Better news from the Japan crisis today, as the nuclear power company Tepco appears to be on track to complete a power line to the Fukushima nuclear power plant this afternoon Tokyo time.
If they can start running water into plants No. 3 and No. 4, to replenish the spent nuclear fuel pools, then potentially the apocalyptic fright of massive radiation could be off the table.
No one knows, certainly not I. So much of this story is unknowable. But at least there’s hopefully some good news.
The human toll in Japan is already massive. That’s a tragedy. But if somehow the meltdown story leading to massive radiation can be stopped, that would be a sign of hope for the Japanese people and all the rest of us.
One of the many fear gauges for this story is the U.S. and world stock markets, including Japan’s. While the Nikkei fell 1.4 percent Wednesday, the Dow managed a 1.4 percent gain today, up 161 points. It could be nothing more than a relief rally.
Traders are pointing to a strong factory report from the Philly Fed and a solid manufacturing gain for the index of industrial production. You want to say that the U.S. economy will survive the Japanese crisis, and undoubtedly that view is correct. But no one can rule out a worst-case Japanese story. Not yet, anyway.
And should that worst case ever occur — and let us pray it does not — no economy, including ours, will be spared.
But let me be hopeful on the Japan nuclear crisis somehow being solved. If that happens, the U.S. economic outlook is still 3 percent, or reasonably good.
All the economic stuff is still a sidebar to the Japanese tragedy. So perhaps as a sidebar to the sidebar, inflation pressures in the U.S. continue to rise. Today, for example, the consumer price index showed another big gain, the third straight monthly rise. This comes to 5.6 percent at an annual rate over the past three months. Producer prices paid by businesses have jumped 13.8 percent annually over the past three months. And import prices paid by everybody are up 6.9 percent over the past year.
Mr. Bernanke still thinks it’s all temporary — just a minor bulge in food and energy. But inflation expectations in the bond market and in consumer surveys show increases, not declines. Gasoline is holding at $3.55 at the pump. A year ago, it was $2.79. I hope the Fed is paying attention.
Thursday, March 17, 2011
Wednesday, March 16, 2011
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:MARKETS IN TURMOIL
- Brett Arends, columnist The Wall Street Journal
- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Pat Kernan, Cardinal Capital Management trader
FOOD INFLATION
- Art Laffer, Chief Investment Officer, Laffer Investments; Fmr. Reagan Economic Advisor
- Dan Greenhaus, Miller Tabak & Co Chief Economic Strategist
DISASTER IN JAPAN: NIKKEI JAPAN'S FINANCIAL/BUSINESS UPDATE
- Sri Jegarajah joins us live from Tokyo
ECONOMIC IMPACT OF JAPAN DISASTER HERE IN U.S.
HOW LONG WILL IT TAKE TO GET THE SUPPLY-CHAIN BACK UP?
GAME THEORY -- WHAT WOULD IT MEAN HERE IN U.S. IN WORST CASE SCENARIO?
- Brian Wesbury, First Trust Advisors Chief Economist
- Niall Ferguson Harvard University Professor "The Ascent of Money" Author
- Keith McCullough, Founder & CEO of Hedgeye Risk Management; CNBC Contributor
WINNING THE WAR AGAINST SPENDING & GOVT. UNIONS
Gov. Scott Walker (R-WI) joins us.
WASHINGTON TO WALL STREET
ARE TEAM OBAMA POLICIES PUTTING A CRIMP ON PRODUCTIVITY & GROWTH?
WHY ISN'T OBAMA WHITE HOUSE HELPING BUSINESS?
WHERE'S BILL DALEY?
WHERE ARE THE CORPORATE TAX CUTS?
- T.J. Rodgers, Cypress Semiconductor CEO
- Jim Murren, MGM Resorts Chmn & CEO
Please join us at 7pm ET on CNBC.
One-on-One with Mitch McConnell
Here's the transcript from my recent interview with top Senate Republican Mitch McConnell. One of the key points he made from my perch is that he wants a broad-based budget deal, but absolutely no tax hike.
LARRY KUDLOW:
Senator Mitch McConnell, welcome back to The Kudlow Report, sir.
SENATOR MITCH MCCONNELL:
Glad to be with you, Larry.
LARRY KUDLOW:
Let me just begin with this catastrophic Japanese story, the tremendous human toll it's taking and, of course, the nuclear power worries too. First, will efforts be made in the Senate to help our friends in Japan?
SENATOR MITCH MCCONNELL:
Yeah. If it needs Senate approval, we certainly will be there for helping our friends in Japan. What a horrible environmental catastrophe they're experiencing, the loss other human life, and all the rest. We're gonna be there for them in every way possible.
LARRY KUDLOW:
What kinda stuff is being discussed right now in the way of assistance?
SENATOR MITCH MCCONNELL:
I assume that our emergency services experts are interacting with the Japanese. I know they are. The USS Ronald Reagan is either there or on the way there, you know, which-- 'cause, apparently, they would like additional helicopter support in delivering supplies. We're gonna do everything we can to be helpful.
LARRY KUDLOW:
And, the issues of the worries about a nuclear meltdown in Japan, will that effect Senate policy? Will there be hearings held to look at our whole nuclear and our energy program in the wake of these Japanese problems?
SENATOR MITCH MCCONNELL:
Well, I think it's important not to rush to a conclusion about a major American energy policy in the wake of a disaster. For example, we all vividly recall last summer the BP oil spill. One of my colleagues said, "You know, when an airline-- when-- when an airplane goes down, you don't quit flying." I mean, we need to try to learn from what happened there. But, to rush to conclusion about-- what this means with regard to our-- policy in the future for nuclear power, I think it's premature.
LARRY KUDLOW:
No shutdown of nuclear licensing and things of that sort?
SENATOR MITCH MCCONNELL:
Well, you know, it took us 30 years to get back on track after Three Mile Island. I expect that this will-- produce some difficulty. I just don't think we oughta make American domestic energy policy based upon something that happens in another part of the world. Well, we try to learn from the mistakes that were made, and apply them.
LARRY KUDLOW:
Let me talk about American budget policy. You've recently said, "Not a single one of the 47 Senate republicans will vote to raise the debt ceiling unless some credible effort, unless something credible is done about our debt." Can you expand on that? What, "something credible" would be necessary to vote for an increase in the debt ceiling...
SENATOR MITCH MCCONNELL:
Well, first, let's just talk about the situation. We have now a divided government. The American-- public last November-- decided-- as one pundit put it, "Issue a restraining order against the actions of this administration over the first two years." A divided government frequently has done very important things. Think of Ronald Reagan and Tip O'Neill. Fixed social security in '83. Ronald Reagan and Tip O'Neill did tax reform in '86.
Bill Clinton and the republican Congress did welfare reform in '96. And, Bill Clinton and republican Congress actually balanced the budget, believe it or not, in the late '90s. This is a time to do important things. Our debt situation is extremely dangerous. We now have a $14 trillion cumulative debt, the size of our economy. We begin to look a lot like Greece.
Over and above that, we have over $50 trillion in unfunded liabilities in Medicare or Medicaid and social security, promises we've made that we cannot keep. This is an important time in our history to begin to get our fiscal house in order. And, the President-- so far, is remarkably passive, just sort of sitting on the sideline. So, what I have said, to get back to your question, there are 53 democrats and 47 republicans.
Fifty-three democrats can vote for a clean debt ceiling increase if they want to. But, 47 republicans, I'm quite confident, are gonna insist that we use that opportunity, which is all about our debt, to do something important about our debt.
And, I've been trying to incentivize the President every way I can, to come to the table. He doesn't have to lay it out publicly. We need to have private discussions and see what we can come up with that would be an important accomplishment for the country.
LARRY KUDLOW:
But, to make it credible, I mean I'm gonna guess you have a couple of months. To make it credible, would you, for example, insist on any conditions from the White House to have republicans vote for a higher debt ceiling? Specific conditions--
SENATOR MITCH MCCONNELL:
Well, I'm not gonna start laying out a potpourri of options. I think they know and we know what would be significant. And, we should be discussing which of those significant items should be added to the debt ceiling. Think of putting an ornament on a Christmas tree. Add it to the debt ceiling, as a condition for having bipartisan approval, of raising the debt ceiling. And, I'm not gonna get into the specifics now--
LARRY KUDLOW:
How about a spending--
SENATOR MITCH MCCONNELL:
but we all know what our--
LARRY KUDLOW:
--limitation--
SENATOR MITCH MCCONNELL:
--we all know what are problems are.
LARRY KUDLOW:
How about a spending limitation? A number of republicans have raised this. Senator Corker has raised this, something like 20, 21 percent of GDP. If I'm not mistaken-- your whip, Senator Kyl has raised it also, Senator Mike Lee and others. A spending limitation, a debt limitation, an entitlement package. It's kinda hard to do in the next six or eight weeks. But, would those qualify as conditions--
SENATOR MITCH MCCONNELL:
All of those are the kinds of things that would be considered significant by the markets, by the American people, and by foreign countries. And, we're in the process, within the republican conference, of looking at statutory solutions. Senator Corker's got a creative and interesting one. And, we're also looking at a Constitutional amendment that would not be a good candidate for a debt ceiling 'cause the President, under out Constitution, is not involved in a Constitutional amendment to balance the budget. He doesn't play a role in that.
Entitlement reform. A lot of study has already been done. The President's own entitlement debt reduction commission has done a lotta study over the last year w-- whose-- all of these issues have been studied thoroughly. What is lacking so far is the political will to tackle them.
LARRY KUDLOW:
Senator Schumer and some others, I believe Senator Durbin also, they want to have a big package deal discussion. Spending cuts, entitlement cuts, and also taxes. And, I wanna ask you, down through the years, we've had these big, grand design deals. Are taxes on the table for such a deal?
SENATOR MITCH MCCONNELL:
Taxes are not on the table. We don't have this problem because we tax too little. We have this problem because we spend too much. And, I've made it clear, both publicly and privately, that as a result of last November's election, tax increases cannot be considered as part of the solution to any of these problems.
LARRY KUDLOW:
Are there any movements in the Senate Finance Committee to lower the business tax rate structure? President's talked about this. He's sort of making a charm offensive with business. A lotta people on Wall Street took notice of that. He's goin' to be a centrist. He's got Bill Daley as his new Chief of Staff. Is the White House pushin' for business tax reform? Is the Senate pushin' for business tax reform? Are you pushing for business tax reform?
SENATOR MITCH MCCONNELL:
Yeah, we'd like to see the American corporate tax rate be competitive with the rest of the world. And pretty soon, we're gonna have the the highest corporate tax rate in the world. I don't think that's good for business. By the way, we all be-- oughta be ratifying trade agreements, not just the Korea deal, but the Panama, Colombia deal as well. We oughta be doin' all of those things. And I'm waiting to see whether this is just a rhetorical shift on the President's part courting business whether he's gonna back it up with anything real. And, I think doin' work on lowering the corporate tax rate, passing trade agreements, all of that, would have reality match up with rhetoric.
LARRY KUDLOW:
Speaking of rhetorical shifts-- President, in his news conference Friday, last Friday, said he was in favor of domestic drilling, domestic oil and gas production. Do you believe him?
SENATOR MITCH MCCONNELL:
Well, I remember one previous President said, "Watch what we do, not what we say." And, it is no question this administration has made it tougher to drill both on and offshore in this country. It's harder to get permits. We've had to suffer through an endless moratorium in the gulf after the BP spill that is totally unpopular all across the southeastern United States because it's costing us jobs.
One of my colleagues, Senator Vitter, on the floor of the Senate actually read the list of rigs, named them, that are now-- that used to be in the gulf, that are now in places like West Africa and other places. They've been moved around the world, and the jobs have gone along with them.
So, the question is not what the President's saying, but what he's doing. We need to quit this anti-production-- view that's been pervasive. It needs to stop. The anti-pro-- production view that's so pervasive in the administration needs to change. He's the President, he can change it if he wants to.
LARRY KUDLOW:
Do you blame him for $3.57 gasoline at the pump, which many economists are saying will slow the economy and raise the inflation rate? Do you blame the--
SENATOR MITCH MCCONNELL:
No, I'm--
LARRY KUDLOW:
--President?
SENATOR MITCH MCCONNELL:
--not gonna lay that just on his shoulders. But, he is you know, in terms of domestic production, this has been an administration that's very hostile to domestic production, not just in the gulf, but in Alaska and other places, to the extent that we could reduce our dependence on foreign oil. I think we all agree that would be good. But, we're not gonna do that any time soon with the proliferation of electric cars. It's just not gonna get the job done. So, we need to be straight with the American people. And, that involves opening up more of our substantial domestic supplies of both oil and gas.
LARRY KUDLOW:
Do you blame Fed Chairman Ben Bernanke for printin' too many dollars? Value of the currency's goin' down. Food commodities are skyrocketing. Energy commodities are skyrocketing.
SENATOR MITCH MCCONNELL:
Well, I'm not an expert on Fed policy. But, anyway, we were just talking about gas prices. Nothing will send the cost of everything up faster than an increase in gasoline prices. Just a penny up, you know, will cost us hundreds of millions of dollars a year. Everybody's very sensitive to gas prices in this country.
LARRY KUDLOW:
When you heard PIMCO's Bill Gross, the big investment manager out west. He says he's pulling out of the U.S. Treasury Bond market. What kind of signal do you take that to be? What do you and the Senators feel that kind of negativism toward bonds pushes the deficit reduction, pushes the budget issue to the front page, and to the front of your agenda? Are we losing time on this? If too many Bill Grosses pull out, who's gonna buy our debt?
SENATOR MITCH MCCONNELL:
Well, I think the message is this is a serious problem, and it's a problem now. I mean, you get the impression the President hopes to finesse this past the next election. That's fine if it'll wait that long. There are many experts who come and talk to us here in the Senate who believe we need to act, and act now.
And, as I've suggested, Larry, I think the time to act is-- in connection with the debt ceiling. We all know the kinds of actions we can take that would be viewed about the bond market, for example, as an indication the American government is gonna get its house in order. We know what the steps are that need to be taken. We need to reach out and grab them with both hands, and pass them.
LARRY KUDLOW:
All right, Senator Mitch McConnell, Republican Leader, we appreciate it very much, sir.
SENATOR MITCH MCCONNELL:
Thank you, Larry.
LARRY KUDLOW:
Great. I really can't thank you enough.
LARRY KUDLOW:
Senator Mitch McConnell, welcome back to The Kudlow Report, sir.
SENATOR MITCH MCCONNELL:
Glad to be with you, Larry.
LARRY KUDLOW:
Let me just begin with this catastrophic Japanese story, the tremendous human toll it's taking and, of course, the nuclear power worries too. First, will efforts be made in the Senate to help our friends in Japan?
SENATOR MITCH MCCONNELL:
Yeah. If it needs Senate approval, we certainly will be there for helping our friends in Japan. What a horrible environmental catastrophe they're experiencing, the loss other human life, and all the rest. We're gonna be there for them in every way possible.
LARRY KUDLOW:
What kinda stuff is being discussed right now in the way of assistance?
SENATOR MITCH MCCONNELL:
I assume that our emergency services experts are interacting with the Japanese. I know they are. The USS Ronald Reagan is either there or on the way there, you know, which-- 'cause, apparently, they would like additional helicopter support in delivering supplies. We're gonna do everything we can to be helpful.
LARRY KUDLOW:
And, the issues of the worries about a nuclear meltdown in Japan, will that effect Senate policy? Will there be hearings held to look at our whole nuclear and our energy program in the wake of these Japanese problems?
SENATOR MITCH MCCONNELL:
Well, I think it's important not to rush to a conclusion about a major American energy policy in the wake of a disaster. For example, we all vividly recall last summer the BP oil spill. One of my colleagues said, "You know, when an airline-- when-- when an airplane goes down, you don't quit flying." I mean, we need to try to learn from what happened there. But, to rush to conclusion about-- what this means with regard to our-- policy in the future for nuclear power, I think it's premature.
LARRY KUDLOW:
No shutdown of nuclear licensing and things of that sort?
SENATOR MITCH MCCONNELL:
Well, you know, it took us 30 years to get back on track after Three Mile Island. I expect that this will-- produce some difficulty. I just don't think we oughta make American domestic energy policy based upon something that happens in another part of the world. Well, we try to learn from the mistakes that were made, and apply them.
LARRY KUDLOW:
Let me talk about American budget policy. You've recently said, "Not a single one of the 47 Senate republicans will vote to raise the debt ceiling unless some credible effort, unless something credible is done about our debt." Can you expand on that? What, "something credible" would be necessary to vote for an increase in the debt ceiling...
SENATOR MITCH MCCONNELL:
Well, first, let's just talk about the situation. We have now a divided government. The American-- public last November-- decided-- as one pundit put it, "Issue a restraining order against the actions of this administration over the first two years." A divided government frequently has done very important things. Think of Ronald Reagan and Tip O'Neill. Fixed social security in '83. Ronald Reagan and Tip O'Neill did tax reform in '86.
Bill Clinton and the republican Congress did welfare reform in '96. And, Bill Clinton and republican Congress actually balanced the budget, believe it or not, in the late '90s. This is a time to do important things. Our debt situation is extremely dangerous. We now have a $14 trillion cumulative debt, the size of our economy. We begin to look a lot like Greece.
Over and above that, we have over $50 trillion in unfunded liabilities in Medicare or Medicaid and social security, promises we've made that we cannot keep. This is an important time in our history to begin to get our fiscal house in order. And, the President-- so far, is remarkably passive, just sort of sitting on the sideline. So, what I have said, to get back to your question, there are 53 democrats and 47 republicans.
Fifty-three democrats can vote for a clean debt ceiling increase if they want to. But, 47 republicans, I'm quite confident, are gonna insist that we use that opportunity, which is all about our debt, to do something important about our debt.
And, I've been trying to incentivize the President every way I can, to come to the table. He doesn't have to lay it out publicly. We need to have private discussions and see what we can come up with that would be an important accomplishment for the country.
LARRY KUDLOW:
But, to make it credible, I mean I'm gonna guess you have a couple of months. To make it credible, would you, for example, insist on any conditions from the White House to have republicans vote for a higher debt ceiling? Specific conditions--
SENATOR MITCH MCCONNELL:
Well, I'm not gonna start laying out a potpourri of options. I think they know and we know what would be significant. And, we should be discussing which of those significant items should be added to the debt ceiling. Think of putting an ornament on a Christmas tree. Add it to the debt ceiling, as a condition for having bipartisan approval, of raising the debt ceiling. And, I'm not gonna get into the specifics now--
LARRY KUDLOW:
How about a spending--
SENATOR MITCH MCCONNELL:
but we all know what our--
LARRY KUDLOW:
--limitation--
SENATOR MITCH MCCONNELL:
--we all know what are problems are.
LARRY KUDLOW:
How about a spending limitation? A number of republicans have raised this. Senator Corker has raised this, something like 20, 21 percent of GDP. If I'm not mistaken-- your whip, Senator Kyl has raised it also, Senator Mike Lee and others. A spending limitation, a debt limitation, an entitlement package. It's kinda hard to do in the next six or eight weeks. But, would those qualify as conditions--
SENATOR MITCH MCCONNELL:
All of those are the kinds of things that would be considered significant by the markets, by the American people, and by foreign countries. And, we're in the process, within the republican conference, of looking at statutory solutions. Senator Corker's got a creative and interesting one. And, we're also looking at a Constitutional amendment that would not be a good candidate for a debt ceiling 'cause the President, under out Constitution, is not involved in a Constitutional amendment to balance the budget. He doesn't play a role in that.
Entitlement reform. A lot of study has already been done. The President's own entitlement debt reduction commission has done a lotta study over the last year w-- whose-- all of these issues have been studied thoroughly. What is lacking so far is the political will to tackle them.
LARRY KUDLOW:
Senator Schumer and some others, I believe Senator Durbin also, they want to have a big package deal discussion. Spending cuts, entitlement cuts, and also taxes. And, I wanna ask you, down through the years, we've had these big, grand design deals. Are taxes on the table for such a deal?
SENATOR MITCH MCCONNELL:
Taxes are not on the table. We don't have this problem because we tax too little. We have this problem because we spend too much. And, I've made it clear, both publicly and privately, that as a result of last November's election, tax increases cannot be considered as part of the solution to any of these problems.
LARRY KUDLOW:
Are there any movements in the Senate Finance Committee to lower the business tax rate structure? President's talked about this. He's sort of making a charm offensive with business. A lotta people on Wall Street took notice of that. He's goin' to be a centrist. He's got Bill Daley as his new Chief of Staff. Is the White House pushin' for business tax reform? Is the Senate pushin' for business tax reform? Are you pushing for business tax reform?
SENATOR MITCH MCCONNELL:
Yeah, we'd like to see the American corporate tax rate be competitive with the rest of the world. And pretty soon, we're gonna have the the highest corporate tax rate in the world. I don't think that's good for business. By the way, we all be-- oughta be ratifying trade agreements, not just the Korea deal, but the Panama, Colombia deal as well. We oughta be doin' all of those things. And I'm waiting to see whether this is just a rhetorical shift on the President's part courting business whether he's gonna back it up with anything real. And, I think doin' work on lowering the corporate tax rate, passing trade agreements, all of that, would have reality match up with rhetoric.
LARRY KUDLOW:
Speaking of rhetorical shifts-- President, in his news conference Friday, last Friday, said he was in favor of domestic drilling, domestic oil and gas production. Do you believe him?
SENATOR MITCH MCCONNELL:
Well, I remember one previous President said, "Watch what we do, not what we say." And, it is no question this administration has made it tougher to drill both on and offshore in this country. It's harder to get permits. We've had to suffer through an endless moratorium in the gulf after the BP spill that is totally unpopular all across the southeastern United States because it's costing us jobs.
One of my colleagues, Senator Vitter, on the floor of the Senate actually read the list of rigs, named them, that are now-- that used to be in the gulf, that are now in places like West Africa and other places. They've been moved around the world, and the jobs have gone along with them.
So, the question is not what the President's saying, but what he's doing. We need to quit this anti-production-- view that's been pervasive. It needs to stop. The anti-pro-- production view that's so pervasive in the administration needs to change. He's the President, he can change it if he wants to.
LARRY KUDLOW:
Do you blame him for $3.57 gasoline at the pump, which many economists are saying will slow the economy and raise the inflation rate? Do you blame the--
SENATOR MITCH MCCONNELL:
No, I'm--
LARRY KUDLOW:
--President?
SENATOR MITCH MCCONNELL:
--not gonna lay that just on his shoulders. But, he is you know, in terms of domestic production, this has been an administration that's very hostile to domestic production, not just in the gulf, but in Alaska and other places, to the extent that we could reduce our dependence on foreign oil. I think we all agree that would be good. But, we're not gonna do that any time soon with the proliferation of electric cars. It's just not gonna get the job done. So, we need to be straight with the American people. And, that involves opening up more of our substantial domestic supplies of both oil and gas.
LARRY KUDLOW:
Do you blame Fed Chairman Ben Bernanke for printin' too many dollars? Value of the currency's goin' down. Food commodities are skyrocketing. Energy commodities are skyrocketing.
SENATOR MITCH MCCONNELL:
Well, I'm not an expert on Fed policy. But, anyway, we were just talking about gas prices. Nothing will send the cost of everything up faster than an increase in gasoline prices. Just a penny up, you know, will cost us hundreds of millions of dollars a year. Everybody's very sensitive to gas prices in this country.
LARRY KUDLOW:
When you heard PIMCO's Bill Gross, the big investment manager out west. He says he's pulling out of the U.S. Treasury Bond market. What kind of signal do you take that to be? What do you and the Senators feel that kind of negativism toward bonds pushes the deficit reduction, pushes the budget issue to the front page, and to the front of your agenda? Are we losing time on this? If too many Bill Grosses pull out, who's gonna buy our debt?
SENATOR MITCH MCCONNELL:
Well, I think the message is this is a serious problem, and it's a problem now. I mean, you get the impression the President hopes to finesse this past the next election. That's fine if it'll wait that long. There are many experts who come and talk to us here in the Senate who believe we need to act, and act now.
And, as I've suggested, Larry, I think the time to act is-- in connection with the debt ceiling. We all know the kinds of actions we can take that would be viewed about the bond market, for example, as an indication the American government is gonna get its house in order. We know what the steps are that need to be taken. We need to reach out and grab them with both hands, and pass them.
LARRY KUDLOW:
All right, Senator Mitch McConnell, Republican Leader, we appreciate it very much, sir.
SENATOR MITCH MCCONNELL:
Thank you, Larry.
LARRY KUDLOW:
Great. I really can't thank you enough.
Tuesday, March 15, 2011
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:MARKET FEAR
- Jim Rogers, Rogers Holdings Chairman Author/ Investor
- David Goldman, Fmr. head of fixed income research at Bank of America
- Gary Shilling, A. Gary Shilling & Co. President
IMPLICATIONS OF JAPAN’S NUCLEAR REACTOR DISASTER
- Daniel Aldrich, Purdue University Japan expert - Purdue University
- Kevin Kamps, Nuclear information & Resource Service; Nuclear Waste Specialist
GLOBAL IMPACT OF JAPANESE DISASTER
- Amb. Tom Schieffer, Fmr. Amb. to Japan (2005 - 2009)
THE RIGHT PATH TO PROSPERITY
- Jim Owens, Fmr. Caterpillar Chmn & CEO
GETTING AMERICA'S FISCAL HOUSE IN ORDER
- Sen. Rand Paul (R) Kentucky
- Sen. Mike Lee (R) Utah
Please join us at 7pm ET on CNBC.
One-on-One with John Boehner: Is a Corporate Tax Cut in the Cards?
Here's the transcript from my interview last night with Republican House Speaker John Boehner. We covered a wide range of topics including the tragedy in Japan, U.S. energy policy, the budget battle and taxes. On that final topic, according to Speaker Boehner, a corporate tax cut is still possible this year.
LARRY KUDLOW:
Speaker Boehner, welcome back to the Kudlow Report.
JOHN BOEHNER:
Good to be with you.
LARRY KUDLOW:
Thank you. Let me begin, of course, with the catastrophe going on in Japan-- and ask you first, are there thoughts, policies, discussions in Congress? What can we do to help our Japanese friends?
JOHN BOEHNER:
Well, clearly our hearts and souls go out to the people of Japan, and the tragedy that they have faced and are facing. Whether it's military help, or whether it's our expertise-- food supplies-- a lot that we will be doing-- to help the Japanese people.
LARRY KUDLOW:
Will the Congress appropriate additional funds for these kinds of emergency assistance?
JOHN BOEHNER:
I think that's yet to be seen. But I would not be surprised.
LARRY KUDLOW:
And, do you think these food supplies and military assistance is gonna start right away? Is it in motion as we speak?
JOHN BOEHNER:
I think it's been in motion all weekend, and will continue.
LARRY KUDLOW:
Let me ask you also, of course related to this, is the whole issue of-- the threatened nuclear meltdown in Japan. Is that gonna effect American energy policy? Are you gonna hold additional hearings on this?
JOHN BOEHNER:
Well, Chairman Upton at the Energy and Commerce Committee already has a hearing scheduled for this week with the head of the Nuclear Regulatory Commission. And, I'm sure the question will come up about those types of plants-- what kind of experience we have here. But, it's clear that there are lessons to be learned from what's happening in Japan as we speak. And, I think that we need to learn those lessons as we continue to look at how do we produce more energy from nuclear sources here in America.
LARRY KUDLOW:
You were home this weekend and Ohio has some nuclear power plants. Did local folks, did voters, were they talking about this? Were they worried about their own nuclear plants?
JOHN BOEHNER:
No, I didn't hear any concerns raised. But as you watch these images on TV, you can't help but be concerned about what caused this. The design of these plants, as I understand, is about, they're about 40 years old. And, what improvements have been made over the course of the last 40 years and, what's the risk that we face if we continue to push more nuclear energy here in the United States. I think that's the question the American people wanna know.
LARRY KUDLOW:
And-- I'm sure you're right. Is it, are people saying, "This is the end of nuclear energy policy"? I mean, is it gonna be cut and dry? Or, are they gonna give this an honest look?
JOHN BOEHNER:
Listen, I think we need we need to take a step back, understand what happened, understand what changes have been made, and really understand what are the risks here. As we all know Japan sits in volcanic area-- prone to earthquakes. You know, they have some 1,500 earthquakes a year.
We've got parts of the United States that have some inclination toward earthquakes. But, we have other parts of the country where there's no threat. But, we need to learn those lessons. But, I don't think it should deter us from trying to do everything we can to move America toward energy independence.
LARRY KUDLOW:
Let's turn back to the budget. On Friday, you unveiled a new continuing resolution, I guess to stop a shutdown this Friday. You got another $6 billion of budget cuts in there towards your $61 billion target. Can this one get through?
JOHN BOEHNER:
I believe that the continuing resolution this week will pass for another three weeks, keeping the government open. And yet, though, cutting some $6 billion, which means that over the last several weeks, we'll be able to accumulate $10 billion worth of real savings.
All of this because the democrats did no budget last year. They did no appropriation bills, and dumped this mess in our lap. I want the continuing resolution through September 30th finished as soon as possible. But, that's gonna mean real cuts. It's gonna mean real limitations on what this administration can do for the balance of this fiscal year. And, I'm hopeful that we'll get it finished as soon as possible.
LARRY KUDLOW:
I mean, you've got a lotta pressures, as we know. You've got tea party conservatives on one side. You've got people that want policy defunding of Obamacare on the other side. Democrats are way apart. I mean, it's almost a $50 billion gap. You told me a little while ago if the democrats won't take the whole loaf of budget cuts, you're gonna give it to 'em one slice at a time. Do you think you can get most of the original $61 billion in cuts?
JOHN BOEHNER:
Well, I think we'll see. We're in discussions with the democrats in the Senate, with the administration. We want to cut spending because cutting spending will lead to a better environment for businesses to help create jobs in America. That's the core of what we're trying to do, bring some fiscal sanity to Washington DC.
LARRY KUDLOW:
And, you've also been talking about next year's budget, if you get to it, for 2012. And, you want to put some entitlement reforms in there. You wanna put some entitlement limits and caps. How specific will you be? What kind of size reduction in spending might that come to?
JOHN BOEHNER:
We've got serious fiscal challenges facing our country. And, it's time that we, as Americans have an adult conversation with each other about the serious challenges that face our country. No more kicking the can down the road. I've watched it go on for all the years that I've been here. So, you will see us bend the curve. You will see us lay out a plan that will not only balance the budget, but pay off the debt.
It's gonna take a long time to do this. But, it's time to make decisions. And, the unfortunate part of this is that the President a year ago set up a Deficit Reduction Commission. They did a lot of very good work. And, they worked very hard. And, I don't agree with everything they did.
But, when the President submitted his budget about a month ago, not one idea from his own Deficit Reduction Commission. That's just kickin' the can down the road. It's whistling past the graveyard. And, House republicans, along with our colleagues in the Senate are not going to do that. If he won't lead, we will.
LARRY KUDLOW:
How do you react to criticism from democrats? Let's see, Senator Reed, Senator Durbin, Senator Schumer, they say republican spending cuts are bad for economic growth, bad for jobs. How do you react to that and, has the Republican Party focused too much on spending austerity, and not enough on economic growth?
JOHN BOEHNER:
I gave the President a letter signed by 150 economists over a month ago that said that cutting federal spending will lead to a better environment for job creation in America. Businesses and, I used to be a small business man understand that you can't continue to borrow 40 cents for every dollar the federal government spends.
And, if we begin to cut spending, and people understand that we're serious about putting America on a sound fiscal footing it will send the signal to business people and investors that America is a place they can invest in. It's that investment that creates jobs.
LARRY KUDLOW:
What about pro-growth tax reform, particularly business tax cuts? What about pro-growth regulatory moratorium? There's been a lotta talk about over-regulation of energy, for example. We got, what, $3.50 at the gallon. Many economists believe that's gonna raise the inflation rate and lower the economic growth rate. So, tax cute-- an-- and regulatory freezes, where's the GOP on that?
JOHN BOEHNER:
Well, when you look at what it's gonna take to create jobs in America, we talked about cutting spending. We also need to look at all of this regulation coming out of this administration. And, whether it's Obamacare, whether it's the Dodd-Frank financial services bill, the EPA that's choking our ability to produce more American energy, we need to look at the regulatory side as well.
But, how about the three free trade bills that are sitting downtown the administration's holding Panama, Colombia, South Korea? Free trade will create more jobs here in the United States. And, we need to produce energy. We need to produce energy because we need to bring energy prices down.
But, let's not forget that if we begin to do all of the above on the energy side we because it'll create up up to a million new jobs here in America. So, we need to do all of these things, if we're going to create a better environment for our economy to get up and get moving and get Americans back to work.
LARRY KUDLOW:
You know, President Obama and especially Vice President Biden-- Mr. Biden was over in Russia recently, talking about admitting Russia into the World Trade Organization, which would require a congressional vote. Wouldn't it be better to get these free trade deals passed before we put Russia into the World Trade Organization?
JOHN BOEHNER:
Well, these free trade bills, some of them have been out there for three or four years. I believe that-- and then, the South Korea trade agreement. Let's deal with these. And if Russians want to actually agree to play by the rules then we can have a discussion about whether ascension into the WTO is the right step.
LARRY KUDLOW:
Let me ask one last one. Do you believe that President Obama has turned pro-business? I get this question all the time. He had a charm offensive, he spoke to the Chamber of Commerce, and particularly his new Chief of Staff, Bill Daley. Have you spoken to Mr. Daley? Have you heard from him that they want a pro-business, pro-growth agenda? How do you come out on all that? Have any changes really been made in the last couple months in the White House?
JOHN BOEHNER:
Well, I've talked to the President a lot over the last couple of months. And, I've talked to Mr. Daley a number of times. Talk is cheap. Actions speak louder than words. I haven't seen any new actions yet.
LARRY KUDLOW:
What are you looking for? What would be a hint?
JOHN BOEHNER:
Well, send the three free trade agreements to Congress for our consideration. Let's put a real moratorium on new regulations coming out of his administration, which he's also called for.
LARRY KUDLOW:
How about Mr. Camp, your Chairman of the Ways and Means Committee? He runs tax policy, I know he runs trade policy too. Have you deputized him to come with a business tax cut reform bill?
JOHN BOEHNER:
If we want to make America more competitive, we've got to reform our corporate tax code. It is in the way of job creation in America. Dave Camp is a great Chairman. We came to Congress together 21 years ago. He is working on that reform. There's a number of hearings that are already set up. The administration appears to have some interest in wanting to pursue this. And, I'm optimistic.
LARRY KUDLOW:
Could this happen in my lifetime?
JOHN BOEHNER:
It could happen this year.
LARRY KUDLOW:
(LAUGH) Okay.
JOHN BOEHNER:
I hope that much was in your lifetime.
LARRY KUDLOW:
I have high expectations. You think it could, you think you could get business tax reform this year, that's possible?
JOHN BOEHNER:
I do. I actually do.
LARRY KUDLOW:
All right. Speaker John Boehner, we appreciate your time very much, sir.
JOHN BOEHNER:
Nice to see you.
LARRY KUDLOW:
Great.
* * *END OF TRANSCRIPT* * *
LARRY KUDLOW:
Speaker Boehner, welcome back to the Kudlow Report.
JOHN BOEHNER:
Good to be with you.
LARRY KUDLOW:
Thank you. Let me begin, of course, with the catastrophe going on in Japan-- and ask you first, are there thoughts, policies, discussions in Congress? What can we do to help our Japanese friends?
JOHN BOEHNER:
Well, clearly our hearts and souls go out to the people of Japan, and the tragedy that they have faced and are facing. Whether it's military help, or whether it's our expertise-- food supplies-- a lot that we will be doing-- to help the Japanese people.
LARRY KUDLOW:
Will the Congress appropriate additional funds for these kinds of emergency assistance?
JOHN BOEHNER:
I think that's yet to be seen. But I would not be surprised.
LARRY KUDLOW:
And, do you think these food supplies and military assistance is gonna start right away? Is it in motion as we speak?
JOHN BOEHNER:
I think it's been in motion all weekend, and will continue.
LARRY KUDLOW:
Let me ask you also, of course related to this, is the whole issue of-- the threatened nuclear meltdown in Japan. Is that gonna effect American energy policy? Are you gonna hold additional hearings on this?
JOHN BOEHNER:
Well, Chairman Upton at the Energy and Commerce Committee already has a hearing scheduled for this week with the head of the Nuclear Regulatory Commission. And, I'm sure the question will come up about those types of plants-- what kind of experience we have here. But, it's clear that there are lessons to be learned from what's happening in Japan as we speak. And, I think that we need to learn those lessons as we continue to look at how do we produce more energy from nuclear sources here in America.
LARRY KUDLOW:
You were home this weekend and Ohio has some nuclear power plants. Did local folks, did voters, were they talking about this? Were they worried about their own nuclear plants?
JOHN BOEHNER:
No, I didn't hear any concerns raised. But as you watch these images on TV, you can't help but be concerned about what caused this. The design of these plants, as I understand, is about, they're about 40 years old. And, what improvements have been made over the course of the last 40 years and, what's the risk that we face if we continue to push more nuclear energy here in the United States. I think that's the question the American people wanna know.
LARRY KUDLOW:
And-- I'm sure you're right. Is it, are people saying, "This is the end of nuclear energy policy"? I mean, is it gonna be cut and dry? Or, are they gonna give this an honest look?
JOHN BOEHNER:
Listen, I think we need we need to take a step back, understand what happened, understand what changes have been made, and really understand what are the risks here. As we all know Japan sits in volcanic area-- prone to earthquakes. You know, they have some 1,500 earthquakes a year.
We've got parts of the United States that have some inclination toward earthquakes. But, we have other parts of the country where there's no threat. But, we need to learn those lessons. But, I don't think it should deter us from trying to do everything we can to move America toward energy independence.
LARRY KUDLOW:
Let's turn back to the budget. On Friday, you unveiled a new continuing resolution, I guess to stop a shutdown this Friday. You got another $6 billion of budget cuts in there towards your $61 billion target. Can this one get through?
JOHN BOEHNER:
I believe that the continuing resolution this week will pass for another three weeks, keeping the government open. And yet, though, cutting some $6 billion, which means that over the last several weeks, we'll be able to accumulate $10 billion worth of real savings.
All of this because the democrats did no budget last year. They did no appropriation bills, and dumped this mess in our lap. I want the continuing resolution through September 30th finished as soon as possible. But, that's gonna mean real cuts. It's gonna mean real limitations on what this administration can do for the balance of this fiscal year. And, I'm hopeful that we'll get it finished as soon as possible.
LARRY KUDLOW:
I mean, you've got a lotta pressures, as we know. You've got tea party conservatives on one side. You've got people that want policy defunding of Obamacare on the other side. Democrats are way apart. I mean, it's almost a $50 billion gap. You told me a little while ago if the democrats won't take the whole loaf of budget cuts, you're gonna give it to 'em one slice at a time. Do you think you can get most of the original $61 billion in cuts?
JOHN BOEHNER:
Well, I think we'll see. We're in discussions with the democrats in the Senate, with the administration. We want to cut spending because cutting spending will lead to a better environment for businesses to help create jobs in America. That's the core of what we're trying to do, bring some fiscal sanity to Washington DC.
LARRY KUDLOW:
And, you've also been talking about next year's budget, if you get to it, for 2012. And, you want to put some entitlement reforms in there. You wanna put some entitlement limits and caps. How specific will you be? What kind of size reduction in spending might that come to?
JOHN BOEHNER:
We've got serious fiscal challenges facing our country. And, it's time that we, as Americans have an adult conversation with each other about the serious challenges that face our country. No more kicking the can down the road. I've watched it go on for all the years that I've been here. So, you will see us bend the curve. You will see us lay out a plan that will not only balance the budget, but pay off the debt.
It's gonna take a long time to do this. But, it's time to make decisions. And, the unfortunate part of this is that the President a year ago set up a Deficit Reduction Commission. They did a lot of very good work. And, they worked very hard. And, I don't agree with everything they did.
But, when the President submitted his budget about a month ago, not one idea from his own Deficit Reduction Commission. That's just kickin' the can down the road. It's whistling past the graveyard. And, House republicans, along with our colleagues in the Senate are not going to do that. If he won't lead, we will.
LARRY KUDLOW:
How do you react to criticism from democrats? Let's see, Senator Reed, Senator Durbin, Senator Schumer, they say republican spending cuts are bad for economic growth, bad for jobs. How do you react to that and, has the Republican Party focused too much on spending austerity, and not enough on economic growth?
JOHN BOEHNER:
I gave the President a letter signed by 150 economists over a month ago that said that cutting federal spending will lead to a better environment for job creation in America. Businesses and, I used to be a small business man understand that you can't continue to borrow 40 cents for every dollar the federal government spends.
And, if we begin to cut spending, and people understand that we're serious about putting America on a sound fiscal footing it will send the signal to business people and investors that America is a place they can invest in. It's that investment that creates jobs.
LARRY KUDLOW:
What about pro-growth tax reform, particularly business tax cuts? What about pro-growth regulatory moratorium? There's been a lotta talk about over-regulation of energy, for example. We got, what, $3.50 at the gallon. Many economists believe that's gonna raise the inflation rate and lower the economic growth rate. So, tax cute-- an-- and regulatory freezes, where's the GOP on that?
JOHN BOEHNER:
Well, when you look at what it's gonna take to create jobs in America, we talked about cutting spending. We also need to look at all of this regulation coming out of this administration. And, whether it's Obamacare, whether it's the Dodd-Frank financial services bill, the EPA that's choking our ability to produce more American energy, we need to look at the regulatory side as well.
But, how about the three free trade bills that are sitting downtown the administration's holding Panama, Colombia, South Korea? Free trade will create more jobs here in the United States. And, we need to produce energy. We need to produce energy because we need to bring energy prices down.
But, let's not forget that if we begin to do all of the above on the energy side we because it'll create up up to a million new jobs here in America. So, we need to do all of these things, if we're going to create a better environment for our economy to get up and get moving and get Americans back to work.
LARRY KUDLOW:
You know, President Obama and especially Vice President Biden-- Mr. Biden was over in Russia recently, talking about admitting Russia into the World Trade Organization, which would require a congressional vote. Wouldn't it be better to get these free trade deals passed before we put Russia into the World Trade Organization?
JOHN BOEHNER:
Well, these free trade bills, some of them have been out there for three or four years. I believe that-- and then, the South Korea trade agreement. Let's deal with these. And if Russians want to actually agree to play by the rules then we can have a discussion about whether ascension into the WTO is the right step.
LARRY KUDLOW:
Let me ask one last one. Do you believe that President Obama has turned pro-business? I get this question all the time. He had a charm offensive, he spoke to the Chamber of Commerce, and particularly his new Chief of Staff, Bill Daley. Have you spoken to Mr. Daley? Have you heard from him that they want a pro-business, pro-growth agenda? How do you come out on all that? Have any changes really been made in the last couple months in the White House?
JOHN BOEHNER:
Well, I've talked to the President a lot over the last couple of months. And, I've talked to Mr. Daley a number of times. Talk is cheap. Actions speak louder than words. I haven't seen any new actions yet.
LARRY KUDLOW:
What are you looking for? What would be a hint?
JOHN BOEHNER:
Well, send the three free trade agreements to Congress for our consideration. Let's put a real moratorium on new regulations coming out of his administration, which he's also called for.
LARRY KUDLOW:
How about Mr. Camp, your Chairman of the Ways and Means Committee? He runs tax policy, I know he runs trade policy too. Have you deputized him to come with a business tax cut reform bill?
JOHN BOEHNER:
If we want to make America more competitive, we've got to reform our corporate tax code. It is in the way of job creation in America. Dave Camp is a great Chairman. We came to Congress together 21 years ago. He is working on that reform. There's a number of hearings that are already set up. The administration appears to have some interest in wanting to pursue this. And, I'm optimistic.
LARRY KUDLOW:
Could this happen in my lifetime?
JOHN BOEHNER:
It could happen this year.
LARRY KUDLOW:
(LAUGH) Okay.
JOHN BOEHNER:
I hope that much was in your lifetime.
LARRY KUDLOW:
I have high expectations. You think it could, you think you could get business tax reform this year, that's possible?
JOHN BOEHNER:
I do. I actually do.
LARRY KUDLOW:
All right. Speaker John Boehner, we appreciate your time very much, sir.
JOHN BOEHNER:
Nice to see you.
LARRY KUDLOW:
Great.
* * *END OF TRANSCRIPT* * *
Monday, March 14, 2011
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:GLOOM SETTLING OVER THE MARKET?
- Ron Kruszewski, Stifel, Nicolaus Chairman & CEO
- Todd Harrison, Minyanville Founder & CEO
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
GEOPOLITICS (JAPAN/MIDEAST) & THE ECONOMY
- Niall Ferguson, Harvard University Prof. of History; "Ascent of Money" Author
- Gen. Barry McCaffrey, 4-star Gen.; NBC Military Analyst; U.S. Army (Ret.); McCaffrey Associates Pres.
ONE-ON-WITH WITH JOHN BOEHNER
House Speaker John Boehner joins us.
ONE-ON-ONE WITH MITCH MCCONNELL
SENTAE Minority Leader Sen. Mitch McConnell joins us.
OIL SHOCK IMPLICATIONS
- Larry Nichols, Devon Energy CEO
- Larry Dickerson, Diamond Offshore CEO
Please join us at 7pm ET on CNBC.
Friday, March 11, 2011
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:VOLATILE MARKETS
-Brian Kelly, Kanundrum Capital president
-David Dietze, Point View chief investment strategist
-Stephanie Link, TheStreet director of Research
SHOULD U.S SEND MILITARY TO LIBYA & SAUDI ARABIA?
-Retired Army Gen. Barry McCaffrey
-Dan Senor, foreign policy expert
HUNDREDS KILLED IN JAPAN EARTHQUAKE
-CNBC's Tokyo bureau chief
PRESIDENT OBAMA'S FAILED GREEN AGENDA
-Steve Moore, Wall Street Journal editorial board
-Robert Reich, former Clinton Labor Secretary
FREE MARKET FRIDAY
-Andrew Ross Sorkin, New York Times
-Deroy Murdock, syndicated columnist
-Evan Newmark, Wall Street Journal
Please join us at 7pm ET on CNBC.
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