Friday, September 29, 2006

Rising Stocks, Falling Gas Prices & Goldilocks

There’s a great editorial in today’s Chicago Tribune entitled Goldilocks and the Dow.”

They correctly point out that the Dow Jones stock average, which is right on the edge of setting an all-time high, is reflecting solid growth with mild inflation. There’s no bubble.

The money quote is, “We are enjoying a goldilocks economy, not too hot and not too cold.”

Recent economic reports confirm this. The Chicago and Richmond Fed indexes of factory production came in strong, much better than the much smaller Philly Fed report.

Core inflation settled down to only 2.3 percent at an annual rate over the past three months. Excluding energy, the consumer price deflator hasn’t really moved in three years, hovering just above 2 percent.

In the third quarter, real consumer spending is running 3.2 percent at an annual rate ahead of the second quarter average. In addition, non-defense capital goods shipments excluding aircraft are 7.6 percent ahead of the second quarter.

Meanwhile, after-tax real disposable income is 5.4 percent ahead of last year. State budgets across the country are reporting record revenue collections. And over the September 15th tax date, the U.S. Treasury reported its highest revenue collection in the nation’s history.

Politically speaking, this powerful combination of rising stocks, falling gasoline prices and the Goldilocks economy are powerful plusses for election year Republicans. The Dems aren’t even talking about the economy any more.

Today’s results from the online betting parlor TradeSports show an 80 percent probability of a GOP hold in the Senate, and a 52 percent chance for a Republican hold in the House. The TradeSports House GOP contract has actually moved dramatically higher over the last couple weeks, as online bettors see better days ahead for the House Republicans.

The bottom line is that Goldilocks and a reenergized President Bush offensive on national security have turned the November election race around.

Now, the big question is, can the GOP close the sale?

Kudlow’s Congressional Report Card

There’s a lot of media buzz today about a do-nothing Republican Congress that didn’t get a whole bunch of legislation through the shortened session. But there are actually three items that are all pro-growth that matter much more than all the rest of it.

First: The investor tax cuts on dividends and capital gains were extended to 2010. This underpins the Goldilocks economy with the strongest capital formation incentives since Calvin Coolidge.

Second: Treasury Secretary Hank Paulson apparently talked Senators, “Smoot” Schumer and “Hawley” Graham out of a vote on their China bashing 27.5 percent tariff. This could’ve been the worst anti-growth legislation since the Smoot-Hawley tariff passed in 1930, and signed into law by Root Canal Republican Herbert Hoover (who was also dumb enough to sign a tax hike that raised the top rate on personal income to 65 percent from 25 percent.)

Third: There was no immigration legislation passed. So, for the moment, the new Berlin Wall will not be built.

A balanced approach to immigration suits me just fine. But a fence only approach not only won’t work, it would be bad for the economy. (Now I’ve said it.) Remember, over the past twenty years of the high tide of Mexican immigration, the American economy has prospered and flourished.

I like these Mexicans. They go to Catholic Church; They work hard; They’re learning English and they will eventually create a new blue-collar middle class.

Yes, I do worship at the high church of GDP. But I also worship at the high church of Catholic Mass. And therefore I’m able to combine supply-side economics with the teachings of Catholic humanitarianism.

My biggest disappointment with this session of Congress was the marked absence of a strong budget earmark reform bill that would end the cash for legislative favors corruption.

But all things considered, I basically like this session of Congress

In the end, low taxes, free trade, and the free movement of labor and capital will all bolster our Goldilocks economy. And as I’ve said all along, this economy remains the greatest story never told.

Tonight's Lineup

CNBC's Kudlow & Company will broadcast live at 8pm EST this evening.

We'll begin with a look at the latest from Washington with Rep. Charlie Rangel (D-NY); Richard Miniter, bestselling author of Losing Bin Laden: How Bill Clinton's Failures Unleashed Global Terror; Jim Warren from The Chicago Tribune; and Jack Burkman, GOP political consultant.

Sen. Rick Santorum (R-PA) will discuss his heated election contest.

A look at the Goldilocks economy and the latest stock market action with Craig Columbus of Advanced Equities Asset Management and Harry Clark, CEO of Clark Capital Management Group.

Also, a look at New York City's proposed ban on trans-fat. Our guests include Sanford Levine, owner of Carnegie Deli and Stephen Joseph, CEO CEO

Getting Facts Right

President Bush is putting the heat on the Democrats.

He delivered another powerful speech today highlighting the weakness of Democrats on national security. Bush is continuing this security offensive and is doing a heckuva good job.

Bush blasted away today saying:

"Five years after 9/11, the worst attack on the American homeland in our history, Democrats offer nothing but criticism and obstruction and endless second-guessing. The party of FDR and the party of Harry Truman has become the party of cut and run."

The President’s point was right on the money.

The spokeswoman from the Democratic National Committee responded, “[Bush’s] failed policies have made America less safe and spawned terrorism, not decreased it. Democrats will be tough and smart, and will actually fight the terrorists, not leave them to plan future attacks."


In addition, Sen. Hillary Clinton recently said, “I’m certain that if my husband and his national security team had been shown a classified report entitled ‘ Bin Laden determined to attack inside the United States’ he would’ve taken it more seriously than history suggests it was taken by our current president and his national security team.”

Dems have to be held accountable for these kinds of statements.

What Mrs. Clinton neglected to tell us is that in the December 4th 1998 Presidential Daily Brief received by President Clinton, the subject was “Bin Laden preparing to hijack U.S. aircraft and other attacks.”

It went on to say some members of the Bin Laden network had received hijack training according to various sources and that the Bin Laden organization and its allies were moving closer to implementing anti-U.S. attacks at unspecified locations.

This material comes from the 9/11 Commission which Mr. Clinton himself cited during his interview with Chris Wallace.

Additionally, terrorist expert Richard Clarke, who Mr. Clinton also cited in the Chris Wallace interview, made it clear in an August 2002 press conference that the Bush administration was stepping up the anti-terror, anti Bin Laden effort quite a bit during their first eight months, contrary to what President Clinton told Chris Wallace.

There are two key points to Clarke’s briefing:

First, Clarke said that President Bush shifted the war effort from a rollback strategy to an elimination strategy. Second, the Bush Administration increased the anti al Qaeda budget by fivefold. Hence the Bushies were much tougher on al Qaeda.

Now I’m not saying that Bush didn’t make mistakes, just as Clinton made mistakes. What’s more, I grow weary of all this finger pointing over past actions because the key point is to win the war as a future strategy.

But in terms of charges and countercharges, the facts clearly show that Bill Clinton was apprised of a direct Bin Laden attack threat. History also shows that Bush did step up the anti-al Qaeda pace during his earliest months pre-9/11.

It’s a pleasure to use the same sources like Richard Clarke and the 9/11 Commission that Mr. Clinton used in his angered tirade on Fox News.

Thursday, September 28, 2006

Tonight's Lineup

CNBC's Kudlow & Company will broadcast live at 8pm EST this evening.

Tonight's Topics:

POLITICAL ROUNDUP: Will the Dems take the Senate? Also, a look at the key political races and the fallout from President Clinton's tirade against Chris Wallace, Fox News and conservatives.

Our political guests include Lawrence O'Donnell, MSNBC Senior Political Analyst; Terry Jeffrey, editor of Human Events and Larry Sabato, Professor of Politics at the University of Virginia.

RUMSFELD/WAR IN IRAQ DEBATE: On board are Jed Babbin, author/former deputy undersecretary of defense and retired Major Gen. John Batiste.

HP & CORPORATE SPYING: Senior MarketWatch columnist Herb Greenberg and retired New York Police detective/author/security analyst Bo Dietl will look inside the story.

MARKETS: Don Luskin, Chief Investment Officer for Trend Macrolytics and Herb Greenberg will offer their perspective.

NYC TRANS-FAT BAN PROPOSAL: James Copeland from The Manhattan Institute; Sanford Levine from Carnegie Deli and Meir Stampfer of the Harvard School of Public Health will debate.

China Tariff Takes a Hit

Today around 2pm, news broke that Sens. “Smoot” Schumer (D-NY) and “Hawley” Graham (R-SC) gave up for now on their China bashing tariff of 27.5 percent. This is a very good thing indeed.

Placing a huge tariff barrier between American and Chinese trade would have the same effect as imposing a large tax on the consumers, businesses and investors of both countries. It would completely disrupt economic growth worldwide.

Treasury Secretary Henry Paulson deserves credit for getting this delay and preventing a vote in the Senate that surely would have passed with very bad economic symbolism.

Fortunately, there is no similar tariff bill in the House. Chuck Schumer and Lindsey Graham apparently will now work through the Senate Finance Committee where Chairman Chuck Grassley (R-IA) is generally opposed.

China is far from our best friend in world affairs, but the widening economic links between our two countries is a definite plus for prosperity as well as diplomacy.

$45 Oil?

(The following is an excerpt from CNBC's Kudlow & Company last night with oil analyst Michael Lynch, President of Strategic Energy & Economic Research. Some interesting ideas here...)

KUDLOW: We were talking earlier about how markets work. When prices skyrocket as they have, it affects supply, it affects demand and eventually goes back and affects prices. Is your analysis based on the workings of the marketplace?

Mr. MICHAEL LYNCH: Yes, almost exclusively. You know, the fundamentals have really shifted. They've become a lot more bearish over the past year. The geopolitical situation is improving so you've got to expect prices to come down.

KUDLOW: We might play ball with Iran at least in so far as some greater diplomacy efforts and maybe a little bit less saber-rattling. Look, I'm a hawk on Mahmoud Ahmadinejad. I don't like the guy. I don't like the nuclear weapons program. But it looks like at the margins, there's a little bit more opportunity for discussion and maybe a little less threat of war. Is that what you're thinking about?

Mr. LYNCH: Yes, it's been nine months or so of concern about this, and nothing's happened to the oil supply. I think traders realize that it's going to be--in the worst case, it's going to be months before anything really happens.

KUDLOW: Did the oil inventory as it came out today have any impact? Now crude oil inventories are just about as high as they were back, seven, eight years ago in 1998. Gasoline inventories are not quite as strong but still strong. Does the inventory data affect--influence your price forecast?

Mr. LYNCH: Yes, it does. Especially--not just the US inventory but the OECD inventory data, which is showing that inventories are approaching the record levels we saw back 10 years ago in 1998 when the price collapsed to $12.

KUDLOW: Is it possible that ethanol-related gasoline, which was a big problem, we couldn't deliver the stuff when the mandate went into place last winter and spring--is that getting to the gas stations better? Is the transportation better? Is that one of the factors helping the gas price story?

Mr. LYNCH: That's definitely one of the factors. It's also--we've ended the summer driving season, and so refiners no longer have to have the ultra-clean gasoline, which requires more ethanol, so that's also helped the market. But you know, ethanol supplies--it's a lot easier to build an ethanol plant than it is to build a refinery, so that's catching up.

KUDLOW: Now if I were a nattering nabob of oil pessimism, which I am not, but I'm going to play devil's advocate, if I were, I would say to you that led by Saudi Arabia, OPEC is going to screw all of us by somehow cutting back production and getting the price back to $70. How do you respond to that?

Mr. LYNCH: Well, in theory, they've got a lot of influence and power, not complete control, but I don't think the Saudis want $70. I think they're worried that their market is going to collapse just like it did back in the early '80s, and you're seeing some signs of that. There are a lot of people who think that over the next few years, OPEC production is going to have to decline just to balance the market.

KUDLOW: And, Michael, you're down there, as I recall, at $45. That's your estimate. Let me just ask you how you get there, and I'm going to bring my panelists back in to comment and either agree or disagree. Why not $30 or why not $55 or $60? How do you get to $45?

Mr. LYNCH: Well, I think the main reason is that although the fundamentals are weak, we still have a bit of geopolitical concern. Something might happen in Nigeria or Iran, and that keeps the traders worried and gives you some bullish pressure. But also, you know, OPEC will cut back as the price goes down, depending on how quickly it drops and where it is, and I think by the time you get to $50, the Saudis especially are going to be cutting back.

Wednesday, September 27, 2006

Mozart and Mohammed

A Berlin opera house just canceled a production of Mozart’s "Idomeneo" over concerns that the opera could enrage Muslims and lead to violence.

At issue were scenes with King Idomeneo on stage next to the severed heads of Buddha, Jesus, Poseidon and Mohammed.

There were no security concerns from angry Buddhists or Christians—just Muslims.

To her credit, German Chancellor Angela Merkel criticized the decision saying, "I think the cancellation was a mistake. I think self-censorship does not help us against people who want to practice violence in the name of Islam. It makes no sense to retreat."

Anyone see the irony in all of this? Daniel Pearl? Nick Berg?

Where is the Muslim outrage over real beheadings?

Tonight's Lineup

CNBC's Kudlow & Company will broadcast live at 5pm EST this evening.

On tonight's show:

We'll dive into the markets and economy. Our guests include:

**Diane Swonk, chief economist for Mesirow Financial
**Brian Wesbury, chief economist at First Trust Advisors
**Stefan Abrams, CIO at Trust Company of the West
**Barry Ritholtz, President of Ritholtz Capital Partners

Oil analyst Michael Lynch, President of Strategic Energy & Economic Research, will discuss oil prices which he believes are headed lower.

An immigration discussion with Rep. Tom Tancredo (R-CO)

A healthcare & prescription drugs debate between Robert Reich, former Clinton Labor Secretary/UC Berkley professor and The Wall Street Journal's Steve Moore.

On Last Night's Show

James Carville and Paul Begala had their talking points to defend Clinton's unseemly, unpresidential and politically damaging anger outburst, and the attack on Fox news.

They refused to address Clinton's false testimony on getting Osama and a real anti-terrorist attack plan. See Richard Miniter's op/ed in today's WSJ. See also Robert "Buzz" Patterson in Human Events and Dick Clarke's comments to the 9/11 commission.

(Here are a couple noteworthy comments I've received following last night's segment.)

Mr. Kudlow,

I appreciate your "open" show, with its viewpoints from all sides, but...well, let me just say that I had never muted your show until today.

Carville and Begala are simply too dishonest. Neither have a trace of ethics; both are utterly without shame. They specialize in the grain of truth, built into mountains of misrepresentation.

Very telling that Mr. Clinton would need these two, after his recent performance.

-Buddy Larsen

god, carville is a total lunatic and fake southerner

i suppose you could argue begala is worse because he tries to conceal his insanity with mediocrity

kudlow should have invited another clinton adviser: dick morris


Karzai's Comments

Noteworthy comments from President Hamid Karzai during yesterday’s news conference:

Terrorism was hurting us way before Iraq or September 11th. The President mentioned some examples of it. These extremist forces were killing people in Afghanistan and around for years, closing schools, burning mosques, killing children, uprooting vineyards, with vine trees, grapes hanging on them, forcing populations to poverty and misery.

They came to America on September 11th, but they were attacking you before September 11th in other parts of the world. We are a witness in Afghanistan to what they are and how they can hurt. You are a witness in New York. Do you forget people jumping off the 80th floor or 70th floor when the planes hit them? Can you imagine what it will be for a man or a woman to jump off that high? Who did that? And where are they now? And how do we fight them, how do we get rid of them, other than going after them? Should we wait for them to come and kill us again? That's why we need more action around the world, in Afghanistan and elsewhere, to get them defeated -- extremism, their allies, terrorists and the like.

Tuesday, September 26, 2006

Bill Hammers a Nail in Hillary's Coffin

This may have been said before, and if so, I apologize in advance to whoever said it, but Bill Clinton’s blowup on Fox News this weekend represents yet another large nail in Hillary Clinton’s presidential coffin.

I know, I know, clever political commentators think Bill Clinton was giving the Democratic left their anti-terror talking points to counter President Bush’s successful national security offensive. Well, I don’t buy this for a second. But it is at least an arguable point.

My key thought here is that the general public, watching yet another Clinton temper tantrum, will not want him back in the White House, even if he’s there only a third of the time. Clinton’s time has come and gone. And, because Hillary is still married to him, she will pay the political price.

At the end of the day, the former president’s ill-advised public spectacle was a huge mistake for Hillary supporters.

Meanwhile, if I may jump shift, the stock market indexes keep marching higher while gasoline prices remain low. This message of the markets is very important to the November elections—much more important that Mr. Clinton’s rant.

Consumers are feeling more confident and the outlook is for continued economic growth with low inflation. Interest rates are coming down, rather than going up. Worried homeowners are actually refinancing mortgages. A happy investor class could save Congress for the GOP.

Tonight's Lineup

CNBC's Kudlow & Company will broadcast live at 5pm EST this evening.

On tonight's show:

An economic/markets debate between the following guests:

**Nouriel Roubini, Economics professor at NYU's Stern School of Business
**John Rutledge, chairman and CEO of Rutledge Capital
**John Mauldin, president of Millennium Wave Advisors, LLC
**J.J. Burns, president of JJ Burns & Company

Kudlow's Stock Club with Robert Smith, portfolio manager of T. Rowe Price's $12 billion dollar Growth Stock Fund.

War of Words - a look at Bill Clinton's tirade this weekend and the fallout. Guests include John Harwood, CNBC's Chief Washington Correspondent and Senior Contributing Writer for The Wall Street Journal.

Also, a debate with former Clinton advisors James Carville and Paul Begala.

A Fair Question

Could someone just provide a list of things that don't provoke Muslim rage?

-From "The Week" in the latest issue of National Review.

"Clinton Doth Protest Too Much"

This Los Angeles Times op/ed hit the bull's eye:

THERE'S NO LIMIT to what a man can do," President Reagan used to say, " … if he doesn't care who gets the credit."

Former President Clinton's motto seems to be a little different: "There's no limit to how much credit a man can get, if he doesn't care what he's actually done."

Reagan came to office after the Jimmy Carter catastrophe. He pulled the American economy out of a graveyard spin, restored the country's military and its confidence and helped bring one of the most oppressive empires on Earth to the brink of collapse. But in those days, my children, there was no Internet, no Fox News, no Rush Limbaugh — the media was almost all Colmes and precious little Hannity — and if you got your news from the New York Times, say, or CBS, you would've thought the country was being run by a miserly, warmongering idiot instead of the greatest president of the century's second half.

And yet even after his two terms were over, when left-wing news sources sourly continued to portray his administration solely in terms of its faults, as nothing but a big deficit and the Iran-Contra scandal, I cannot remember Reagan ever "defending his legacy" with anything more than a quip and a smile.

Compare and contrast Clinton. Questioned mildly on his anti-terrorism record by Fox's Chris Wallace on Sunday, President Me went absolutely medieval on the newsman, leaning forward threateningly, rapping his fingers against Wallace's notes and proceeding to, well, lie — and in a very angry voice too!

"And you got that little smirk on your face and you think you're so clever," Clinton told Wallace, sounding for all the world like a 6-year-old girl scolding her playground rival. He then proceeded to try to rewrite his coulda-woulda-shoulda presidency by claiming to have had a much more focused and hard-lined approach to terrorism than any reading of his administration can support. Even Clinton counter-terrorism chief Richard Clarke's book — which Clinton cited repeatedly during his tantrum — shows the president as too weak to order Osama bin Laden's death. Other accounts are much less favorable.

But let the political observers fight that one out. My beat is human psychology and the nature of reality and fiction. It's in those realms that at least one key difference between Reagan and Clinton can be found — a difference that sits at the heart of our current divisions.

Reagan was a man who believed in truth. Not your truth or my truth but "the truth," the one that is out there whether you happen to believe in it or not.

"I never thought of myself as a great man," he said, "just a man committed to great ideas." Those ideas — our founders' ideas — were great because they recognized a central truth: the good of individual liberty. And they guaranteed human beings those rights endowed in them by the "big truth" — their creator.

Clinton, on the other hand, is a narcissist who finds it difficult to grasp in any real sense that there is a place where his "inner man" ends and the rest of the world begins. Clinton's stock phrase, "I feel your pain," is really the insistence of a man who does not truly feel anyone else's pain, does not truly understand that there are other inner realities as urgent as his own.

Take Clinton's misuse of women. One way to understand it is as a symptom of his inability to come to terms with anything that would not conform to his own desire, imagination and grandiose sense of himself.

To put it in his own terms, Clinton has never understood what the meaning of "is" is, the fact that some things happened and others didn't, that some things are true and others simply are not. He believes that his legacy will be created in the spin cycle of history rather than in the fitful but persistent human search for history's truth.

Of course he panics and rages like a child when the spin goes the wrong way, when he is given his portion of the blame for encouraging Bin Laden through his military retreat from Somalia or for allowing the terrorist to escape by refusing to put a kill order on him.

He thinks reality itself is being wrestled away from him, that he can wrestle it back and mold it into the shape he wants it to have.

But he's wrong. That's just "is" being is. That's just "truth" bearing away the victory.

Monday, September 25, 2006

Tonight's Lineup

CNBC's Kudlow & Company will broadcast live at 5pm EST this evening.

On tonight's show:

A look at what's moving the stock market and economy.

Our expert lineup includes Jason Trennert, Managing Partner & Chief Investment Strategist at Strategas Research Partners; Jeff Kleintop, chief investment strategist of PNC Wealth Management; and Gary Shilling, President of A. Gary Shilling & Co., Inc.

A look into Sarbanes-Oxley reform with The Wall Street Journal's Kim Strassel, Jared Bernstein, senior economist at the Economic Policy Institute, and Kathryn Wylde, president and CEO of the Partnership for New York City.

House Armed Services Committee Chairman Duncan Hunter (R-CA) will offer perspective on the latest in Washington.

Frank Newport, Editor in Chief of The Gallup Poll will provide some clarity in our "Sunday Unspun" segment.

Uncertainty at Tribune--Leo Hindery, media investor/former chairman of The YES Network and Jim Warren, Chicago Tribune Deputy Managing Director, will discuss the media company's future after a three year stock slide.

The latest on the Hewlett-Packard saga with CNBC contributor/author Charlie Gasparino.

The GOP’s Bush-Led Turnaround

From my latest column at National Review Online:

President Bush continued his bold pre-November offensive last week, focusing our attention on the war, national security, the totalitarian regimes in the Mideast, and even taxes.

Talking about the potential for a Democratic shift in Congress, the president warned a Florida audience, “If they get control of the House of Representatives, they’ll raise your taxes. It’ll hurt our economy. And that’s why we’re not going to let them get control.”

The president also warned that Democrats would raise taxes in a futile attempt to balance the budget: “They will raise your taxes and figure out new ways to spend your money.” He then added the real money line, good supply-sider that he is: “The best way to balance the budget is to keep pro-growth policies in place.”

Bush is doing a great job this political season. His polls are rising everywhere, as are the numbers for congressional Republicans. The House GOP 2006 contract on is up to nearly 57 percent from 38 percent two weeks ago. That’s an amazing turnaround, and huge credit goes to Bush.

On all topics it seems the Bush message is resonating. In particular, it’s nice to see him claiming ground on the economic front. This is territory he fought for, and he shouldn’t give it up.

Last week on CNBC I asked prospective Democratic Ways and Means chair Charlie Rangel if he would roll back the Bush tax cuts on capital gains and dividends. Rangel deflected the question, speaking instead about raising the cap on the alternative minimum tax. Earlier, in a Bloomberg news interview, Rangel said he “cannot think of one” of Bush’s tax cuts that merit renewal — another crafty answer since the investor tax cuts aren’t up for renewal until 2010. Rangel, who emphasizes the need for bi-partisan tax, budget, and entitlement cooperation, knows the president will veto any tax-hike proposal while he is still in office. (By the way, bravo for Rangel’s trashing of Hugo Chavez and his patriotic defense of Bush.)

Indeed, the chance of any tax-cut rollback is pretty thin. But Bush is being politically savvy when he warns Americans about the Democrats’ fiscal wish list. On the economy, Bush knows he has argument, data, and momentum on his side.

Oil and gasoline prices have plunged over the past month, taking away a big Democratic issue. The broad stock averages have had a nice run since Labor Day and are closing in on five-year highs. This rally is a measure of the future economy and business profits, and it signals continued growth as far as the eye can see. And while investors are abandoning the energy sector, consumers are spending — making the retail stock index one of the hottest plays on Wall Street.

At the same time, inflation indicators such as gold, commodities, and energy have been pummeled. Long-term interest rates have dropped quickly from 5.25 percent to 4.6 percent, another sign of diminishing inflation fears. Consequently, the Federal Reserve hasn’t touched interest rates at its last two meetings, while many on Wall Street are now betting the next Fed move will be a rate cut, not a hike.

Meanwhile, the monetary base, which measures the Fed’s dollar-creating activities, has been flat-lined with literally zero growth over the past eight months. As Milton Friedman taught us, excess money is the cause of rising inflation. But the Fed is taking care of that problem, which is why forward-looking market indicators (i.e., gold, energy, and long-term bond rates) have all dropped significantly. In fact, if you combine the rising stock market with the falling inflation markets, the clear forecast is for non-inflationary growth.

This is just what the doctor ordered — and another chapter in the greatest story never told.

No, you won’t hear Democrats admit that government policies under Bush are working. In fact, the Democrats have stopped even talking about the economy. But most Americans seem to be coming around. A recent L.A. Times/Bloomberg poll reveals that 54 percent of Americans believe the economy is doing well. Almost one-in-three respondents say lower gasoline prices have enabled them to spend more on household items. And while half of those polled say they disapprove of Bush’s management of the economy, that number is down from 59 percent at the beginning of August.

The Democrats, without an economic message of their own, are losing their audience. Even their anti-Wal-Mart tirades are falling short, with a majority of Americans saying the retail giant is good for the economy.

Bush is involved in quite a political turnaround. His national-security offensive, buttressed by his strong stance on tax cuts, is working. If he keeps it up — and there’s every reason to think he will — the GOP Congress may be poised to snatch victory from the jaws of defeat.

Friday, September 22, 2006

Tonight's Lineup

CNBC's Kudlow & Company will air during the primetime slot at 8pm EST tonight.

Next week we will return to our regular time slot at 5pm EST.

On tonight's show:

A politics of the economy discussion with The Wall Street Journal's Steve Moore and Jared Bernstein, senior economist at the Economic Policy Institute.

Pat Buchanan will debate his new book on immigration.

Nationally syndicated conservative talk show host Michael Medved will offer his perspective on the pulse of America.

A look at spying in the war on terror with Bill Gertz, author of "Enemies: How America's Foes Steal Our Vital Secrets - and How We Let It Happen"

A look at the HP imbroglio with CNBC contributor/author Charlie Gasparino and Ira Winkler, author of "Spies Among Us".

And finally, Pax World Balanced Fund Co-manager Chris Brown will offer his stock selections in Kudlow's Stock Club.

Liberal Flapjacks

Dear Matt Drudge,

I implore you to please remove that utterly gross picture of Barbara Streisand’s breasts currently displayed on your front page.

The Drudge Report is my news bible. You, Matt, are my new media hero. But this picture is really gross. This is one flapjack too many, even for me. I’d rather be water-boarded or subjected to The Red Hot Chili Peppers than gaze at those things.

Not only are Bab’s flapjacks bad enough, but to know that they belong to a screaming Hollywood liberal, well that has just put me over the edge. Liberal flapjacks…I am just beside myself.

Please, Matt, please, it’s time for change.

All the best.

Your Fan,

Larry Kudlow

"Intellects Whose Desires Have Outstripped Their Understanding."

From National Review:

The mayor of Caracas, a close ally of Hugo Chavez, has ordered the “forced acquisition” of private golf courses in the Venezuelan capital. He explained that the move would make room for 11,500 new homes for poor families, and that “20 families survive for a week on what’s needed to maintain each square meter of grass on a golf course.” Such logic provides the link between the ideal of equality and the reality of tyranny. According to the mayor’s reasoning, it is the state’s responsibility to ensure that none may enjoy luxury while others suffer poverty. But consider the moral disaster that such a principal would create: The security and stability that flow from private ownership would evaporate. No one could safely produce, improve, or acquire any property for himself, since the resulting inequality would only create a new target for “forced acquisition” by the state. Productive incentives would be destroyed. It is for this reason that there is only one way for state-enforced egalitarianism to succeed: by making everyone equally poor.

(Hugo Chavez should put down Hezbollah supporter Noam Chomsky’s bizarre, anti-American leftist screed and pick up a copy of this classic instead. He may actually learn something useful.)

Thursday, September 21, 2006

Tonight's Lineup

CNBC's Kudlow & Company will air during the primetime slot at 8pm EST tonight and for the remainder of the week.

On tonight's show:

We'll begin with a few Congressional Democrats poised to assume positions of control should the Dems take over the House come November.

On board:

Rep. Charlie Rangel (D-NY)
Rep. Steny H. Hoyer (D-MD)
Rep. Barney Frank (D-MA)

A political debate between former House Majority Leader Dick Armey and Katrina vanden Heuvel, editor of The Nation magazine.

CEO of Devon Energy Larry Nichols will offer his perspective on what's ahead for energy.

MarketWatch senior columnist Herb Greenberg and CNBC contributor/author Charlie Gasparino will discuss the markets, HP, and more.

Bravo Mr. Rangel

From Drudge:

RANGEL: AN ATTACK ON BUSH IS AN ATTACK ON ALL AMERICANS... 'You do not come into my country, my congressional district, and you do not condemn my president. If there is any criticism of President Bush, it should be restricted to Americans, whether they voted for him or not. I just want to make it abundantly clear to Hugo Chavez or any other president, do not come to the United States and think because we have problems with our president that any foreigner can come to our country and not think that Americans do not feel offended when you offend our Chief of State'...

Good for Charlie Rangel who closed ranks behind President Bush today in the name of American patriotism against a thuggish enemy of this country. Hugo Chavez’s ridiculous, rhetorical bullying here on U.S. soil deserved Rangel’s commendably harsh response.

Mr. Rangel wasn't alone in calling out Venezuela's clownish leader. House Democratic Leader Nancy Pelosi offered up this money line:

"Hugo Chavez fancies himself a modern day Simon Bolivar but all he is an everyday thug."

This bipartisan show of support is a very good thing. It reminds me of that old, often forgotten American tradition of leaving politics at the water’s edge.

Good for Mr. Rangel and Ms. Pelosi for reinvoking this much needed tradition. I say bravo and good for them.

(Please note: Mr. Rangel will be a guest on CNBC’s Kudlow & Company this evening at 8pm EST. Please join us.)

"Juice for the Apple"

Is there hope for New York?

The two money paragraphs of today's Wall Street Journal "Juice for the Apple" editorial:

Enter GOP candidate for Governor John Faso, who is expected to release a tax reduction plan today that could at least put New York back in the game for jobs and investment. At the urging of such advisers as economist Larry Kudlow, Mr. Faso will propose to repeal the state's tax on dividends and capital gains over four years and immediately zero out the capital gains tax on all new investment in the state. Since the amount of new investment under the current tax regime is so microscopic, eliminating that capital-gains levy would cost the state almost nothing in lost revenue even on a static basis.

It's always been a strange paradox that New York, which fancies itself the financial capital of the globe, tries to repel capital with high taxes. Mr. Faso will also propose cutting the corporate income tax, as well as indexing the personal income tax brackets for inflation while chopping the top marginal rate to 6.25% from 6.85% (plus 3.65% if you live in New York City). The Big Apple's top rate would fall below 10% for the first time in decades. "When it comes to taxes, the world is flat and New York should be too," says Mr. Faso, referring to the flat-tax movement sweeping Europe and other parts of the world...

New York needs smart money and smart people. The tax climate must be hospitable rather than cold shoulder punitive. A tax-free state zone for new investment would be a huge plus. Come to think of it, a tax-free zone for new investment for the entire U.S. would be a big plus. From sea to shining sea.

Wednesday, September 20, 2006

CNBC's Kudlow & Company

Please note that CNBC's Kudlow & Company will air during the primetime slot at 8pm EST tonight and for the remainder of the week.

"Violence, Terror & Bloodshed"

This op/ed by Jeff Jacoby is worth reading in its entirety.

If it weren't so sickening, it would be farcical: A line in the pope's speech suggests that Islam has a dark history of violence, and offended Muslims vent their displeasure by howling for his death, firebombing churches, and attacking innocent Christians. One of the points Benedict made in his speech at the University of Regensburg was that religious faith untethered by reason can lead to savagery. The mobs denouncing him could hardly have done a better job of proving him right...

In every case, the pretext for the Muslim rage was the claim that Islam had been insulted. Freedom of speech was irrelevant: While the rioters and those inciting them routinely insult Christianity, Judaism, and other religions, they demand that no one be allowed to denigrate Islam or its prophet. It is a staggering double standard, and too many in the West seem willing to go along with it. Witness the editorials in US newspapers this week scolding the pope for his speech. Recall the State Department's condemnation of the Danish cartoons last winter.

Of course nobody's faith should be gratuitously affronted. But the real insult to Islam is not a line from a papal speech or a cartoon about Mohammed. It is the violence, terror, and bloodshed that Islamist fanatics unleash in the name of their religion -- and the unwillingness of most of the world's Muslims to say or do anything to stop them.

Deflationary Pressures Out There?

I'm sure the folks at the Fed are watching the commodity selloff of gold, silver, and various energy areas. And I'm equally certain they are watching the drubbing of metals and mining stocks, where Freeport-McMoRan was off yesterday around 5 percent and Phelps Dodge, U.S. Steel, and Alleghany Technology were down about 3 percent. The CBOE gold index was off 4.5 percent in yesterday's trading and 26 percent since May 10.

Money is tight. That's the message of the inverted yield curve where the 5.25 percent fed funds rate is way above most other maturities that are around 4.70 percent. The monetary base hasn't grown all year; it's been flat-lined by Fed actions to withdraw cash and raise their target rate.

The core PPI has dropped two straight months. Housing and autos are deflating. Yahoo is complaining about a big slowdown in ad revenues.

Working through the TIPS bond market model, the real fed funds rate is 2.85 percent, about 50 basis points above the real TIPS bond rate of 2.35 percent, which represents the economy's so-called natural rate.

The dollar bottomed two years ago and a combination of tight money plus reduced terror risk premiums are hauling in gold and oil prices.

As somebody who thought a couple of months ago that a neutral fed funds rate would be 5.5 percent, I am now coming to believe that a neutral rate would be 25 or 50 basis points lower.

Believe it or not, there are deflationary pressures building up out there.

Tuesday, September 19, 2006

"To the People of Iran: The United States Respects You"

During President Bush’s U.N. speech today, he spoke directly to the people of Iran—bypassing their terrorist government regime.

It is exactly the way President Reagan used to speak to the people of the old Soviet Union, telling them we respect you, we want to join hands with you and help you create a prosperous democracy, but your so-called leaders are blocking the way. This is how Bush dealt with Iran today at the United Nations.

Here’s the paragraph:

To the people of Iran, the United States respects you.

We respect your country. We admire your rich history, your vibrant culture and your many contributions to civilization.

You deserve an opportunity to determine your own future, an economy that rewards your intelligence and your talents, and a society that allows you to fulfill your tremendous potential.

The greatest obstacle to this future is that your rulers have chosen to deny you liberty and to use your nation's resources to fund terrorism and fuel extremism and pursue nuclear weapons.

The United Nations has passed a clear resolution requiring that the regime in Tehran meet its international obligations. Iran must abandon its nuclear weapons ambitions.

Despite what the regime tells you, we have no objection to Iran's pursuit of a truly peaceful nuclear power program.

We're working toward a diplomatic solution to this crisis. And as we do, we look to the day when you can live in freedom, and America and Iran can be good friends and close partners in the cause of peace.

Tonight's Lineup

CNBC's Kudlow & Company will air during the primetime slot at 8pm EST tonight and for the remainder of the week.

On tonight's show:

A VIEW FROM THE HILL: Senate Majority Leader Bill Frist (R-TN) will discuss a host of subjects including the terrorism interrogation debate, a possible border fence, and the tax bill.

Sidney Blumenthal, journalist and senior adviser to Bill Clinton and conservative columnist David Limbaugh will be aboard to debate Sen. Frist's comments.

FED DISCUSSION: John Rutledge, chairman and CEO of Rutledge Capital will discuss what's ahead.

KUDLOW'S STOCK CLUB: Barry James, President of James Advantage Funds, will offer his picks.

"TAKE THIS JOB & SHIP IT": Senator Byron Dorgan, author of the new book,"Take This Job & Ship It" will be on the show to discuss.

A Brilliant Summation

Thomas Sowell, "Suicidal Hand-Wringing":

When you enter a boxing ring, you agree to abide by the rules of boxing. But when you are attacked from behind in a dark alley, you would be a fool to abide by the Marquis of Queensbury rules. If you do, you can end up being a dead fool...

(This an extraordinary article. Hats off to Mr. Sowell for piercing the moral fog and intellectual haze. Truly worth the read.)

Laffer Looking Good

Did someone say record tax receipt collections? At lower tax rates? Sounds a lot like the Laffer Curve to me.

The U.S. government just recorded record high tax revenues on the September 15th quarterly deadline date for business tax payments. It turns out that total receipts were a booming $85.8 billion.

Treasury Undersecretary Randal Quarles said Friday’s numbers provided a “continuing demonstration of the strength of the U.S. economy”.

Actually, overall tax revenues for that day, including personal taxes and payroll taxes, were the largest in a single day in the nation’s history. Twenty percent above a year ago according to Quarles.

I would simply call it the greatest story never told.

Monday, September 18, 2006

Tonight's Lineup

This week, CNBC's Kudlow & Company will air during primetime at 8pm EST.

On tonight's show from Washington DC:

We'll take an in-depth look at the political landscape and the latest headlines, including a look at the mid-term elections, the Pope's comments on Islam, and Bush vs. McCain on terrorist trials and interrogations.

Our guests include:

Pat Buchanan, author, syndicated columnist; Lanny Davis, lawyer and former Special Counsel to President Clinton; Tony Blankley, editorial page editor of The Washington Times; and Michael Crowley, senior editor and columnist at The New Republic magazine,

Ed Lazear, chairman of the Council of Economic Advisors, will discuss the economy.

A Fed debate between Don Luskin, chief investment officer of Trend Macrolytics and John Silvia, chief economist at Wachovia Corp.

A look at the latest in the HP saga with attorney David Boies and author/CNBC contributor Charlie Gasparino.

A markets roundup with Michael Thompson, Director of Research at Thomson Financial.


The following is a partial list of what has occurred since Pope Benedict XVI delivered a speech suggesting that Islamic holy war was against God's nature and that "violence is incompatible with the nature of God and the nature of the soul.”

- Islamic gunmen murdered an Italian nun as she walked home from the children's hospital where she worked in Mogadishu. A leading Islamic cleric in the Somali capital told worshippers at a mosque that, “Whoever offends our Prophet Mohammed should be killed on the spot by the nearest Muslim.”

- Islamic protestors have set fire to Christian churches (at least 7 so far). A group calling itself the Islamic Organization of the Swords of Righteousness attacked the oldest church in Gaza City with gunfire and a grenade. In the West Bank, gunmen threw Molotov cocktails at four churches of different denominations. Gunmen opened fire inside an empty Catholic church after the building's entrance door was burnt down.

- Protestors have burnt German, American and Israeli flags in the streets, and called Pope Benedict XVI “Hitler” while torching his effigy.

- Outside of Westminster Cathedral in London, an Islamic extremist leader told a demonstration that the Pope should face execution. He added, "Whoever insults the message of Mohammed is going to be subject to capital punishment." (This is the same guy who organized demonstrations against the publication of Danish cartoons of Mohammed where Muslim protesters carried signs declaring "Behead Those Who Insult Islam".)

- The Mujahideen Shura Council issued the following statement: "We shall break the cross and spill the wine! God will (help) Muslims to conquer Rome. (May) God enable us to slit their throats, and make their money and descendants the bounty of the mujahedeen!"

This growing list of murder, violence and mayhem by radical Muslims proves the Pope’s point.

I’m sorry the Pope apologized. He was right, and he didn’t have to.

No Further Tightening

Commodity after commodity is down 15 to 20 percent this year, most notably crude oil (-17%), gas at the pump (-16%), and gold (-20%). This shows that both inflation and inflation expectations are falling as a consequence of the Fed's tightening of the money supply.

So, it goes without saying that at Wednesday’s meeting, there will be no further tightening.

Friday, September 15, 2006

The Pope Was Right

In my humble opinion, the speech delivered by Pope Benedict XVI at the University of Regensburg in Germany on the subject of faith and reason is exactly right. Violence has no place in religion.

From the Pope’s remarks:

... I was reminded of all this recently, when I read the edition by Professor Theodore Khoury (M√ľnster) of part of the dialogue carried on - perhaps in 1391 in the winter barracks near Ankara - by the erudite Byzantine emperor Manuel II Paleologus and an educated Persian on the subject of Christianity and Islam, and the truth of both…

…In the seventh conversation [text unclear] edited by Professor Khoury, the emperor touches on the theme of the holy war. The emperor must have known that surah 2, 256 reads: "There is no compulsion in religion".

According to the experts, this is one of the suras of the early period, when Mohammed was still powerless and under threat. But naturally the emperor also knew the instructions, developed later and recorded in the Qur'an, concerning holy war.

Without descending to details, such as the difference in treatment accorded to those who have the "Book" and the "infidels", he addresses his interlocutor with a startling brusqueness on the central question about the relationship between religion and violence in general, saying: "Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached".

The emperor, after having expressed himself so forcefully, goes on to explain in detail the reasons why spreading the faith through violence is something unreasonable. Violence is incompatible with the nature of God and the nature of the soul. "God", he says, "is not pleased by blood - and not acting reasonably ... is contrary to God's nature. Faith is born of the soul, not the body. Whoever would lead someone to faith needs the ability to speak well and to reason properly, without violence and threats... To convince a reasonable soul, one does not need a strong arm, or weapons of any kind, or any other means of threatening a person with death...".

The decisive statement in this argument against violent conversion is this: not to act in accordance with reason is contrary to God's nature. The editor, Theodore Khoury, observes: For the emperor, as a Byzantine shaped by Greek philosophy, this statement is self-evident…

***(For an illuminating perspective on this growing storm of controversy, make sure to read the editorial in Investors Business Daily which hits the nail on the head.)***

IBD begins:

Benedict XIV takes a swipe at the idea of holy war and says reason need not be divorced from faith. That's cause for reflection, not Islamic outrage.

Thursday, September 14, 2006

Tonight's Lineup

On CNBC's Kudlow & Company tonight:

An economic debate between John Ryding, Bear Stearns chief economist and Lincoln Anderson, Chief Investment Officer, LPL Financial Services.

A resurgent Bush and GOP? We'll take a look inside Washington politics with Rep. Robert Wexler (D-FL) and Rep. Darrell Issa (R-CA).

A stock market roundup with Elizabeth MacDonald, Forbes magazine senior editor and Herb Greenberg, senior columnist for MarketWatch.

Also, a political roundup (including a look at Rosie O'Donnell's controversial remarks) with author/syndicated columnist David Limbaugh and Sidney Blumenthal, journalist and senior adviser to Bill Clinton.

Moving in the Right Direction

Scott Rasmussen writes:

The political season has kicked into high gear this week and the initial news cycle features a bounce in President Bush's Job Approval ratings. Our numbers today show the President at 47%, up six points in a week and the best numbers he's enjoyed since mid-February. What's fueling this? The Republican base is coming home. Today, 85% of the GOP faithful voice approval of Bush's performance. Earlier this year, that level of support had fallen as low as 66%. Of course, it's still early. It's just one poll. It might be statistical noise or perhaps a temporary bounce following the 9/11 activities and the President's recent speeches. However, it might also be an early signal that the White House strategy to re-focus the debate is starting to energize the base. Only time will tell.

(Note: On top of the Bush surge, the House GOP 2006 contract over at TradeSports is still climbing higher. The last trade was made at 52. That's an unbelievably bullish 14-point move so far this week.)

Today's Top Three Most Absurd Statements

#1 “The U.S should moderate its language…we believe that on the basis of law and justice, we can better lead the world.” -Iranian President Mahmoud Ahmadinejad

This, from the terrorist supporting, nuclear ambitious holocaust-denier who calls for Israel to be “wiped off the map.” The same loony-tune who delivered a speech at the UN General Assembly and claimed he felt a light surround him and that the attention of the world leaders in the audience was unblinkingly focused upon him.

In his own words:

"I am not exaggerating when I say they did not blink; it's not an exaggeration, because I was looking. They were astonished as if a hand held them there and made them sit. It had opened their eyes and ears for the message of the Islamic Republic."

#2 “I’m prepared to kick their ass from one end of America to the other.” -Sen. John Kerry on going up against the Swift Boat Veterans for Truth in a possible White House run in ‘08.

They’re running scared John, no really…

#3 Amidst news that Air America Radio, the liberal talk-show network, is fighting off bankruptcy and unable to pay Al Franken his salary—and on top of Air America's switch from its flagship New York station to a station with a much weaker signal, and its subsequent laying off of nine employees, the liberal blog offered up this beauty of a headline:

“Air America To Declare Bankruptcy, But Progressive Radio Remains Strong”

Huh? How does that work?
Please be advised:

CNBC's Kudlow & Company will air during the primetime slot all next week at 8pm EST.

Thank you.

Wednesday, September 13, 2006

Turning Tide?

The afterglow of President Bush’s strong national security speeches—especially his evening speech on 9/11—along with falling gas prices and a strong stock market, has now moved the House GOP 2006 contract on the online betting parlor TradeSports up 3 additional points today to flat even 49.9.

That’s a seismic 32 percent gain since Monday.

The normal rule of thumb with polls is you give Republicans at least 6 percentage points. Whether that holds true for online betting remains to be seen.

At a bare minimum, the House has made up an enormous 12 points in the last 48 hours.

That’s big time news.

So, has the tide turned?

The Magic Numbers

Democrats told us three years ago that we could not afford President Bush's tax cuts.

With a straight face, they told us that none of them were affordable.

They told us none of them creates jobs. In fact, they actually warned us that tax cuts would do damage to our long-term economic growth and contribute to the national deficit.

That's what they told us.

Well, the facts tell us something different. Just look.

Since President Bush's 2003 tax cuts we've witnessed:

-34 consecutive months of growth.

-GDP growth has averaged 3.7% a year.

-5.7 million new jobs have been created.

-unemployment has fallen to 4.7%, (lower than the average of the past four decades when it averaged 6%)

-tax cut revenues have increased 36%

Just in case you were wondering.

Tonight's Lineup

On CNBC's Kudlow & Company tonight:

Stefan Abrams, CIO at Trust Company of the West will discuss the stock market.

A look at interest rates, the Fed & the economy with Michelle Girard, senior economist at RBS Greenwich Capital Management and Diane Swonk, chief economist for Mesirow Financial.

Rob Portman, Director of the Office of Management and Budget, will discuss the budget outlook.

The "Dynamic Duo" of Robert Reich, former Clinton Labor Secretary/Cal Berkley professor and The Wall Street Journal's Steve Moore will duke it out on myriad economic & political topics.

Bear Stearns retail analyst Dana Telsey will join us to offer her outlook on consumers and retail.

Hal Scott, securities-law expert at Harvard Law School and director of the Committee on Capital Markets Regulation, will discuss potential changes in SarBox.

NRO Nails the New York Times

All the News that Didn’t Fit
The New York Times is a capitalist enterprise, although you’d never know it by reading it.

By Jerry Bowyer

The New York Times Company is a business, and accordingly, it acts like one. Normally that wouldn’t be a problem. But when the New York Times takes all other businesses to task for not giving workers their fair share of the American Pie, it leaves the door of its own business open to scrutiny.

For instance, in a story late last month titled “Real Wages Fail to Match a Rise in Productivity,” the Times complained that the American economy, which used to allot 50 percent of its output to wages, now only allots 45 percent. My quick rebuttal to this complaint is that it’s not that people are making less money, it’s that the economy is growing faster than their paychecks. But what about the Times itself? How much of its revenue goes to wages?

Answer: 38 percent, well below the national average. But it’s even worse than that — the Times number counts benefits while the national statistic does not.

Is it fair to attack a mature company in a struggling industry for giving only about a third of its output to workers? Not normally, but it is when a particular business attacks everybody else for giving a little less than half.

The outlook isn’t all that good for the Times, either, while I’d say it’s pretty darn good for the rest of the nation.

The general economy is providing wage increases that beat cost-of-living adjustments. However, while the New York Times Co. has seen revenue increases of 4.5 percent, the wages-and-salaries line item in its profit-and-loss statement shows an increase of only 2.9 percent over the past two years.

That’s okay, and it’s a reality of business: Companies don’t pay their workers any more than they have to. They don’t charge their customers any less than their customers are willing to pay. And they generate as high a return for their shareholders as they can. That’s what they’re supposed to do, and no one has yet discovered a more efficient and effective way to deliver goods and services.

Business works. And the fact that the New York Times is chartered as a profit-seeking corporation — rather than, say, an anarcho-syndicalist commune — attests to this fact. But isn’t the hypocrisy startling?

The New York Times Co. may sell anti-capitalist drivel to its customers, but when it talks to its shareholders it has to reveal what it really believes. Capitalism works, even for its fiercest critics.

— Jerry Bowyer is an economic advisor to Blue Vase Capital Management and the author of The Bush Boom.

More Proof that Dems Don't Get It

From the AP:

WASHINGTON -- Democratic Sen. Russ Feingold called on President Bush to refrain from using the phrase "Islamic fascists," saying it was offensive to Muslims and has nothing to do with terrorists fighting the United States.

"We must avoid using misleading and offensive terms that link Islam with those who subvert this great religion or who distort its teachings to justify terrorist activities," Feingold said Tuesday in a speech to the Arab American Institute on Capitol Hill...

Remember, Mr. Feingold was the only senator who voted against the Patriot Act back in 2001. Feingold also led the filibuster effort to block the act's renewal earlier this year.

There's a word for all this. It's called clueless.

Tuesday, September 12, 2006

Go Ahead MSM: Make My Day

Keep misunderestimating President George W. Bush as The Washington Post did this morning on its front page when it trashed Bush’s 9/11 speech to the nation.

In fact, after over a week of national security and terrorism speeches, the online betting parlor is now showing a big GOP congressional gain.

The Senate GOP ‘06 contract is up to 84 from 78 just a few days ago. And most important, the House GOP contract is up to an unbelievable 46 today, compared to 38 just a few days ago. Especially for the House race, this is big news.

Suddenly, the generic GOP contract is back in the game. In the race. With big mo. (Glad I checked.)

And another important poll—the stock market—roared on the day after President Bush’s 9/11 speech. Stocks know that Bush is saving the country through lower tax rates for prosperity and a strong national security to protect us. This is big.

The tide may be turning.

Tonight's Lineup

On CNBC's Kudlow & Company tonight:

We'll be live from Washington.

At the top of the show, we're going to take a look at Chicago Mayor Richard Daley's veto of the big store minimum wage ordinance passed by the City Council. On board to debate this news is The Wall Street Journal's Kim Strassel and Jared Bernstein, senior economist at the Economic Policy Institute.

An economic debate between Brian Wesbury, Chief Economist for First Trust Advisors and Charles Dumas, Lombard Street Research Chief Economist.

Forbes Magazine Managing Editor Dennis Kneale will offer his perspective on HP and the markets.

Frank Newport, editor-in-chief of The Gallup Poll will offer his political insight.

A political debate between The National Review's Jonah Goldberg and The New Republic's Peter Beinart.

Dems Just Don't Get It

The Wall Street Journal offers yet another reason to pull the election lever for the GOP come November:

What would Jack Bauer do? If he worked at the CIA in real life today, the anti-terror hero of Fox's "24" would apparently be buying insurance in case the ACLU or John Kerry decided to sue or subpoena him for protecting America with too much vigor...

These CIA counterterrorism officers ought to be given medals, not forced to buy insurance.

"One Arab's Apology"

Pretty remarkable op/ed in the New York Post today:

"WELL, here it is, five years late, but here just the same: an apology from an Arab-American for 9/11. No, I didn't help organize the killers or contribute in any way to their terrible cause. However, I was one of millions of Arab-Americans who did the unspeakable on 9/11: nothing..."

Click here to read the whole thing.

Capitalism Soldiers On

Osama bin Laden threatened to bankrupt the United States. And, as recently as two days ago, al Qaeda’s deputy leader al-Zawahiri said he was going to force our economic collapse.

Well, reality presents a far different picture. The U.S. and the world economies have prospered mightily since September 11, 2001.

The bulk of this credit goes to the ingenuity, entrepreneurship and stick-to-itiveness of Americans who go to work everyday. These hardworking men and women are an optimistic lot. They possess a great deal of faith in our nation, in our future, and in God.

Federal policies to cut interest rates and tax rates set the backdrop for this economic recovery and growth. Since that fateful day five years ago, non-farm payrolls have increased 4 million. 7.7 million more people went to work according to the household survey, which registered a declining unemployment rate.

Real GDP, total business investments, and household consumption all increased around 15 percent.

Inflation has run slightly above 2 percent. Household net worth has grown by 32 percent. American trade with the rest of the world increased 61 percent.

While fundamentalist Islamic radicals vehemently hate capitalism and freedom, and are doing everything they can to destroy our markets and economy, both have prospered worldwide despite these murderous hatemongers’ wicked goals.

Robert Samuelson of Newsweek correctly points out that terrorism has been unable to slow the world economy. On the contrary, global trade has risen over 30 percent since 2001. Similarly, the world economy has expanded by more than 20 percent, with developing countries tallying a 30 percent gain.

Mr. Samuelson rightfully observes: “Terrorism so far has been an economic blank.”

Interestingly, world stock markets have boomed during this 5-year terror period. The broadest U.S. average—the DJ Wilshire 5000—is up almost 30 percent. Even more fascinating, emerging markets around the world have gained over 200 percent. Even the stock index of the Arab gulf states has soared about 250 percent

Of course, the greatest story since 9/11 is that there have been no more 9/11s. Smart American security policies and the hard work of dedicated counterterrorism agents are successfully responding to this evil's potent challenge.

It is precisely this security that has enabled American workers and investors to prosper mightily and harness the economic and political freedoms the totalitarians hate so much.

The fact is, while terrorists have increased their attacks worldwide, they have been unable to stop the forward march of free market capitalism and globalization. These two powerful, resilient forces have produced extraordinary new wealth and increasing living standards worldwide.

This remarkable economic and stock market advance of the past five years clearly points to the fact that radical Islam and its murdering militants are completely isolated and doomed to failure.

Freedom, capitalism and prosperity roll on.

Monday, September 11, 2006

Faith in the Future

On 9/11, my wife and I left the apartment on the Upper East Side and went to church to pray and meditate. A wonderful woman--I don't know who she is to this day--threw her arms around me and said, "Larry, are we going to be okay?"

I told her, "This is America. We are going to be okay."

That has always been my mantra.

I went to that church, St. Thomas More, it's where I was baptized. It forms the basis of my newborn faith, which guides my life and my thinking.

I believe that faith is central to this country, and its optimism about the future. Faith is the spirit. Along with freedom, it makes America great.

Tonight's Special Lineup

On CNBC's Kudlow & Company this evening:

We will be live from Ground Zero.

Gov. George Pataki (R-NY) will join us at the start of the show.

We will take a look at 9/11's impact with Robert Samuelson, Newsweek & Washington Post Columnist; Arthur Laffer, former Reagan Economic Advisor/CIO, Laffer Investments; Fred Bergsten, Institute for International Economics Director; and Jason Trennert, Strategas Research Partners Chief Investment Strategist.

The panel will be followed by a special interview with Debra Burlingame, former attorney, and sister of Charles F. "Chic" Burlingame III, the pilot of American Airlines flight 77, which was crashed into the Pentagon, and Mary Fetchet, Founding Director of Voices of September 11th, who lost her son Brad in the attacks on the World Trade Center.

Dick Grasso, former New York Stock Exchange chairman, will join Joseph Grano, Centurion Holdings CEO/former Homeland Security Advisory Council Chairman and will offer their perspectives as well.

"Free People Have Much Greater Strength Than They Realize"

Rudy Giuliani, USA Today:

"...One of the main reasons for the founding of the United States was to establish freedom, particularly freedom of religion. Our enemies oppose freedom, particularly freedom of religion. This was made shockingly clear by the recent gunpoint "conversion" of two kidnapped journalists in Gaza. The terrorists don't want to understand and co-exist alongside Western democracies. There are those over the past 30 years, and even to this day, who want to negotiate with the fanatic Islamic terrorists. But the fanatics don't want to negotiate. They want to establish a world in which everyone practices a perverted version of their religion. They want to return to a time before the modern age, to a world in which women have no rights and religious dissent is met with death.

These attacks are about a radical form of Islam that views our very existence as a grave threat. This is not a debate over values or policies. This is not a border dispute. This is a war over the preservation and expansion of the modern world...

...There is a reason thousands of rescue personnel rushed into enormous danger to save men and women who were strangers to them. The reason was respect for the value of human life. It can also be described as love — the kind of love expressed in a biblical phrase, "Man has no greater love than to lay down his life for his friend." This respect for human life and love for others, including strangers, form the core of Western civilization. It is the driving force that helped us create freedom.

What I learned from Sept. 11, 2001, is that free people have much greater strength than they realize. Ultimately, free people prevail over oppression."

Sunday, September 10, 2006

"We Have to Confront It"

British Prime Minister Tony Blair speaking during an interview to Haaretz in Jerusalem on Sunday:

With the recent arrests of suspected terrorists in the UK. These are people who grew up in the UK, in the welfare state, with no experience of any form of oppression or occupation. Did you ask yourselves what went wrong, what you did wrong?

Well, they become like that. It's not necessarily what have we done wrong, because part of the problem of what you have in Western opinion is that Western opinion always wants to believe that it's our fault and these people want to have a sort of, you know, grievance culture that they visit upon us and say it's our fault. And so we have a young British- born man of Pakistani origin sitting in front of a television screen saying I will go and kill innocent people because of the oppression of Muslims, when he has been brought up in a country that has given him complete religious freedom and full democratic rights and actually a very good job and standard of living. Now, that warped mind has grown out of a global movement based on a perversion of Islam which we have to confront, and we have to confront it globally.

And as I said recently in my L.A. speech, the first way to win a battle is to realize you're in a battle. That's part of the trouble: We don't yet really understand this is a global movement and it requires a global strategy to beat it.

Friday, September 08, 2006

Dems doth protest too much, methinks

Well, it sure looks like ABC struck a nerve with their 9-11 miniseries.

Harry Reid, Dick Durbin, Chuck Schumer and other congressional lefties—in addition to Bill Clinton’s barking lapdogs—are out in force, throwing their weight around, bullying, intimidating and stabbing fingers into chests like they’ve got something to hide.

These Washington tough guys are giving Tony Soprano’s crew a run for their money.

Perhaps, after all their attacks on President Bush, the soft-on-terror Dems are worried that their chicken’s come home to roost?

After all, lefties have complained for years that the Bush administration missed an opportunity to kill Osama bin Laden in Tora Bora back in 2001, while steadfastly refusing to acknowledge their own failed efforts in offing bin Laden during Clinton's tenure.

"People in both parties didn't particularly like the commission report, and I think people in both parties aren't going to love this one," former New Jersey Gov. and 9/11 Commission co-chair Tom Kean said about the ABC miniseries.

According to Kean: “The basic fact is that on a number of occasions, [The Clinton administration] thought they might have been able to get bin Laden, and on those occasions, the plug was pulled for various reasons.”

Dems don't want Americans to know this. This is why they are pulling out all the stops in their efforts to can ABC's 9/11 miniseries.

Aside from one scene involving former NSA advisor Sandy Berger hanging up a phone and refusing to authorize American and Afghan operatives to take out Osama bin Laden, the movie does apparently offer a balanced version of events.

Berger wrote Disney’s Bob Iger earlier this week and said, "no such episode ever occurred, nor did anything like it...complete fabrications." Sandy Berger, heck, wasn’t he the guy caught stuffing documents from the National Archives into his pants? Isn’t that a felony? Hot Hands Berger ought to be voicing his protestations to Mr. Iger behind bars.

Dems prefer to point fingers at Bush. They lay all the blame at his feet, while jumping into bed with the security saboteurs over at the ACLU and New York Times. These are the good people working night and day to undermine our national security. But, try as they may, they cannot sweep the Clinton administration's own documented failures with bin Laden and al Qaeda under the rug.

As pointed out in Investors Business Daily:

"[The] first missed chance to capture or kill bin Laden came in February 1998, when "Clinton's aides scuttled a CIA plot that had been eight months in the planning to kidnap Osama." The plan would have used Afghan tribesman to capture the al-Qaida leader for a later trial in the U.S.

Believe it or don't, Clinton's aides worried that bin Laden might be killed in the process, making it look like a political assassination.

According to the 9-11 commission report, they were worried of "recriminations" in the event "that bin Laden, despite our best intentions and efforts, did not survive."

The second chance came on Aug. 20, 1998, in the famous "wag the dog" attack at the height of le affaire Lewinsky, when cruise missiles were actually fired at a bin Laden encampment in Afghanistan. The problem was that Clinton ordered that the Pakistanis be told of the attack, lest they think it was an attack from India.

The news was leaked, and bin Laden dodged our bullets.

The final missed chance came in May 1999 when the CIA reported bin Laden would be in Kandahar, Afghanistan. As the 9-11 commission report said: "If this intelligence was not 'actionable,' working-level officials said at the time and today, it was hard for them to imagine how any intelligence could meet that standard."

Now might also be a good time to point readers of this blog to this video.

Senate Passes Pork Transparency Bill

"We might hope to see the finances of the Union as clear and intelligible as a merchant's books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them." -Thomas Jefferson

Good news:

Last night the Senate unanimously passed S. 2590, the Federal Funding Accountability and Transparency Act of 2006. This, of course, is a very good step towards cleaning up the earmark disaster in Washington.

Porkbusting Sen. Tom Coburn (R-OK) was the force behind this piece of legislation and deserves major credit. Coburn's bill will create a searchable database enabling Americans to track the trillion dollars of federal grants, earmarks, contracts and loans. U.S. taxpayers will finally be able to see where their money is being spent.

True earmark reform is necessary to stop Senate and House members from dropping budget earmarks into appropriations bills in the dead of night. This transparency bill will enable us to discover these earmarks after the fact, but it would be better to prevent this egregious practice altogether.

Earmarks should be made completely transparent before appropriations bills are voted on. This way both officials and the public will know what these earmarks are. How much? Who’s sponsoring? And what they're intended for? This should happen before the vote is taken on the appropriation bills. Including all omnibus bills, and of course transportation and highway bills.

Of course, it would be much better if legislators actually reduced appropriations (i.e. cut budget spending.) Wouldn’t that be something?

Lower tax rates from President Bush and the Republican Congress have unleashed economic growth and generated a literal cascade of tax receipts. If spending had been held down, today’s budget would be in balance. Think of it.

Message to the GOP: Much more work to be done.

Thursday, September 07, 2006

Still Betting Against the GOP

Despite a series of excellent speeches from President Bush on national security and terrorism, the online betting parlor has actually bet against Republicans in the House and Senate races.

The Senate still looks secure with the Senate GOP 2006 contract at 78 bid (think 78 percent), but that is down about 5 percentage points in the past week or so. Meanwhile the House GOP 2006 contract has fallen four points to 38 bid. This suggests only a 38 percent chance of a Republican hold in the House.

Personally, I like what Mr. Bush has been saying. However, worldwide bettors seem not to think that the President is making the sale. As disappointing as these odds-makers are reporting, my simple thought is that the GOP House and Senate absolutely must force key votes on the Patriot Act, the NSA wiretapping of international calls and the telephone company data-mining patterns, the SWIFT terrorist financial tracking program, military tribunals, and airport profiling.

And while they are at it, Congress should make a big fuss about imams who preach America’s destruction in mosques, schools, prisons, and elsewhere. In other words, the President is doing what he can by dominating the news cycle with national security and terrorism defense, but now it's up to Congress to adopt a tough-minded and strong-willed anti-terrorist legislative agenda.

What's Going on Here?

No one will soon forget Yale’s joke of a decision to admit the former mouthpiece of the murderous Taliban inside its classrooms.

But now, in an apparent game of one-upmanship, Harvard is trying to steal away Yale's "Head-in-the-Sand" crown from its longtime rival by giving a platform to Mohammed Khatemi, the former president of Iran—on the eve of the fifth anniversary of September 11th no less.

As The New York Sun wrote:

The John F. Kennedy School of Government at Harvard University, fresh from having established itself as a headwater of anti-Israel agitation, is choosing to mark the fifth anniversary of the terrorist attacks in an astounding way — by hosting Mohammed Khatemi, a former president of Iran, an enemy state levying a terrorist war against America. Mr. Khatemi has been invited to speak on, of all things, "Ethics of Tolerance in the Age of Violence." The title insults the intelligence of all those who would attend. What in the world is a man who presided over the July 9, 1999, crackdown on Tehran University, where hundreds of students were arrested and tortured, doing speaking about "tolerance" at a university?

What a disgusting way for Harvard to mark the fifth anniversary of the outbreak of a war that has claimed thousands of American lives and is still in full tilt...

The Editors at National Review sum it up:

...As we approach another national election in which the War on Terror looms front and center, the president has thrown down the gauntlet. He has effectively said to voters: Should it be our priority to maximize the rights of al Qaeda, or to save American lives? The answer should be obvious — as should the choice voters face.
September 7, 2006

The Honorable Assemblyman John Faso
New York State Republican Candidate for Governor

Dear John,

There is an editorial in today's Wall Street Journal about a 5% flat tax in Massachusetts. At dinner at our home this summer, we talked about the 5.5% flat tax option in Rhode Island. We also talked about the Kudlow tax reform commission I chaired for Governor Pataki, which recommended a 5% top tax-rate in New York.

Yet, there is no policy development along these lines coming out of your campaign. The summer months passed without new proposals. Polls suggest you are far behind Spitzer. You need new, bold ideas to shake up the race. But none are forthcoming.

You argue, according to the New York Post, that upstate's economy needs property, business and income tax relief. But you are not proposing any meaningful measures.

When I saw you at Yankee Stadium at the Bloomberg event you barely even said hello, though my wife and I have hosted two dinners for you and I have publicly supported your candidacy.

Frankly, as I have indicated to Ed Cox, all this is mystifying and troubling.


Lawrence Kudlow

Wednesday, September 06, 2006

Liars & Enablers

Jonah Goldberg on the sham of Joe Wilson and his zealous accomplice - mainstream media:

Now is the time to ask: What do John Mark Karr and Joseph Wilson have in common? Wilson is no more a would-be pedophile than Karr is a former diplomat. But they are both attention-seeking liars who deliberately helped launch criminal investigations that should never have gone as far as they did. Moreover, they launched media feeding frenzies that wasted everybody's time.
It's this second point that interests me more than the first. Ever since it was reported that Karr wasn't the right guy, the media - cable news networks in particular - have been taking a beating by the professional fingerwaggers...

...But when it comes to the Joseph Wilson story, the wagging fingers shudder to a full stop. Wilson's allegations were all outright lies or, at best, deceitful insinuations. At least when Karr lied, he put the blame on himself. In Wilson's telling, he could do no wrong even as he was a one-man sprinkler system of false accusations - accusations that launched an absurd investigation, cost the vice president's chief of staff his job, put a journalist in jail and threatened to do likewise to many more, and hurt America's image around the globe...

...I don't know if the Wilson fraud will instantly go down with the greatest media embarrassments in modern history. However, the press doesn't seem to mind beating itself up when it overindulges the public's passions. But when its own self-indulgence is the issue, there's never any need to feel embarrassed. Indeed, there's no need to say anything at all.

"Extirpate the Malignancy"

Tony Blankley on RealClearPolitics:

...The politically correct crowd who say we should change the way we talk, think and behave, change our surveillance of Muslims, even here in America, because it offends Islamist sensibilities -- wish to gain safety by appeasing the violent and offended Islamists.

These arguments are not immoral or cowardly. If we could vouchsafe America from the danger of nuclear, biological and other mass slaughters of millions of our citizens, it would be reckless not to carefully consider such appeasements.

This is an issue of threat assessment. The appeasers don't see the threat as so great. Thus they think we are overreacting and even adding to the problem.

But for President Bush, Donald Rumsfeld, Tony Blair, Australian Prime Minister Howard and (considerably lower on the food chain) me and millions of others, we are convinced that no amount of appeasement of the terrorists' desires will make us safer.

As I wrote in my book last year ("The West's Last Chance"), just as Hitler's Nazis, the radical Islamists are irreconcilable and unlimited in their goals. And, they are expanding their reach into the broad grass roots of Islam throughout the world (including in Europe and the United States).

A maximum effort to extirpate the malignancy is the only and best defense for our way of life.

I'm not against the appeasers because they are immoral or cowardly. I merely disagree with them because I believe that, like Neville Chamberlain, they underestimate the threat, and are thus dangerously wrong.

Tuesday, September 05, 2006

Best Factoid of the Day: “We believe that the impact of housing on consumer spending has been exaggerated by some commentators. Over the last year, the increase in real disposable income (+ $205 billion) has matched the increase in real consumer spending (+ $188 billion). Strong real wage gains are the major factor driving consumer spending increases. –John Ryding, chief US economist at Bear Stearns

2nd Best Factoid of the Day: The latest data from the IRS indicate that the share of income claimed by the wealthiest 1%, 5%, and 10% of earners is down, not up, since 2000. Even the millionaires, those in the top 0.5% of income, have seen their share of the nation’s total income fall to 15% in 2004, from 17% in 2000. What’s more, the top sliver (i.e. the group that includes just one earner in 1000) now pays 4 times more in total taxes than do all Americans in the entire bottom 50 percent. These are the uncensored facts. -Stephen Moore, The Wall Street Journal

Most Disturbing Thought: “Yield-Curve Recession Indicator Flashes Yellow. “Unless the shape of the Treasury yield curve normalizes in the next few months, going from its current negative to a more normal positive slope, the U.S. could be headed for a recession late next year. That’s the implication of a new paper by economist Arturo Estrella and Mary R. Trubin of the Federal Reserve Bank of New York.” And that disturbing thought comes courtesy of Caroline Baum, Bloomberg news columnist.

Give Them the Boot

Get these anti-American imams out of here.

From The Washington Times:

"...Last year, (counterterrorism consultant and Arabic translator) Miss Mansfield visited a mosque in Georgia that advertised an English and Arabic session on God and family. She attended the Arabic session where a man identified as Khaled recounted a New York flight. He and his friends acted suspicious and made simultaneous restroom runs to frighten passengers.

"He laughed when he described how several women were in tears, and one man sitting near him was praying," Miss Mansfield later wrote in an account of that meeting on her personal Web site.

"As the meeting drew to a close, the imam gave a brief speech calling for the protection of Allah on the mujahedeen fighting for Islam throughout the world, and reminded everyone that it was their duty as Muslims to continue in the path of jihad, whether it was simple efforts like those of Khaled and his friends, or the actual physical fighting," Miss Mansfield wrote...."