A: I would have asked him why he thinks government ownership of banks or car companies or Fannie Mae or Freddie Mac is better than bankruptcy courts. I would have asked him why he believes that the White House can pilot these stressed areas better than the market. I regard bankruptcy courts as part of the market process to restructure failed enterprises. That's what I would have asked him.

I would also have asked him - and this may have come up - whether there is an end game to this or whether it is unlimited. He claims there is an end game, but he has given us no evidence of that. The next step is going to be gigantic intervention into health care, gigantic intervention into energy, gigantic intervention - possibly - into unionization, because I think they are going to make a run at the so-called "card-check" bill, which stops the secret ballot for unionization. I think that is a huge negative for productivity and growth.

Q: You were very critical of President Obama's handling of the Chrysler bankruptcy deal - you called it "left-wing demagoguery."

A: Yeah. His attack on investors and bondholders is shameful, absolutely shameful. He says he wants people to save more, and yet he doesn't want them to save through investment. I know many of these bondholders personally. I talk to them. These guys represent teachers and firemen and police and widows - the whole nine yards. Their job is to invest their clients' money. Why is that bad?

Q: On your show, you are an unabashed cheerleader for capitalism, but there seem to be so few people like you in the media, in business -- even on CNBC, which isn't crawling with leftists. But they are not too many Larry Kudlows, either.

A: Yeah, we cover the gamut. But I continue to argue that economic freedom is vital, and that free market capitalism -- with all of its faults and the possibilities that we do have recessions from time to time -- is nonetheless the most efficient growth engine out there. I think that Obama is moving us away from free markets and towards government controls. That's the bottom line, and I don't like it one bit. And I think there's a limit to the stock market rally. That's the key. I usually argue for a long-run view, but right now I think investors have to be more activist in managing their portfolios because I don't think you can just invest for the long run. You have to be rather cautious.

Q: Republicans seem pretty stupefied. They have no leader. They seem afraid to stick up for the market in a lot of ways. Do you see any "mustard seeds" in the future of the GOP?

A: I think the party is really dead. I am sure that there are "mustard seeds," in the sense that you can look at individuals who have some good ideas about trying to roll back Obama's regulations - in the Senate people like DeMint, Coburn, Kyl. Over on the House side, you've got some terrific young people - Paul Ryan or Jeff Hensarling. But they are just individual House members and senators. You don't have any national figures -- perhaps Mitt Romney. Ok, he's a classy guy and perhaps Mitt is destined for greater things. But at the moment, I wouldn't say he is a force.

I actually take the view that the most important Republican spokesman right now is Dick Cheney. An odd view, perhaps, but I think that what Cheney did on the CIA interrogation issue was very interesting, when he pushed back and said, "A), releasing these memos is a terrible idea; and B), if you are going to go there, let's release the good information that helped keep us safe." He really rattled the Obama White House by doing that because of his own force and his intellect. I think that on economic policy we are going to see Dick push back also.

Q: And Cheney would get the attention from the media?

A: Exactly. Exactly. So therefore I am quite interested in what he is intending to do.

Q: Is there anything that can happen that would turn you into a pessimist - a doom-and-gloomer -- when it comes to the fate of free market capitalism?

A: Well, if you let market forces go, you're going to be fine. If you let them play out, if you leave them alone, you're going to be fine. But the more we attempt to regulate the market and stifle these incentives, the worse we're going to do. The country will survive. We'll see in the elections in 2010, I think, a lot of opposition to Obama's policies.

Obama's approval ratings are good but they are not great. They are about in line with many prior presidents. He's more popular than his policies are. I think if Republicans mount a good campaign next year they'll hopefully pick up a number of seats and slow this thing down. But right now we are moving in the wrong direction. It's that simple. We will get a cyclical economic rebound but I don't think it is going to be anything to write home about.