere and trying to cause trouble. Youre right. Theres a false sense of hysteria out there and a lot of it has to do on the president s side. Lets remember one thing here, larry and robert. The president needs to show leadership. He is the head of our executive branch. And one should make the argument he should be negotiating in full faith behind closed doors. 17 years ago when it was bill clinton on the stage, bill clinton had partisan jabs from a public standpoint, but behind the scenes he was negotiating, showing leadership, and behind the scenes he was literally conceding different points. We dont see that with this white house. I was saying, i couldnt disagree more respectfully, robert. If democrats refuse to raise the debt ceiling for unrelated issues saying they want ondemand abortion across the country, theyd be laughed out of the room by the way, they have done that. Go back they exactly have done that. And by the way, its funny you use the abortion issue because that was the issue that was used. By the way, it was used during the Carter Administration and then it was used later on in the bush the papa bush administration. So youre wrong. Youre dead wrong. But the point i want to make is i dont know besides trying to scare people in the economy let me go to bob costa on this, trying to scare people in the economy. The president and the Treasury Department issuing these statements. I heard boehner say its not going to happen. And again i say, if they had used senator pat toomeys amendment last year, that wouldve codified all of these questions that the principal and interest on the federal debt would be serviced on time. These guys are using this for political purposes. Thats all it is, robert. And if you listen to the president s remarks, really at a moment where both sides seeing if the other will blink. Boehner doesnt want to blink and the president doesnt want to blink. Eventually theyll keep sweating it out until this debt limit deadline. And eventually they are going to come to the table. I hear at the white house yesterday, they did Start Talking general terms about some kind of fiscal package to solve both of these impasses. By the way, okay weve got besides this week, two more weeks to go youre saying until we get to the october 17th week. Ari, i didnt want to be rude. But i want to tell you, go back and read theres a great article in the National Review that reviews most of the debt most of these shutdowns came under jimmy carter. A lot under ronald reagan. They had issues like the sandanistas, issues like School Prayer, abortion that were nongermane. So you cant tell me this is john boehner operating. Let me say, yes, there has been jockeying about the debt ceiling from both parties over history. I dont deny that. What i was saying and i standby my historical claim is we have never seen us go this close to defaulting to the point that we have our Credit Rating downgraded, going up to the ninth inning in a way that wall street understandably thinks has no logical reason, no good thing for the country over these kind of issues. Ive got to say weve never seen as a factual matter. We have never seen a downgrade like this which we saw the last time. What did they get out of last time in 2011 . Tremendous spending cut. The president and democrats met them on that. The socalled cr includes everything the tea party asks for through sequestration. And its not enough. Theres a reason why ive got to get out. Ive got to get out. You guys are coming back later in the show. Well pursue this later. Thank you. Stick around, everybody, so well have them back in the end of the show. Now ive got to talk to two distinguished house members to see if we can make a deal, suggest a deal, whatever. Paul tonko, welcome back. And the chair of the republican study committee. Steve, i want to ask you this question. When you hear all the negativism coming out of mr. Obama and his treasury regarding this phony issue of a debt default which no one wants. Its almost, steve, as though obama and company are trying to create a market panic. You know, like 500, 600, 700 points in the marketplace and a run on our bonds. Thats what it sounds like and that is not something any president should ever do. Well, larry, the president showing a severe lack of leadership, but i think if you look at what hes doing. This goes back to november. He has wanted to create all of these crises of the moment and he tries to scare people, tries to threaten things like default, which is incredibly irresponsible so he can get everything he wants. And hes made it clear, pass my bill, one bill, no negotiation or nothing. All or nothing, thats not how we work. Weve passed eight different bills to fund all parts of government including a number that has broad bipartisan support and yet they said, no, theyll kill everything. Even the bill that funds Cancer Patients and our veterans unless they get everything they want. We passed language to take default off the table as you said with the full faith and credit act. Thats the incredible thing. It would have solved any of this speculation. But john boehner, in my opinion, Speaker Boehner did a good job today rebutting all this default nonsense. But let me ask you this, what do you want . Tell me simple, clear, what do you want in the cr that would end the shutdown . I think we should do a clean cr. I think were way into the 11th hour. We need to move quickly here to avoid a credit default, a full faith and credit of this country should not be challenged and downgraded. Its important for us to keep that strong and to reopen government to make certain that we can move quickly here. Its causing a huge loss every day that we have these workers furloughed and that services are not rendered out there to American Families and businesses. So what i would like to see is a clean cr. We have given already as was stated earlier by a comment made in this segment of your show, we have already given. We have given sequestration, the cuts associated with sequestration and weve given that lowest number, which is the House Republicans number in the process. By the way, i acknowledge that. Weve had a number of guests on. I was even on msnbc, heaven forbid, last night. I acknowledged the numbers are pretty good. Youve held the numbers. But let me move on, you want essentially a clean bill. Steve scalise, what do you want the continuing resolution bill to look like . Give me your top two or three. Lets first keep in mind that the sequestration was an idea that barack obama himself proposed two years ago but signed into law. Thats the law of the land from two years ago. Obviously we have some serious issues with the president S Health Care law as most americans do. And so weve said, look, we want to address the problems and make everybody live by the same rules that the law says you have to live by that the president s exempted his friends thats the vitter amendment . But also weve passed no exemptions to obama care, is that right . Right. And weve also passed a number of other proposals over to the senate they said no way, its my way or the highway. We havent taken just one position where its all or nothing, weve said here are a number of issues including bills to say make sure we fund our veterans, cancer treatment, and they said no to that unless they get everything they want. I think what you need here is regular order to do a full budget. We say get the clean cr done, and by the way, sequestration was something the president moved on the table because of the request earlier by the republicans in the house of representatives. They like that concept. So they cant walk away from it now. It was a give, it was a concession. And we also think that with a clean cr, if we can get this done, it buys us time from november and december, name the conferees, weve been begging to have names to go to the table, do the budget in regular order under subcommittees, committees, report to the floor, thats the best way to do the business. This goes back to the days of thomas jefferson. Regular order. I knew Tom Jefferson very well. So you want a clean cr. Steve, ill give you equal time. Youve already mentioned the vitter amendment not to exempt government from the obama care bill. Whats your next what other addon would you like . Weve offered a number of ideas. In fact, one of the things we want to do is try to get spending under control in washington. When paul talks about the sequestration agreement, he acts as if the president didnt get anything. He got the increase on the debt ceiling two years ago. He negotiated as all have negotiated and ultrama timately have another negotiation now. The president cannot just continue to say im not going to do anything unless i get everything and aisle going to bash republicans because the country doesnt want the partisanship. Lets get at the table and get the agreement. We can get all this done. We need cooperation from the president and harry reid. You dont repeal a law as part of a concession. I wish wed have you both back as a blueprint. Id love to have you both back. Now, right now, big drop for stocks today. Its obvious markets are worried about the shutdown and the debt ceiling fight. Question, did the president realize what would happen when he said this . Wall streets been pretty calm about this. The reaction i would say generally speaking has been washington fighting, washington posturing, yada yada yada. I think this time is different. I think they should be concerned. All right. This times different. They are concerned. Anyway, well keep you updated on any new developments in todays incredible capitol hill shooting incident. And finally as always, dont forget free market capitalism is the best path to prosperity. Yes, of course, we have to defend american debt. But it would be nice if we had less of it. Im kudlow and well be right back. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to the kudlow report. Here with this market flash. The dow finished down 136 points. It closed below 15,000 for the first time in about a month here. The nasdaq and s p 500 also down big by about a percent. Now this is more than just about the shutdown. Obviously the capitol hill incident spooked investors, but the dow downright out of the gate this morning and the big reason was the debt ceiling. Using scary words like catastrophic. Larry, that debt ceiling day is only, of course, two weeks away. Back over to you. All right. Many, many thanks, we appreciate it. Were going to talk about that. Gentlemen, question before the house, will the Government Shutdown and the debt ceiling will the Government Shutdown shut down stocks and the debt ceiling . Lets ask dan greenhouse at btig, alan valdez from dme securities. Let me just start with the debt ceiling. There isnt going to be a shutdown. Theres not going to be a default of treasury. Its going to go at least two more weeks because theyre going to merge the shutdown continuing resolution with the debt ceiling debate. And my view is the chances are growing that this will go on a third week, a fourth week. My crystal ball is no better than anybody else. I want to put that option. If you have a fourweek for argument, what does that mean for the stock market . Not good, larry. Investors are nervous now. And nervous investors dont buy, if anything they sell and the longer this goes on, the worse its going to get for the market. It seems, you know, ive been around a long time. When your boss spoke to the speaker, they were negotiating. Tip oneill and reagan, they would negotiate. This president does not want to negotiate. We elect the president to work. You have to deal with people you dont like. I hate to be the ari mel ver of the panel here. You can be the dan greenhouse. But to play devils advocate in the president s defense, we have litigated this already. We had election and congress. His point of view is weve been through this already, why do i have to do it again . Im sympathetic to that view because we always but if the opposite was true, youd be blowing a gasket right now. I actually worked for reagan and went through debt ceiling after debt ceiling fights and reagan swept with much bigger numbers than obama. I want to make that point. And reagan not only controlled the senate he controlled the house with the help of 60 or 70 southern democrats. Thats not the point. The point is when youre talking about borrowing and spending, youre always going to have this debate. It is part of it. Unfortunately down through the years, theyve had stuff like abortion debates and School Prayer debates and nicaragua debates and so on and so on. What i want you to tell me, though, is if this shutdown does merge into the debt ceiling as i believe it will and our own bob costa suggests it will, and we go four weeks or five weeks or six weeks. What is the impact on the market . Whats your view on that . Well, let me start by saying Robert Costas reporting has been fantastic, jake sherman has done fantastic work and out with a big story right now talking about how, indeed, the speaker is targeting another ground bargain if you will. That is correct. Has investors, to a rj large degree you have to look through this, cant control whats going on in washington. Tell me you may be dead right, but what would you look at instead . I am dead right. Say you had a thought experiment and pushes washington out of the picture, out of your mind, what should you look at for stocks . Youre still looking at the path for earnings, and with that regard, everything that was true yesterday is true today. Whether or not you have an opportunity to buy stocks in general at a 5 , 7 , 10 , or in the case of 2011, a 20 lower level. Im not saying thats not going to happen again, but i am saying the closer it gets to a debt ceiling breach because the budget debate doesnt bother the closer to the debt ceiling, the more rattled investors will get. Its interested me enormously, the tenyear treasury closed at 2. 59, 2. 60 today. Its having a nice rally. If bonds were such jeopardy, if Treasury Bonds were in such jeopardy, why are people buying them . Theyre buying them, bidding up the price and bidding down the rate. Yeah, they sure are. And its right. Theyre comfortable with that right now. And, again, i go back. Theres a lot of fear amomonger out there. And that creeps into investors minds. And if they get nervous, theyre not going to buy this market. Theyre playing with fire but theyre going to the treasury were not seeing a real selloff. Buyers arent coming into the market. Theres light volume. We will see. Its tricky but its going to go on for a while. Thank you. Now, folks, we talked about how stocks are responding to the shutdown but what about the rest of the economy . Were going to ask george w. Bushs former chief economic adviser. Please stay with us. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. 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Welcome back to the kudlow report. Here with this market flash. Its finally here. Everyone wanted to know whats under the hood at twitter got their first peek. Filed an s1 with regulators, a precursor to going public. In these documents we learned a great deal about the financials. Twitter isnt yet profitable but sales grew from 28 million in 2010 to 317 million in the year 2012. Also learned it hasnt selected which exchange to list on so the battle between the nyse and the nasdaq continues. But either way, it intends to trade under the ticker twtr. Back over to you. All right. As a constant tweeter, i like that very much. Now, day three and counting, how will the Government Shutdown impact the economy if at all . Lets welcome back our friend ed lezier and now professor at stanford university. How do you reckon this were three days into this. By most accounts, were going to go a couple more weeks minimum. Couple more weeks. Let me give it a round number of four weeks. How would that impact the economy in your judgment . I think minimally. And there are a couple of pieces of evidence on that. First, if you look at the sequester which everybody was deathly afraid of, theres not a lot of evidence that even a sequester had a significant effect on economic growth. Remember that the quarter before the sequester had zero growth. The First Quarter the sequester had 1 , the next quarter had 2. 5 . If youre looking at the numbers, you just dont see it. But the other way to do it is the way we always did it at council of economic advisers, also the way that cbo does it. And that is to use the models. And if you use the models, were talking about a month having about a 1 20th of a percent on gdp. The only way we would get big effect is if this were to escalate and have general kinds of effects on other services, like customs, like tsa, air traffic control. When you say escalate, youre saying if they if money is so short because they cant raise the borrowing ceiling, then theyd have to redefine essential and nonessential and start cutting into quote, unquote, essential services which you say would have a larger negative effect on the economy. Is that fair . Thats right. Yeah, and thats pretty obvious. You know, if you start affecting transportation, youre going to have a significant effect on the economy. I dont think thats going to happen. And i dont think were going to default on our debt. Thats just almost zero probability event. And, you know, its unfortunate that we have to go through these theatrics in order to get to a solution. Fortunately, i think, Speaker Boehner actually was rational today and responsible and his comments were welcome. I hope we move in that direction because thats where were going to end up anyway. I agree with you that boehner was a hero today, but its all great for reporters and anchors and things like that. Its fantastic. Now, hang on. I want you to listen to what president obama had to say to our very own john harwood yesterday in a great interview about what he, obama, wants from the next fed chairman. Okay. Theyre going to be making sure that they keep an eye on inflation, that theyre not encouraging some of the bubbles that weve seen in our economy that have resulted in bust. But theyre also going to stay focused on the fact that the Unemployment Rate is still too high. All right. Now heres the thing he says, yeah, dual target unemployment inflation. But when he talks about bubbles and hes talked about bubbles in other speeches, ed, ive heard this before. It kind of seems to me leaning toward tighter money, leaning toward the position held by Larry Summers before he took himself out of the race. If the president warns about bubbles, that tells me thinks moneys too loose. Thats right although he said he was worried about the dual mandate aspect of it which is also employment. Its always nice after the fact to talk about bubbles that should have been burst and when they should have been burst. But if we know theyre bubbles at the time, then you can make a lot of money in the market by selling them short and, you know, i cant imagine that any Government Official is going to be wiser than the people out there trading on these things and no, i agree, but i was going a different direction and im running out of time. I want to ask you yeah. Do you think obama was somehow subtly signaling that janet yellen, the new favorite to be the chair of the fed is herself a little too much of a bubble maker . No, i dont think so at all. I think his emphasis on employment and the second aspect of the dual mandate suggests thats what hes worried about. When hes talking about bubbles that were in the past what hes really talking about is what he thinks of his irresponsible behavior. I dont think he wants a tight money policy at all. Thank you very much. We appreciate it. Thanks, larry. Were going to get a quick update on the shooting incident at the u. S. Capitol today and day three of the obama care exchanges, more glitches being reported. And what about these very steep deductibles. Next up on the kudlow report. I was made to work. Make my mark with pride. Create moments of value. Build character through quality. And earn the right to be called a classic. The lands end no iron dress shirt. Starting at 49 dollars. Welcome back to the kudlow report, im larry kudlow. Youre looking at the dramatic video of the shooting incident in washington, d. C. Today. Police shot and killed a woman who drove her car into security barricades near the white house. The woman led the police on a chase all the way to the Capitol Building and thats where she was shot. Sources are now telling nbc news that she did not have a gun. She did have a 1yearold baby in the car. The child was fortunately not hurt. Police say there is no connection to terrorism and it was an isolated incident. We will update you on any Significant Developments as they come in. Now, we are on day three of obama care enrollment. But still lots of glitches and uncertainties and very few signups according to reports coming in from across the country. Many people, once again, seeing this error message when they reach the online exchange. And who knows how high cost and deductibles will be if they get past the error screen. Welcome back. You know, i dont know what the final storys going to be until we get, i guess, but not a Single Person is enrolled in these exchanges. No t not a Single Person. The london daily mail is reporting 1 of those who visited exchanges signed up. And my last one for you is in california. First they said 5 Million People looked into it, then brought that number down to 645,000 from 5 million and then they report nobody has actually enrolled yet. Now i know its only day three, but it sounds like a bust. I thought this all along and the numbers are showing it. Computer glitch, some of the states operating in their own exchanges, the number was down 645,000. D. C. Has delayed their own exchange, colorado. This is a huge nightmare. The government, the Administration Spent a lot of money promoting these exchanges. Its not happening. The dropdown box is not working security glitches. And this is what i thought all along. Its just unfolding as it should. Let me ask you quickly, i want to get to the financing of these health care policies. At what point do you say, you know, conclusively this is not happening right . This is only day three. And i acknowledge that. Day three is nothing. Well, people have until march 31st for the exchanges to be open. They will get their coverage on january 1st. The issue is are the invincibles going to sign up for insurance . The average premium for a young, healthy 30yearold is about 260, which is a lot more than if they had a, say, in california, a blue cross a blue shield silver plan at 94 a month. If these young people do not sign up, the old er eer sicker e will be using the exchange. Some will drop out and its going to be a big implosion. Theres a lot in the paper today about 5,000 to 6,000 deductibl deductibles. Talk to me about that relative to premiums. Whats the impact going to be . The deductibles will be higher. 60 of americans get their Health Insurance through their employer. Seeing home depot, u. P. S. Making changes. When the president said over and over again, if you like Health Insurance, if you like your doctor, nothing will change. These high deductibles will be a shock to people. People being pushed our their employer based coverage where they paid a low copay and low premium, theyre going to be astounded. And the dissatisfaction with obama care in the polls is going to rise significantly. All right. Well leave it there. Sally, thanks very much. Thanks, larry. Now, were about to talk to a key moderate republican congressman who is trying to end the shutdown battle and live to fight another day. That being congressman michael grimm. Hes with us next. Stay with us, this is the kudlow report. At farmers, we make you smarter about insurance. Because what you dont know, can hurt you. What if you didnt know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . [prospector] ahh what if you didnt know that kitty litter can help you out of a slippery situation . The more you know, the better you can plan for whats ahead. 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Hes demanding republicans pass the Senate Democrats socalled clean funding bill. Some moderate republicans coming out in support of that, as well. Here now is one of those members, michael grimm. Mike, welcome back to the show. Thank you. Whats your principal reason . Youre ready to go with a clean resolution. Whats your reason . Well, one, because as bad as the policy is of obama care, a shutdown it is also bad policy. A lot of people i know barely make ends meet. You know, whatever they may be in the u. S. Government and they cant pay their bills. I dont think we resolve the issue of bad policy, which is obama care, with more bad policy of shutting our government down. What do you say . Im somewhat sympathetic with your point of view and i think the games about to change anyway because i think the crs going to be folded into the debt ceiling. But what about the house unity requires that the republicans get something from the democrats before they sign off on a continuing res. House unity . No, i mean, listen, the big issue for me and for most of my colleagues. Putting aside the faction its obama care or nothing. Lets put that aside for a second. Theres no question the way the president is handling this and harry reid is handling this now its getting personal. Now its almost getting to the point where his name calling and theres a tremendous sense of arrogance that they its, you know, their way or the highway. Thats even making, you know, members like myself now start to dig in a little bit. So i think the issue for me is why we havent tried to completely revolt. Why we are still supporting our leadership. Is because we dont want to set a precedent where the senate dictates over the house. Right. Thats that we cant lose because its the peoples house. And that regardless of whether youre a republican or democrat, thats a bad precedent for whoever is in power. Harry reid is regarded in Many Republican circles as the antichrist and youre right and i totally agree with this. The way obama and reid have treated republicans in this is really, really bad. Its one of the reasons why id like to see you all take another whack at the ball. Let me ask you something, on the way to passing some kind of cr, youve got these small spending bills, okay, national parks, veterans, d. C. Funding, the National Institute of health care. Thats pretty clever. I think thats pretty clever. Now that happened, i dont know, couple of days ago it started. I think thats going to put the democrats on the defensive as they keep vetoing these spending bills. What do you think . Well, i think it certainly turns up the heat. It broadens the debate a little bit. But overall, the way i see it is everyone loses when theres a shutdown. The American People lose, Congress Loses and for me, listen, i came here to really get something done to try to govern. And it looks like we cant get together at all on anything. And i think that the American People are a little bit disgusted and disenchanted with the whole process. Listen, this is not easy. But the more the president comes out and says the things hes saying, the worse this is going to become. And as you mentioned, were very close to a debt ceiling and thats a big deal. Weve already seen, you know, the onemonth treasuries tick up to. 016. Thats anticipation of shortterm default. Wouldnt be a longterm default. Well get the government running again. Not like a default in another country they cant pay their bills. It would be more like a technical default. But something we dont want to see and the markets dont want to see. Well never let them default. Or they shouldve passed senator toomeys bill. Do you approve of the yed that the congressional resolution cr is folded into the debt ceiling and that we then seek or you all then seek some kind of grand design as proposed by paul ryan, for example . Well, i would certainly support that if it ends the shutdown. And we can get on with business as usual and, of course, i would need to see for the debt ceiling, i need to see some reforms. Id like to see some entitlement reform, other things weve been working on, maybe even tax reform. Doesnt have to be monumental, but some steps forward to making this a healthier country and dealing with the very systemic issues that weve been dealing with for a long time now. I want to see some substantive reforms to raise the debt ceiling. And i think this may be a way to do it. But, unfortunately, i think theres a lot of good people getting hurt right now that really shouldnt be in that situation. All right. Fair enough. We appreciate it. Mike grimm, appreciate it very much. Now, how long will this shutdown last . And who do you think has the upper hand . Our panel will rejoin us to debate that very point. Stay with us. When we made our commitment to the gulf, bp had two big goals help the gulf recover and learn from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. Extra curricular activities help provide a sense of identity and a path to success. Joining the soccer team. Getting help with math. Going to prom. I want to learn to swim. Its hard to feel normal, when you cant do the normal things. To help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. Not everyone can be a foster parent. But anyone can help a foster child. Welcome back to the kudlow report. So joining us one more time our expert Political Panel members. Robert costa, i want to pick up where i left off with michael grimm. There is as you reported a growing consensus in the republican ranks in the house of shifting the cr debate into the debt ceiling debate which is really going to become a grand bargain debate, a big grand bargain debate led by paul ryan and, i guess, david cant. Ill ask you if its a good idea. Heres the house, if the republicans have that, they dont have the senate, dont have the white house. Do you think this is a good idea . I think its a difficult proposition. But the problem for Speaker Boehner is the conservatives in the house will not accept a stand alone clean cr to fund the government. Because he knows that, because he knows he would almost have an open revolt on the right if he did that, hes trying to move forward to have some kind of combination deal. But its going to be very difficult because the president and Senate Democrats continue to insist thats not an option. Yeah. You know, ari, im going to you on this. I dont see the president and the harry reid democrats getting into heavy entitlement reform, which is what ryan wants. I think they want to raise spending. I think they want to get rid of the sequester. I think they want to raise taxes by getting rid of deductions. In other words, i think this is a poorly baited trap for the gop right now. What do you think . Yeah, im not sure if its a trap, but i agree with your sense of the lay of the land in washington which means this is unlikely based on the equities and what we know thus far from the two parties. A quick analogy. If you walk in to buy a car and find yourself fighting with the guy trying to sell your the car and youre 10,000 apart and you wait a week and then he comes back and says, okay, you didnt like my price at 30,000, you want to get it for 20,000, why dont we start negotiating over a new house i want to sell you. Youre really unlikely to get a deal on the house if you didnt do a smaller item. Its basically where we are at. And what i think will happen based oen what we know about boehner. This is not a prediction, but i think my understanding of the rules of the house are given his constraints, if we get into october 12th, 13, 14, i think the markets are most likely to rattle as they get close even with the statements made that calmed some investors today. Then you get to a scenario where its very attractive for boehner to move a clean debt ceiling with votes of democrats, keep the Government Shutdown and the political argument he makes is, look, Im Still Holding the argument on big fight. Robert, it seems to me the kind of grand bargain being discussed, you know, entitlements, tax reform, i guess continued sequestration and, of course, the debt limit. Seems to me that kind of package requires a republican victory in 2014. Yeah. And a republican victory in 2016. Thats my take. Whats yours . I agree with you 1,000 . I think thats more longterm strategy and shortterm strategy. I think what boehners probably going to do. Probably going to throw out the rule, the majority of the mar j majority. Im going to have to get democratic votes here. And i think thats what the president and Congressional Democrats know. They know boehner is stuck because theres a small minority within his caucus that will simply not negotiate under any circumstances. I think its more of a longterm strategy in terms of 2014 and 2016. Bob costa, real fast. This grand bargain stuff even if they tried, isnt it going to take weeks and weeks and weeks . It really will. And you may have to see some sort of shortterm cr if we start pushing into late october. Think about winning elections, i think thats the bottom line. And i think some people in the u. S. Senate forgot you need to win elections in order to win controversial votes. I dont want to name any names, but i think they forgot. All right. I agree with ari melber. Weve got to get this done or markets will be in trouble. Thank you, gentlemen. Thank you. Thats it for this evenings show. Thanks for watching. Im larry kudlow. We will see you again tomorrow night. [ driver ] today, my ambulance knew all about a bike accident, just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. 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