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CNBC's Larry Kudlow on the economy

Nov 19, 2012|

CNBC's Larry Kudlow on the economy

Transcript - will not be 100% accurate

We're joined now by Larry Kudlow -- he hosts the Kudlow report is the best business television show on the air CNBC. We night's Monday through Friday 7 o'clock. Larry welcome to the show are you today. Thank you very thank you as always. Larry wanna talk about what's going on in the Middle East. I it it seems to be getting worse day the problems in the Middle East where where what is the situation as we speak. Well it is getting worse. Which reports today that -- is going to be bombing in Jerusalem -- -- worried about Jerusalem. We reported on this story last night. You know it is my great hope. That the Israeli defense forces. Used this opportunity. -- just -- -- smash Hamas. To go in there they'd send in their ground troops because they've amassed their ground troops are there it's sounds like they're preparing. For a full scale. Military effort to go in therein and do clean up. They're calling up reservists. Some 30000 or so I agree with you. I think they've got to just knock somebody out knock their officers out this war is is they award not a skirmish it's a full fledged war. Now the other issues here is whether it is banks Brad. As Egypt is involved in this are they not. Yes that are very. Well I don't know I mean Obama's talking to varsity. By Egypt and our favorite a pot yeah. And there's -- -- prime minister DO Hamas. So that very unsatisfactory. Considering that Egypt is supposed to be an American -- what is. President doing I mean I I I've been I haven't. Heard him take a strong position. In support of Israel. How well he issued to a spokesman. Something can -- expected Israel has a right to defend itself because rockets have been launched that's always set out we know that. He called Netanyahu so. We also know they called RC we don't know what. The conversations were indeed -- obviously. But he seems to be. Taking a rather even handed approach and you know look how much about a terrorist thugs you know financed and armed by Iran. Our great enemy. And which should be very clear. That. -- about aspiring totality of it probably. Probably Jerusalem which should be very clear. -- Ronald Reagan had great. What did Ronald Reagan do in this very same situation what would he do today if he were in the White House because that I think you have to put a perspective you know look back in time this isn't the first time we've had a problem in the Middle East. Well it out but job. The issue of Hamas. In Gaza it was not that the big deal during the Reagan years. Yeah because they were afraid -- They do they knew damn well not to get in his way. Well of course you know you do you did have. He did have that peace accord that would negotiated between Egypt and Israel. It's kind of a different at a different time and place and look I think that the you know Reagan was very pro Israel George -- as secretary of state is very pro Israel George W. Bush was very pro Israel. So I would expect an American president. To really have a very strong pro Israel position. Now where that -- Egypt. And he he's got to deal with Egypt here. But at some point. Bob has got to call the dogs -- an agent you guys they were up you can't back Abbas. Abbas is the troublemaker. We're given them all our money that we're supporting financially supporting Egypt and they're growing our money. We support growth in Asia that Israel does -- part of the accords years ago wanted to have billion. -- dollars -- such. So we're giving money to Baltimore try to keep the peace accord but that's the point. If -- Egypt is gonna be a party to these peace accords. As they had been through these many years. They can't be having their client state that that's what you call about not exactly Egyptian quiet statement he can't be tilting towards Hamas. That's crazy. But the end of the day. What matters here is what Israel does that is really crucial. And not only in terms of knock it out Abbas and the military and weaponry tape that capability. But also setting and I'm very strong statement to be -- remember ran as the banker. And the defense applied they're about as it is to Hezbollah which has claimed to be may be coming down from the north. Syria to Lebanon that's also perhaps a growing problems so. Point I'm making as. Israel must take this opportunity. To do what they -- to destroy Hamas and the that would be the best way at defusing the situation. How would Israel respond if Obama says to Netanyahu look. We want you to negotiate this -- don't take military action will. I think there's chants help that Israel would agree that not a chance that this is not even realistic at a Obama tries to pull that -- He is gonna take just tremendous criticism. In the United States -- but also -- This even handedness I mean that's -- it even handedness between Egypt and Israel's one -- Even handedness between Hamas and Egypt and Israel's great. It's crazy there's no moral equivalence here these guys are terrorist thugs demands by Iraq is real simple. And we have to -- or Israel IDF has just that destroy it. Yeah it -- so. What's the impact on the markets were watching the markets now they they opened up they went down as much as sixty points looks like the Dow's down about nine now. I've got to believe if this thing escalates over the weekend could be very bad for the markets over. The first week it could so far. Oil hasn't done much with best not really yet that oil story. I think the bigger influence on the market Sperry is going to be two -- in the white house with the president the congressional leaders regarding the fiscal -- -- what will be lucky you know when they come out. Will will be looking to see what their commentary is whether it's friendly or whether it's hostile I don't get is. Even know about they would do it all back -- sport that wild guesses. You're gonna see. John Boehner. Keep an open door. Not slamming shut Andy and he wants to work with -- Obama. And I think Obama also keep an open door the big problem was what we learned. You know yesterday the day before that the president actually watched one point six trillion. In new taxes. Over the next ten years. That number -- double. What he had Boehner tried to negotiate. Back in August 20 elaborate a little more than a year ago that it staggeringly large number and it suggests this is important. Not only will there be as firm perhaps. I'm deductions and exemptions and so called loopholes but that there will be higher attach rate as well and down. Rid of those tax rates start is an income threshold because I'm getting a lot of questions about that is three. 200 angle to the married like. I'd seen on your show that there there's rumors that the numbers could be as high as a million so who will it be heard anything more solid on that. Now there has doubled -- speculation. That the so called deal. Could have these higher rates again at 500000. Rebellion but I don't believe that -- All the Republicans I talked to. Simply do not want to raise tax rate at all they believe. That the concessions they're making is the tax revenue concession. Regarding the itemized deductions that putting a cap -- which by the way we've raised over ten years. It is part of muddied by some estimates one point three trillion dollar that would really cover it. Now I'm not crazy about that either though I take those deductions I I I have a mortgage. Well it's a huge transfer. A body. From the private sector to the government might -- it that's what it is and tax reform. Was supposed to be lower marginal tax rates in return for loopholes. But this is just knock it out there at all without the lower marginal tax rate at worst. The president and many of the democratic backers typically on the left. You know they want to -- they want higher marginal tax rates and a lot of capped that deduction. So this -- has to be obviously. Adjudicated true but I think my hope -- today. You get kind of positive. Good to -- like the negotiations will continue I don't think there's going to be any rants and rages at least I hope. All right well with that we wish you a happy Thanksgiving -- and you thanks there. Larry Kudlow CNBC Washington tonight 7 o'clock on CNBC will be right back to unite -- Armstrong.