CNBC's Larry Kudlow on the Economy and the Elections

Welcome back to the financial exchange -- night very Armstrong in our good friend Larry Kudlow from CNBC joins us today Larry -- things. Good thanks good morning good. Good morning. Taylor wanted to talk to you about this Gallup poll I believe the results came out yesterday and he showed that independent voters the poll of independent voters. I believe the margin was 68 to 52. 60% of these voters suggested that George Bush was responsible for this economic. I admire that we existent today as opposed to only I think maybe 52% blaming President Obama with what that. Well look I think bush distilled standard -- -- -- -- The meltdown happened on his watch whether he stressed how important is another question. But the meltdown did happen on his watch and I you know I think that's fair and I think it. You know people are reflecting that in the -- that it Obama inherited. A very difficult situation on the other hand -- Obama at 52 that's not nothing. So obviously he is taking some of the blame at. What pre -- years and his administration. The only thing in this -- we act as a -- clear. Solutions so -- committed apple makes cents I think it's also interesting that I -- a gallop yesterday. By about ten point people's favor Romney. As the economic -- -- rule over Obama and I think that. As probably more telling people. Then he had -- to put people. Is that based on his background as a businessman and you know being in that involved in venture capital and and you know in in the his extensive involvement in the private sector. -- record company's -- company that I think he's done very well. Would step backwards and I think that's going to be a clear message I mean look out let me -- He got to decline of industrial production today. And manufacturing. And it is bad to the last three months and I just wrote a piece. Asking whether we're not already in a global recession. Obama wrong but the US itself. Stamp on the front end of the recession made two straight months of declining retail sales. Two straight month of declining factory orders. Three straight month of declining job creation. Slowing job creation. You sounded pretty bearish last night Larry. You use it -- more person I've ever hurt you in you said basically acting -- I don't put words in your mouth but I figure tell people. Stay in cash dull dull -- buy stocks until after the Greek elections. Well that is also true now I'm you know all these central banks. Our point out the stops. To make sure there's no financial meltdown if -- election goes the wrong way and you know you might get rumors that -- is gonna drop out of via. Of the Euro currency the Euro zone I don't know how that's -- turnout but I would keep my powder dry but I wanna make this generic point. That all of these central banks. -- back to England or the ECB -- Bank of Japan and I think you'll hear from the Fed pretty soon. They are using grease and properly as an excuse. To flood the market with liquidity. And -- I'm kind of our credit freeze or you know financial meltdown OK and I and I think that is correct. But I also want -- today there's the second of motive here and that is these economic numbers are showing were caught in the wrong direction. And regarding the Federal Reserve. I think they're gonna announce something that -- immediately. -- can't -- look at they do and millions sat on the that in and you've got a history but I try and I'm scratching my head and they won't win big in -- more treasuries. Yeah and I don't I think it's almost a -- top exercise one point six trillion. Excess reserves already in the banking system and long term rates are rock bottom so you're right about that. But I haven't spent. They're gonna do -- that is based on that looks easier whether it's a continuation of Operation Twist. Maybe they're just gonna focus on buying mortgages. That right here that would be good right they bought mortgage backed securities -- get. You could reduce borrowing rates even further I would think. Yet they're actually it did not create jobs and income. Who's gonna go out there -- a lot of new home. Well what about oil prices coming down isn't that haven't missed and yeah. Looks good the man did it look good for the brought up -- with the drop in oil -- did did drop in world. Demand world economic growth that in May be part and parcel of this story. And so what I'm saying is that I think the central banks are gonna use Greece as an excuse to eat. But the real reason is that the economy look lousy. And may be on the verge of a global recession you may be on the front end of a recession here in the US states. If we're growing it to prevent what that. -- Had to put that as a growth recession into predominantly if you have an inventory sell off he could go to negative or. It's Europe accept. He's here and there. That -- expected that the complicated story but it and it allows -- world economic growth so here in the United States as well make this point that -- Our problems in my opinion and not monetary obstacles that fiscal obstacle. Okay there's obamacare. Which we may get a decision not in the Supreme Court that's that. An obstacle hiring and second of all this whole perhaps -- business. If actual rates go up to substantially. And my dad has pulled out of the economy as a result of that. That's gotta throw us into recession so I just worry about the story right now I think people should keep their powder dry. David stocks are up a little bit today you all about easy easier money and I -- I understand that but boy what I'd be cautious I would be so careful right now. Our votes to go back to talk about -- you seem to be a pretty big fan of his at this point how does he how how is he any different than George Bush and I bring this up because a stock in my dad. In my dad's a lifelong conservative guy and he says Perry. -- surrounding himself by the same people that bush did. I'm not gonna vote for the guy I think he's just as big a -- as George Bush the the first did not the first George Bush he like first George Bush but he had. Very little respect for George Bush part two. And you know how how does Romney differentiate himself from bush. Well done. I think bit. That's -- I'm not so against George W. Bush I think he did one good thing that I did he did I bet they but put that. But he's got -- clearly he still has a bad reputation with the American public so how does Romney he can't he can't be tied to bush. Well and I think Romney's -- I don't think he's bush and I think what you gonna -- -- Mitt Romney is a guy. Really wanted to save America from bankruptcy. And I think you're gonna see a guy. Who really -- taken night. The federal budget equate to George Bush never do it never wanted to OK I think you're gonna be Romney cut -- pledging to cut. 500. Billion dollars. Out of the budget and first term. Bring down spending GDP ratio. He does a lot of reform the tax code but I think that spending cuts are gonna take precedent. I mean I think -- the 20% as. Got to do that very early right he's got to do our first year not in office. And it got to make the numbers work Romney as the quintessential numbers guy who will make the numbers work probably in ways that W unfortunately did not think the numbers work. I think Romney is gonna take a real scalpel to the federal government itself. I think he you know go back into background. If -- take very companies that try to turn it around what does that mean. It means expenses get cut big and I particularly want to -- cut federal government expenses. -- he's got to go after Medicare and Social Security as well. But I think that's gonna wind up in part two I think he's gonna go with the scalpel you'll probably see. Got a very quick study in commissions. What agency is what programs what agencies what departments. Are on necessary and he's got to go after the in ways that we haven't seen it's it's kind of like that Peter grace commission during the Reagan years. Yeah but that's not the big money are you know he has to attack in Medicare's -- not that's. Money and I don't I don't agree to cut 500 billion dollars out of a federal budget member that's. Not just a one time that goes through forever that's a huge amount of money that's a huge amount of and money over a period of time and that was circulated. A couple of trillion dollars. Depending on air -- over ten years that's a very I think that's his number one priority. Is gonna cut federal spent I really think that's where he's coming from and number two -- who wrote the very least. An actual rates from going out all right that's also very important we needed on that -- to grow if you can get catch up. Reduction and reform which he will go forward that would be even better now I think. Corporate tax -- are more important than personal tax cut to -- -- he's talked about. Right he's actually it -- his corporate tax cut. And I've seen a lot of studies that show that the single most powerful growth weapon is the lower the corporate tax rate. And you know get it down to 25%. In line with the rest of the world that we are competitive so if you if you if you scratch meet people that I would say. Spending cut. As a corporate tax cuts are going to be business priorities. And there's yes he's gonna go out to the economy. Or forms but I think that's a big is that iPod and I think that's pretty darn good. That's a good one Larry we love you thanks for joining us thank you and Larry Kudlow from CBC and you'll learn so much from him when he joins us every week he says a great guest joining us here. On the financial exchange will be.