Support from young people. Because the obama care website is in such bad shape, the government now has offered to bail out Insurance Company profit and losses, and in a possible second bailout, provide the insurers with guest estimates of health care subsidies. This whole story has gone haywire. All right . All of this and more coming up on the kudlow report beginning right now. Good evening, everyone. Im larry kudlow. This is the kudlow report. Were live here at 7 00 p. M. Eastern, 4 00 pacific. President obama tries everything we can to get the attention away from the obama care, anything. Today he went back to his old stand by, the rich. For more on the president s remarks about, quote, income inequality, end quote, lets bring in nbcs own steve handelsman. Steve. Reporter larry, thanks. This was president obama trying to refocus on helping the middle class that he said relative to the rich was in a long, slow slide from the 1970s and seemed to be doing better when housing and wall street got super hot six years ago. When the music stopped and the crisis hit, millions of families were stripped of whatever cushion they had left, and the result is an economy thats become profoundly unequal. Mr. Obama in professor mode had stats. Americas top 10 now earn half of all u. S. Income, up he said from 1 3. Ceos he said used to make 20 to 30 times what workers do, now he said make 273 times more and the top 1 of americans who have net worts now 288 times what a typical u. S. Family has. That is a dangerous and growing inequality and lack of upward mobility that has jeopardized middle class americas basic bargain, that if you work hard, you have a chance to get ahead. Reporter he wants at least a higher minimum wage and an extension of emergency unemployment benefits. The president said when budget talks get going obama care will not be on the table because, he said, his plan is ending one of americas worst inequities, unequal access to health care. Larry. Thanks very much, steve handelsman. We appreciate it. Im going to say it again with all due respect to mr. President , growing income inequality is not the greatest challenge of our time. We need strong economic growth. Thats the biggest challenge. I need a rising tide to lift all boats and help allamericans without these class warfare divisions. So lets talk. Joining us now is former chief economist for Vice President biden, jared bernstein. Hes at the center of budget and policies. Jim pazakukas is with the American Institute and cnbc. Jimmy p. , what about income inequality. Theres a lot of studies out there and they show in the last 20 or 30 years that hasnt happened. Thats not true. Its a bogus issue. I dont want to have study versus counter study. Income inequality, the top 90 and 10 have increased. A lot of disputes about how high inequality has gone. The president fears all of the statistics about income inequality. There is no evidence that, a, income inequality hurts income and, b, theres no evidence that income inequality has led to the middle class stagnation. You dont have to look at the studies. Theres a country thats been running the obama playbook for 20 years. Its tough to fire people. That country is called japan. How has their economy done the past 20 years, terrible. Thats the obamanomics there. What do you think of jim p. s challenge . I think that the issue that youre missing there was really at the heart of his presentation and, again, theres very strong evidence for this, is its not so much that inequality hurts growth, although there were references of that in terms of financial bubbles. By the way, theres Good Research that connects the lack of oversight and the financial problems that we had. What he was talking about was a connection between high income inequality, stagnant incomes for the middle class and diminished opportunity, diminished opportunity. Thats what you have left out. Thats essential because, look, the three of us will all agree that we in america dont push for equal outcomes but we do believe there ought to be some equality of opportunity. When inequality gets too high, opportunity gets squashed. Thats wrong. I know thats the president s line that income has been stagnated for 40 years. That is, a, completely wrong. A more accurate number, incomes have gone up ft. Meadian family 40 or 50 since the late 1970s. As far as income ability goes, income ability is in the top 20 could be better. There has not been a substantial change in u. S. Economic mobility over the past 50 years. Jared, i want to make one other point, by the way. This is not just an economics issue. In places where the president said today people have less of a chance at the low end of the ladder, okay. I want to include the cultural issues here. Family breakup. Family breakup. Marriage breakup. No role models. No discipline. In other words, im not sure that raising the minimum wage is going to help deep seeded cultural problems in our cities and elsewhere, and thats part of my disappointment with president obama because i think he is jerry rigging a case that is not there to be made. Look, first of all, im in total agreement that raising the minimum wage isnt going to solve all our cultural problems. What it will do is give a bit of a boost to low wage workers. Jimmy and i have a big disagreement on the facts. There is some evidence of diminished mobility. Theres very strong evidence of a stagnant middle class income. To be arguing about that jimmy, wait a second. Oh, come on. If you two want to go off in your fantasy land, please. Theyre not going to theyre not going to disrespect the opinion by trying to shut us up. Im talking about wellestablished research by the congressional budget office, by the census bureau. Thats what im talking about, too. Yeah, well, look. The president will be fact checked, im sure, in the washington post. And by me. If that comes up wrong gentlemen, gentlemen, i dont want to get too deep in numbers. I want to put this out there. Some studies have shown that the middle class has diminished, okay, but that diminution is the higher levels, not the lower levels. The 18 drop in the middle class, this is over this multidecade period that jimmy p is talking about, okay . But it turns out that moving up into the higher classes. So it just doesnt make sense. Well show you numbers on the current economics in just a minute. Go ahead. Sorry. You just have to look at the numbers that he was citing in the speech today that are widely accepted by academics who are all over this. The likelihood that someone in the bottom of the income scale will get to the middle or the top over their lifetime, very low. The likelihood that someone in the top will stay there, very high. If you compare that to europe and scandinavia, its lower. Jimmy, do you disagree with what i just said . In the bottom 20 , mobility could be better. Comparing us to these niche economies is not jimmy, youve cited the berkhauser study. See the other side of the study, too. If you go back three decades, go to the 1970s argument that obama makes, the bottom quintile went up 32 . Now that doesnt mean theyve reached nirvana. That doesnt mean the social mobility is all that we would want it to be. I would argue because of this. Dont tell me they havent gone up. Of course they have gone up. The data is very clear. One last point. The middle quintile has gone up by about 1 3. Hang on. I want you to hear hang on. I want you to hear a different perspective. Take a timeout, catch our breath, including me. The president said something today that really stood out. Heres what we say. When the music stops and the crisis hit, millions of families were stripped of whatever cushion they had left and the result is an economy thats become profoundly unequal. All right. So, we asked our own wealth expert here at cnbc, robert frank. We asked him to check that for us. Did the poor really take a bigger hit during the financial crisis . Robert, what have you got . Thanks, larry. Well, president obama said in his speech today that rising inequality is hurting the economy. He said inequality leaves the average family with less to spend be which hurts consumption while more concentrated wealth is less likely to result in consumer spending. Now the problem with this is that inequality today is lower than it was when the economy was much stronger. If you look at the two biggest spikes in inequality over the past 20 years, both came during economic booms. The first was in 99 and 2000. The second was 2006 to 2007. In fact, the top 1 had more in 2007 when unemployment was only 4. 5 than they do today. Thats because the wealthy lost more in the crisis than the rest of america. Average incomes fell 12 during the crisis but incomes for the 1 , they fell three times as much. Now this is not to say, larry, that inequality is not a problem and it has been growing since 2009 with all of that easy money from the fed, but in the past inequality has been a byproduct of rising stock markets and not a direct cause of recessions or unemployment. Back to you. That is exactly right. Thank you very much, robert. I want to say this. When a lot of these measurements are measured, the quintiles, they do not, they do not count the stock market wealth that ordinary people have in their Pension Funds or their 401ks, including union members. Many of those ignore the wealth effect. The rich, on the other hand, have more direct investments. I just want to say can i ask you something, larry . The income inequality numbers, they ignore a lot of things. They ignore taxes, they ignore the changing size of families, they ignore transfers, fringe benefits. They ignore everything other than market income. Heres the thing. I guess there are arguments on both sides of these numbers. I think you guys have it wrong, but let me just ask you this. If i told you that the medium compensation or the median Family Income tracked productivity 1 for 1 from about the mid 40s to the mid 70s, and then it split off. Im not saying that median fell but it grew much, much more slowly with productivity when it actually had tracked that measure for decades, that median families doubled between mid 40s and mid 70s and has been essentially flat since then. Do you disagree . Do you dispute that . I disagree. Here at aei we have the feds former productivity expert who absolutely disagrees with that analysis. So you can always find someone who disagrees with something. I can always find the truth. That is a widely accepted fact. Let me move on. This just is wrong. Jimmys point, jimmys point, so much of this stuff from the two french socialists and other studies leaves out important fringe benefits, important retirement. They leave out the earned income tax credit, for example. These things are so you have to look at the report that says all of that stuff. We did. That looks much better. Jared, let me ask you this. I listened to the president s socalled solution today. He wants to raise the minimum wage, right . He wants more infrastructure spending. He wants to end tax loopholes. He wants more spending. Can i just say how totally boring that is . Thats all he ever says. The guy either needs, a, a new speech writer or, b, a new policy or preferably both because he cant keep standing up with the same four silly bullets and say that that is going to improve the American Economy which is producing the worst economic recovery in the modern era. I wouldnt expect you to i wouldnt expect you to like three of those four, but the fact that he has consistently talked about lowering the Corporate Tax but he didnt talk about that today. He did. He just talked about closing loopholes. Hes referencing his plan to lower the corporate rate and broaden the base. Then why doesnt he why doesnt he ever talk the language of growth, not just to a supply sider like me but men and women and business. I can explain that. Hes too busy talking about the pay differential between american ceos and the average worker. When you talk about doesnt fit into that narrative of the day. In the context of quickly. I want to raise this, larry. Youre all about growth and i am, too. The problem is that as the Living Centers of so many families have become disconnected from growth, the rising tide isnt lifting all boats, its just lifting the yachts. You have to talk about disconnectedness. He doesnt have a growth. I want a rising tide to lift all boats. That was john f. Kennedys mantra. That was Ronald Regans mantra. Sometimes that was bill clintons mantra. I want to hear that from mr. Obama. He doesnt. He doesnt. He is trying. Jared, im sorry, buddy, you know how much i respect you. Same here. This president goes too much for redistribution. He just does. Its in his bones and he creates these divisions and today was the same old boring speech. Ive got to tell you, either, a, get a new speech writer, b, get a new policy, preferably both. This is not the last. Jared bernstein, the best of the best, jimmy p. , thank you, gentlemen. Im kudlow. Im calm noun. Im better now. President obama hosted a big white house youth summit this afternoon, but guess who wasnt invited . Youre about to meet the National Chair of the College Republicans whos going to tell us why she was stiffed and why millennials are deserting obama and obama care in droves. Speaking of obama care, we have another raft of new problems with the Health Care Law to report today. That includes what looks a bit like a bailout for the Insurance Companies. I dont like that if its true. Crony capitalism is not good. Well look at it later on in the show. For now, please dont forget, free market capitalism is the best path to prosperity. Just get rid of the tax and regulatory barriers to growth and well be all better off. The kudlow report is coming right back. [ male announcer ] they are a glowing example of what it means to be the best. And at this special time of year, they shine even brighter. Come to the winter event and get the mercedesbenz youve always wished for, now for an exceptional price. [ santa ] ho, ho, ho, ho [ male announcer ] lease the 2014 e350 for 579 a month easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. 150 students and recent graduates gathered at the white house this afternoon for a socalled youth summit to discuss obama care and other issues that might affect young americans. Notably absent is a representative from the National College of republicans and that because her application to attend was rejected. I am shocked, shocked at this. So, we had to ask her to come on the show. Here now is alex smith, National Chair of the College Republicans. Alex, thank you for coming on. I appreciate it. Thanks, larry. Let me just ask you, when you applied to this gala white house event, did the application ask you what Political Party you belonged to . It did not, but my email address gave away that i worked for the College Republican national committee. Okay. But if you had gotten around that, you think you would have had a better chance of getting invited or are these all Just Campaign workers . You know, i think my theory on this is that the president has nothing left to give young people so he cant have Diverse Voices in the audience because theres no room for a genuine discussion on this issue. Lets go to this issue now. You have a new poll out by the Harvard School of politics. Yes. Its a nasty poll. Obamas Approval Rating for people 18 to 29, young people, 18 to 29, his Approval Rating is down to 41 , which, by the way, tracks it for all people. On obama care his Approval Rating, alex, is 34 . Now those are real low numbers from a major obama constituency, the so called millennium young people. Why is his approval plunging . I think its pure sticker shock. I think that Younger Voters, when theyre able to see the exchanges, when theyre able to see the plans are seeing that their premiums have gone up nearly 200 and they just cant afford it. This is a generation that has more educational, personal and National Debt than any other generation in history so theyre just doing a cost calculation and saying its not worth it. Is some of this, by the way, your generation is better at computers and technology than my generation sure is. Im a baby boom guy. Is it because the website was so bad, so poorly designed and the president kind of lied about it . Is that part of the issue here . Just like uncool website . Well, i dont think the president did himself any favors when he compared it to websites that millennials use every day like kayak and other websites where Younger Voters typically are because those websites work. Those websites are clean. The interface doesnt crash and i think that it certainly didnt help from a cosmetic standpoint the president s argument that health care would be beneficial to everyone and would be working on time. All right. Alex, another question. Im trying to understand this whole issue. I mean, the guys just got real bad numbers among one of his key constituencies which tells me theres great political change going on out there. Did his falsehoods, in other words, going out there for several years and saying if you like your insurance you can keep it, if you like the doctor, you can keep it. Turns out that is simply not the case. Did those falsehoods hurt him among young people who like to be close to as pure as the driven snow . Were they offended by that . Without a doubt. This is a generation that especially values authenticity, and the president did not display that when he told the American People if they liked their plan they could keep it. If they liked their doctor they could keep it. Thats sort of the next wave of disappointments coming in this whole health care rollout. Young people recognize that. They understand when theyve been lied