Thursday, May 31, 2007

Rudy Blasts Hillary

Rudy blasted Hillary’s tax hike plan yesterday calling it an “astounding, staggering tax increase.” Good for him.

Hillary’s been out proclaiming her government redistributionist message of “shared prosperity.” Her growth-paralyzing solution? Increase taxes on Americans making more than $200K a year. This is France before Sarkozy stuff.

Incidentally, Hillary’s tax hike plan would slaughter somewhere around 25 million small, owner-operated businesses. How’s that for sound economic policy?

To his credit, Rudy stepped up to the plate and has taken her on. So far he’s the only major GOP candidate to do so. (Although in fairness, Fred Thompson did attack Democratic tax and spend redistributionism in his Stamford, CT speech last week.)

In New Hampshire just a few days ago, Senator Clinton also attacked President Bush’s “ownership society.” Playing that tired, old, class warfare card, Hillary says it has widened the gap between rich and poor. “Fairness just doesn’t happen,” she said. “It requires the right government polices.”

This is yet another example of income leveling—standard, garden variety, lefty liberal, anti-growth, class-envy rabble-rousing.

History is clear—free market capitalism works. It rewards successful work, investment, and risk taking. But Hillary remains unconvinced. She takes a different tack—she wants to punish successful, hard working Americans. Forget about rewarding them.

This presidential contender wants to confiscate profits from energy companies and other corporations. And as Rudy reminded everyone yesterday, Hillary is on record as saying about the tax cuts, "We're going to take things away from you on behalf of the common good."

Sounds like socialism.

Her message is nothing new. It’s an Old Europe prescription for economic stagnation that snatches the capital out of capitalism.

We’ve seen this show before. It’s a Mike Dukakis message. It’s Walter Mondale redux. (And on foreign policy, she is lurching to the nut-root left and adopting a McGovern message.)

By the way, Hillary’s got company in her redistributionist tax hike plan. Both Edwards and Obama are calling for a big tax increase on U.S. families earning over $200K.

This is why I believe the Democrats are dooming themselves to defeat in 2008.

NASA Chief on Global Warming

NASA chief Michael Griffin offered some interesting thoughts on global warming this morning on NPR. Here's an excerpt:

"I have no doubt that...a trend of global warming exists. I am not sure that it is fair to say that it is a problem we must wrestle with. To assume that it is a problem is to assume that the state of Earth's climate today is the optimal climate, the best climate that we could have or ever have had and that we need to take steps to make sure that it doesn't change. First of all, I don't think it's within the power of human beings to assure that the climate does not change, as millions of years of history have shown. And second of all, I guess I would ask which human beings — where and when — are to be accorded the privilege of deciding that this particular climate that we have right here today, right now is the best climate for all other human beings. I think that's a rather arrogant position for people to take."

Wednesday, May 30, 2007

New Boss at World Bank

President Bush has appointed Robert Zoellick to be president of the World Bank. Zoellick is a good man—a supply-sider and a free trader.

But the bigger question is, do we really need the World Bank?

Free market capitalism is spreading like gangbusters across the globe, and with it, the proliferation of private capital markets to channel investment everywhere.

Instead of making cheap loans at below market rates to state planning governments in Africa and elsewhere, the real key to fighting poverty is putting markets—not World Bank bureaucrats—in the driver’s seat.

Both the IMF and the World Bank are unnecessary artifacts from a bygone, post-WWII reconstruction era. Instead of government-to-government lending, poor nations need pro-market reforms that will then attract private capital flows. This will subject low-income nations to the same marketplace discipline that China, India, Russia, Eastern Europe and Latin America have all been subjected to.

The thousands of World Bank bureaucrats with their tax-free salaries know very well that private market capitalism is overtaking their mission. So they want to morph the World Bank into some kind of super-sized global warming bureaucracy—something we clearly don’t need.

It’ll be up to Mr. Zoellick to discipline the World Bank. And it won’t be an easy task.

By the way, I just love how President Bush defended Paul Wolfowitz at the Zoellick announcement ceremony. In doing so, the President really stuck it to the anti-Bush, anti-Iraq, anti-American, World Bank bureaucracy.

These guys jumped all over Wolfowitz, mainly because he was an architect of the Iraq war mission—not because of his girlfriend.

Bush sticking it in the collective eye of the World Bank is one of the many reasons to love Dubya.

Reagan Tops Gore

Headline from the Drudge Report: “REAGAN TOPS GORE IN SQUEAKER.”

They’re talking about two new books—Doug Brinkley’s The Reagan Diaries, and Al Gore’s Assault on Reason. Turns out Reagan beat Gore in opening week action according to Bookscan.

But there’s a much bigger message here: That is, Reagan tops Gore, but it ain’t no squeaker.

Tuesday, May 29, 2007

Happy Memorial Day

"It is the soldier, not the reporter,
Who has given us freedom of the press.
It is the soldier, not the poet,
Who has given us freedom of speech.
It is the soldier, not the campus organizer,
Who has given us the freedom to demonstrate.
It is the soldier,
Who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who allows the protester to burn the flag."

God bless America.

Friday, May 25, 2007

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

STOCK MARKET & ECONOMY...Joining us are economist Art Laffer, president of Laffer Associates; Craig Columbus, President & Chief Market Strategist at Advanced Equities Asset Management; and Michael Cuggino, president and portfolio manager for the Permanent Portfolio Family of Funds.

Messrs. Laffer, Columbus & Cuggino will stick around and weigh in with their perspective on our other market related topics.

OIL, ETHANOL & GAS PRICES...Dan Yergin, Chairman of Cambridge Energy Research Associates will offer his unique perspective on what's ahead.

CYBER TERROR THREAT...Terrorism expert Dr. Neil Livingstone, Chief Executive Officer for Global International will be aboard to discuss.

WASHINGTON TO WALL STREET...We'll look at a possible China trade war and much more with Dan Clifton, Head of Policy Research at Strategas Research Partners.

HILLARY BOOK...Republican strategist Bay Buchanan will debate her new book, The Extreme Makeover of Hillary (Rodham) Clinton with nationally-syndicated talk radio show host Bill Press.

Both guests will also discuss the latest developments in the immigration bill.

Please be sure to join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Waving White Flags

Hillary and Obama's decision to vote against the Iraq war funding bill is going to come back to haunt them in the presidential race next year.

Both senators are catering to the nutroots-lefties in the Democratic Party.

But when it comes time for the general election, these two are going to be held accountable for voting against funds to support our troops—just like John Kerry was held accountable by President Bush when he voted against the funding bill for troops in Iraq and Afghanistan. (After originally voting to support the use of force in Iraq a year earlier).

All of this just goes to show how McGovernized the Democratic race has become. This catering to the left may win them support from liberal primary voters, but it will seal their defeat come Election Day.

Meanwhile, Senator John “Backbone” McCain is accusing Hillary and Obama of surrendering to al Qaeda.

It’s yet another strong point.

Thompson Speech

I was with former Republican Senator Fred Thompson last night at an event held in Stamford, Connecticut and heard his speech.

While I would’ve liked a little more energy, he did make several strong points—especially his attack on the Democrats’ high tax redistributionism through higher spending and bigger government. He also cautioned against the U.S. imitating the European economic model.

Mr. Thompson came across very strong on national security and homeland security. He also referred to the defeatist Democrats on the war.

It was a pleasure to visit with him personally during dinner.

Rumor has it he will formally announce his run for president in early July.

How to End 'Islamophobia'

Powerful Wall Street Journal op-ed by Muslim reformer Dr. Tawfik Hamid. This former member of an Islamist terrorist group is now a medical doctor living in the West. The whole article deserves a read.

...It is well past time that Muslims cease using the charge of "Islamophobia" as a tool to intimidate and blackmail those who speak up against suspicious passengers and against those who rightly criticize current Islamic practices and preachings. Instead, Muslims must engage in honest and humble introspection. Muslims should -- must -- develop strategies to rescue our religion by combating the tyranny of Salafi Islam and its dreadful consequences. Among more important outcomes, this will also put an end to so-called Islamophobia.

Click here to read the whole thing.

Thursday, May 24, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS & THE ECONOMY...Our market pros tonight include Bear Stearn's Chief Global Economist David Malpass; Jim Awad, chairman at Awad Asset Management; Barry Ritholtz, Chief Market Strategist for Ritholtz Research; and Gary Shilling, president of A. Gary Shilling & Co.

CHINA & THE MARKETS...CNBC Chief Washington Correspondent John Harwood will give us a report on President Bush's press conference today, China trade & Iraq.

Our market panel will stay with us and weigh in with their insights.

RECORD HOME SALE IN THE HAMPTONS, HEDGE FUNDS & MORE...USA TODAY reporter Noelle Knox will give us all the details surrounding Ron Baron's $103 million dollar purchase in the Hamptons.

"RUNNING ON EMPTY"...Gas station owner Jeff Curro will discuss turning off his pumps due to high gas prices.

IRAQ/IRAN...Former Secretary of State Henry Kissinger will join us in a one-on-one interview.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Kissinger on Kudlow & Company Tonight

Former Secretary of State Henry Kissinger will join us for an exclusive one-on-one interview on Kudlow & Company this evening.

Dr. Kissinger and I will discuss Iraq, Iran, and new diplomatic and political developments in the terror war.

Please join us at 5pm ET on CNBC.

Pro-Growth Bill

Excerpt from my interview on Kudlow & Company last night with Democratic presidential candidate, New Mexico Governor Bill Richardson.

KUDLOW: All right, let's talk some issues. First of all, in San Diego, you had a little run-in with Senator John Edwards. Edwards wants an excess profits tax on corporations and an excess income tax on individuals. You disagreed, and I'll quote. You said, "Democrats, wherever we can--wherever we have a solution, we want to tax." And then you go on, "I'm different; I'm a tax cutter." End quote. Can you expand on that? What would your tax strategy be if elected president?

GOVERNOR BILL RICHARDSON: Well, I wouldn't always just look at a tax increase to deal with every solution. I believe we have to grow the economy. I'm a pro-growth candidate. What I would do, Larry, is--for instance, to bring jobs into depressed communities or anywhere, I would give an incentive to companies if they pay over the prevailing wage, if they have a technology start up. I'd do what I've done in New Mexico, no taxes for three years. In rural areas, I would incentivize those companies so that they hire people, train people.

I did this as governor of New Mexico. I got the state income tax in half. I cut capital gains in half, to be competitive with our surrounding states, and it works. Our economy is growing, we got a surplus. I also balanced the budget. I just believe the Democratic Party--I remember, John F. Kennedy, `We should be the party of entrepreneurship, of innovation, of science research, of space, of growing the economy.' And, you know, JFK had those tax cuts in his second year, and it really spurred the economy. We pay for those taxes. We should always do that, but I just wonder--and I'm not saying this is a trait in the party, but every time it seems that, for instance, health care plan. I would have universal health care without any new taxes, without any new bureaucracies. I think we can cover everybody with sensible pro-growth policies reforming the existing system.

Wednesday, May 23, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will get us started with a market report from the NYSE.

Our market panel tonight includes Stefan Abrams, managing partner at Quatamental Capital Partners; Doug Kass, president of Seabreeze Partners; and Kevin Divney, chief investment officer of Putnam's Vista Fund.

GOVERNOR BILL RICHARDSON...A one-on-one interview with New Mexico's tax-cutting Democratic Governor. We'll discuss his Oval Office ambitions & much more.

THE DYNAMIC DUO...Former Clinton Labor Secretary Robert Reich will square off against The Wall Street Journal's Steve Moore and offer their insights on Mr. Richardson.

WOLFOWITZ...Investigative reporter Wayne Madsen from will weigh in on the latest in the Wolfowitz saga.

Messrs. Reich & Moore will add their perspective.

TACKLING TERRORISM...We'll discuss a disturbing new poll showing that one out of four young U.S. Muslims believe suicide bombings against innocent civilians are OK to defend Islam.

Terrorism expert Steve Emerson will debate Edina Lekovic, communications director to the Muslim Public Affairs Council.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Governor Bill Richardson on Kudlow & Company Tonight

We're honored to welcome the pro-growth, tax-cutting Democrat Bill Richardson to the show tonight.

The New Mexico Governor threw his hat into the presidential ring on Monday and his polling numbers are rising from asterisks to double digits in New Hampshire.

The presidential hopeful will join me to lay out his pro-growth, low-tax rate platform.

How about that, a Democratic tax cutter?

Goldie Grabs the Front Page

Goldilocks is featured prominently this morning in the front-page Wall Street Journal cover story, “Why Market Optimists Say This Bull Has Legs”.

It’s a great article. That said, I always get a little nervous when major publications run these cover stories (Business Week boasts a particularly bad record of calling market tops with their cover stories).

I’d prefer this to remain the "greatest story never told."

Incidentally, I didn’t see a single reference to President Bush’s slashing of tax rates on capital. I believe this is a key factor in this rally. The benefits of low capital costs and high investment returns have added substantial liquidity to stock markets while, at the same time, have enhanced after-tax valuations.

Nevertheless, the WSJ story does highlight a key theme of mine: The rise in profits has been greater than the increase in stock averages. This is especially true when profits are capitalized by the 10-year Treasury bond yield, an analytic developed by Arthur Laffer that has stood the test of time.

This analytic device was very helpful in calling the market top in 2000. But today, it shows that considerable upside running room is still left for the major stock indexes.

Tuesday, May 22, 2007

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll start off with a quick market hit from CNBC's Bob Pisani.

OIL, GAS PRICE$ & THE STOCK MARKET...Our market mavens will offer up their wisdom in a wide-ranging discussion.

Our guests tonight include Noah Blackstein, lead portfolio manager for the Dynamic Power American Growth Fund; Robert Shiller, chief economist at Macromarkets and professor of economics at Yale University; Joseph Keating, chief investment officer at AmSouth Asset Management Group; and senior MarketWatch columnist Herb Greenberg.

CHINA BUBBLE?, A LOOK AT THE NASDAQ & MORE...Dan Gross, columnist for Slate and contributor to The New York Times will join Messrs. Blackstein, Greenberg and Keating.

CEO PAY, INCOME INEQUALITY & MORE...A debate between Jared Bernstein, senior economist at the Economic Policy Institute and Geoff Colvin, Fortune senior editor-at-large.

AL GORE AND THE LATEST WASHINGTON HEADLINES...Rep. Artur Davis (D-AL) and Rep. Mike Pence (R-IN) will square off.

Please join us for another free market edition of CNBC's Kudlow & Company at 5pm ET.

Romney Races Ahead

A new Des Moines Register poll shows Romney surging ahead in Iowa.

The former Massachusetts governor is now leading the GOP pack with 30 percent to McCain’s 18 percent, Giuliani’s 17 percent and Tommy Thompson’s 7 percent.

It’s happening in New Hampshire too.

According to Zogby, Romney has first place all to himself with 35 percent. That's a 10-point uptick in the Granite State from just a month ago.

Could this explain Senator McCain’s recent attacks on Governor Romney?

Immigration Polls

Some interesting results from a recent Gallup Poll that came out before the new immigration plan:

It shows that 76 percent want an immigration deal to solve the problem. And, get this, 72 percent favor amnesty.

However, 42 percent believe that illegals must leave the U.S and then return, in order to become citizens. 36 percent would let them stay here and become citizens if requirements are met.

Another 14 percent said they must leave and not return.

Finally, Frank Newport, Gallup Poll editor-in-chief had this to say on last night's show:

"We even found a poll from last year where a pollster had the courage to use the A word in the poll and still found over seven out of 10 Americans were willing to go along with it when that actual word was used in the poll. So I think it is incorrect to say that everybody is opposed to amnesty. They are not... America is right in line. They think there should be a pathway to citizenship."

An Undervalued NAZ?

Interesting take by Quentin Hardy, Silicon Valley bureau chief of Forbes magazine, on last night's Kudlow & Company.

"I think, you know, with things going to a record at the S&P 500, it's an excellent time to look at the Nasdaq again and say 'Dow's recovered, S&P's recovered.' Nasdaq won't go to its old high, but maybe it's the undervalued sector at this point."

Monday, May 21, 2007

Monday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS & ECONOMY...Our market panel will lend their perspective on all the latest news and developments, including the S&P 500's closing in on its all-time record high.

Joining us are Jerry Bowyer, economic advisor to Blue Vase Capital Management and the author of The Bush Boom; Quentin Hardy, Silicon Valley Bureau Chief for Forbes magazine; NewsMax's John Browne; and John Rutledge, chairman of Rutledge Capital.

CHINA DEBATE...On to discuss are Fred Bergsten, director of the Peterson Institute for International Economics; Frank Gaffney, president of the Center for Security Policy and columnist for the Washington Times; and John Rutledge.

SUNDAY UNSPUN...Frank Newport, editor-in-chief of The Gallup Poll will sift through all the latest media spin.

IMMIGRATION/BUSINESS VISAS...A debate between Robert Hoffman, vice president of congressional and legislative affairs at Oracle and Robert Rector, senior research fellow at the Heritage Foundation.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

It Pays to Stay in School

With all the liberal criticism of the Bush economic boom about wage inequality, what’s being overlooked is education inequality and its impact on wages:

As I pointed out in my column today, within our historically low 4.5 percent unemployment rate, there’s a 7.5 percent unemployment rate for those with less than a high-school diploma; a 4.5 percent rate for high-school grads, and a mere 1.8 percent rate for those with college degrees or better.


- Americans who don’t finish high school earn roughly $429 a week.
- Individuals finishing high school pocket $602 a week.
- Americans with a bachelor’s degree or higher take home $1,030 a week.

So it clearly makes financial sense to stay in school. What makes no sense at all is trying to solve wage inequality by penalizing our most successful earners and thereby hindering economic growth.

If You Really Want To Make U.S. Companies More Competitive . . .

"If the Treasury Department and Congress really want to improve American competitiveness, they must continue the Reagan tradition by bolstering our corporate tax competitiveness."

Click here to continue reading my latest syndicated column.

Friday, May 18, 2007

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

A LOOK AT THE FED, THE WORLD BANK, CHINESE YUAN & MORE...On board are economist Art Laffer, president of Laffer Associates; Robert Hormats, Goldman Sachs International Vice Chairman; and Harvard's Ken Rogoff, former chief economist at the International Monetary Fund.

STOCK MARKET PERSPECTIVE...Joining us are Don Luskin, CIO at Trend Macro; Craig Columbus, chief market strategist at Advanced Equities Asset Management; and Michael Panzner, Wall Street trader and author of Financial Armageddon.

IMMIGRATION DEBATE...between Rep. Tom Tancredo (R-CO) and Tamar Jacoby, senior fellow at the Manhattan Institute.

U.S. COMPETITIVENESS...A discussion with Lynn Turner, former SEC chief accountant and Richard Rahn, chairman of the Institute for Global Economic Growth.

Please join us on CNBC at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Brainiac Immigration

Somewhere in this massive immigration deal there’s a big increase in the number of visas for high skilled, well-educated individuals. Sen. Lieberman told us last night that it would go from 65,000 to around 180,000. That’s a good thing.

In addition, foreign students who come to U.S. universities could stay and work without being included in that visa total. That could mean another 100k or so—also very good.

Smart, hardworking, ambitious men and women from around the globe—physicists, engineers, etc—want to work and raise their families here. We should welcome them with open arms. There’s a shortage of workers in the marketplace with these valuable skills, so a more liberal H1B immigration policy would address this and be extremely pro-growth.

The only downside on this as NR’s Ramesh Ponnuru told me is that immigrant engineers have to be registered to one company. I don’t know why that’s necessary. Why not just put them in the general pool of high skilled workers and let them pick and choose which jobs they want? If they’re in the job pool, and they change employers, they could simply re-register.

We ought to encourage brainiac immigration, roll out the welcome mat—not put up obstacles.

Thursday, May 17, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS & THE ECONOMY...Our market pros will offer their perspective on what's ahead.

Joining us tonight are Joe Battipaglia, CIO at Ryan Beck; John Rutledge, chairman of Rutledge Capital; Pat Dorsey, Morningstar's Director of Stock analysis; and Lakshman Achuthan, managing director, Economic Cycle Research Institute.

SENATOR JOE LIEBERMAN...We'll discuss the latest immigration developments, Iraq, and more with Connecticut's Democratic Senator.

SENATOR ARLEN SPECTER...We'll take a look at taxes and immigration.

TAXES...The Dynamic Duo of former Clinton Labor Secretary Robert Reich and The Wall Street Journal's Steve Moore will debate.

COMPETITIVENESS & CORPORATE TAX...A one-on-one interview with US Treasury Under Secretary for Domestic Finance Robert K. Steel.

Messrs. Reich and Moore will get a chance to respond following our interview.

Please join us at 5pm ET on CNBC for another free market edition of CNBC's Kudlow & Company.

So, You Want To Make U.S. Companies More Competitive?

There’s a big hullabaloo going on down in Washington right now about making America more “competitive.” Much of the hubbub centers around President Bush’s powerful Treasury man, Henry Paulson. He’s been busy holding conferences and writing various op-ed pieces on the subject.

If the Treasury Department and Congress are really serious, and really want to do something concrete and long-lasting to dramatically improve American competitiveness, then let’s cut to the chase. Let’s aim for the heart of the problem. Any lasting change requires rolling up our collective sleeve and dealing with the over taxation of American businesses.

We should not bat an eye at reducing the 35 percent federal corporate tax rate.

And, while we’re at it, we should cut the corporate capital gains tax rate as well. Loews CEO James Tisch, who is justifiably concerned about our long-term competitiveness, is pushing this latter proposal. He believes that hundreds of billions of languishing corporate asset dollars would be unlocked and reinvested if this were to occur. He’s right. The result would be an inevitable infusion of new oxygen into the corporate bloodstream. It would create new businesses and greatly expand existing ones. All this would of course create tens of thousands of new jobs for American workers, not to mention a tidal wave of new tax receipts at Treasury.

Right now, the US and Japan are the flag bearers of the highest corporate tax rates in the world. (When one includes state taxes, the US rate is actually higher—40 percent). Yet, the EU average according to Washington policy analyst Dan Clifton is only 27 percent. And virtually every country around the globe is slashing away at their corporate income tax rate. Ireland’s booming economy boasts a corporate tax rate of only 10 percent. Even France comes in lower than the US. It’s quite clear that we have put ourselves at a significant competitive disadvantage in a very palpable, real sense.

High US corporate tax burdens are reducing company investment returns to shareholders and impeding corporate management from a truly competitive after tax return on assets.

What’s more, current US tax law double taxes companies on the profits they make in the US and overseas. Not so in Europe. Across the Atlantic, companies are spared this burden through tax rebates. But our businesses are stuck with this double tax. It not only reduces our competitiveness, it also winds up forcing companies to leave their profits sitting idly overseas to avoid getting hit up twice by the taxman, rather than repatriating them back home for greater domestic investment.

At the end of the day, this country’s bold entrepreneurs understand full well that on an after-tax basis, the money returned from an investment must be significantly greater than the original money invested in order to justify the risk.

The fact is, no so-called “competitiveness action plan” can be complete without full-scale corporate tax reform. Reforming the corporate tax code is the single biggest positive step the government can take to improve American competitiveness.

Wednesday, May 16, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

STOCK MARKET & ECONOMY...Our market experts will weigh in on all the latest news and developments including today's record close for the Dow.

Our panel tonight includes Lea Goldman, associate editor at Forbes; Jill Evans, portfolio manager at Alpine Dynamic Dividend Fund; Michelle Girard, senior economist at RBS Greenwich Capital Management; and James Smith, chief economist for the Parsec Financial Management.

WAR BUDGET & SPENDING...White House Office of Management and Budget Director Rob Portman will join us from the North Lawn.

Sen. Kent Conrad (D-ND) will follow Mr. Portman.

GOP DEBATE...On board to discuss last night's debate are author/columnist Joe Conason; Bay Buchanan, author/former Treasurer of the United States under President Ronald Reagan; radio talk show host Leslie Marshall; and nationally syndicated columnist Mona Charen.

IRAQ...Senator Mitch McConnell (R-KY) will fill us in on all the latest developments.

Please join us at 5pm ET this evening for another free market edition of CNBC's Kudlow & Company.

Showdown in South Carolina

Rudy Giuliani parlayed a Reagan moment in last night’s GOP debate and therefore probably came out the winner. Remember Reagan in New Hampshire in 1980? The “I paid for this microphone” line? That really helped establish the Gipper as the strong man in the GOP field then.

Ron Paul gave Rudy a wonderful opportunity to slam the idea that, somehow, US engagement to enforce the Iraqi UN sanctions and the no-fly zones was really responsible for the 9/11 attacks. Ron Paul ran with the leftwing “I hate America” line and Rudy pounded him for it.

Undoubtedly, McCain , Romney, and others would’ve done the same, but Rudy got there first and scored heavily. Good for him. Rudy also had some nice shots at Hillary’s socialist, anti-market stuff.

Senator McCain did reasonably well, as did Governor Romney. And despite an entertaining performance by Governor Huckabee, I still don’t think he can make it into the top-tier.

Which brings up another issue: With ten candidates crowding the stage and cluttering up the airwaves (and all the flip-flop, gotcha! moments), the GOP’s strong on defense/security/Iraq message, as well as the pro-growth, low tax message that seemed clear in the first debate became diluted in the second.

As Wall Street Journal columnist John Fund told me, what people really want to know from the candidates is where will they lead the country? And how’s my 401K wealth outlook? This didn’t really get through last night as it did in the first debate.

Perhaps most important were the two people not on stage in South Carolina—Fred Thompson and Newt Gingrich. Several insiders tell me they are going to run. Sen. Thompson probably declares in June, while former Speaker Gingrich holds off until September. That will make five major candidates in a very strong field.

Against all odds, I still believe the GOP recaptures the White House next year.

Stock Market Thoughts from Michael Cuggino

Excerpt from last night's conversation with Kudlow & Company friend, Michael Cuggino. He's the president and portfolio manager at the Permanent Portfolio Family of Funds, where he manages the five-star Morningstar-rated Permanent Portfolio Fund (PRPFX).

KUDLOW: You've had this phenomenal run here. You have a great record. What is the best investment strategy? What are you doing now? Because nothing can keep going up in a straight line forever.

MR. CUGGINO: Well, I agree, Larry. As I've said before on your program, I think the economy's a lot stronger than people have given it credit for. We may be in a slowing phase, but I still think all in all, the positives way outweigh the negatives. And we're going to continue to see stock prices trend higher through the rest of the year.

Having said that, we've had a great run the last two months. The major indexes are all up between 5 and 10 percent. Probably closer to 10 percent. The Nasdaq, the S&P 500, the Dow, nothing grows to the sky, and so we're going to have some consolidation, some profit taking, no question. And investors need to keep that in mind in their long term investing profiles.

Investors should be diversified among a lot of different industry groups and stocks. They should also hedge some of their bets in some other areas. Bonds, non-US stocks and bonds, and also some commodities and precious metals because those markets have done very well, too. And investors need exposure to that when you have the inevitable downturn in stocks.

KUDLOW: So, all right. So you want people to go out and buy some bonds, you want them to buy some commodities. Commodities have been a very, very hot performing sector. Do you want them to take any chips off the table? There's no law against taking profits.

MR. CUGGINO: Definitely not. And for people that want to do that, I think the bond market's not rewarding investors for going out too long on the yield curve, you know, five, 10 years or whatever. The real yield is in the short term paper. So the ultimate safety play is to put it in cash, put it in short term Treasuries for a while, wait out things till maybe there's a better buying opportunity and then get maybe back into stocks. So that's certainly one area to take a look at.

The Disciplined Investor Podcast

Click here to listen to the podcast I taped yesterday for The Disciplined Investor.

We discussed a number of topics including the health of the stock market and economy, the global spread of capitalism, the dollar vs. the Euro, and the 2008 presidential horserace.

(Fast forward to 6:40 for the beginning of the interview.)

Tuesday, May 15, 2007

"The Anger Of The Left"

From Thomas Sowell's latest column:

...All sorts of people can have all sorts of beliefs about what tax rates are best from various points of view. But how can people work themselves into a lather over the fact that some taxpayers are able to keep more of the money they earned, instead of turning it over to politicians to dispense in ways calculated to get themselves re-elected?

The angry left has no time to spend even considering the argument that what they call "tax cuts for the rich" are in fact tax cuts for the economy.

Nor is the idea new that tax cuts can sometimes spur economic growth, resulting in more jobs for workers and higher earnings for business, leading to more tax revenue for the government.

A highly regarded economist once observed that "taxation may be so high as to defeat its object," so that sometimes "a reduction of taxation will run a better chance, than an increase, of balancing the Budget."

Who said that? Milton Friedman? Arthur Laffer? No. It was said in 1933 by John Maynard Keynes, a liberal icon....

Click here to continue reading.

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll begin tonight's show with a quick market update from the NYSE with CNBC's Mary Thompson.

A ONE-ONE INTERVIEW WITH BARNEY FRANK...Chairman of the House Financial Services Committee, Congressman Barney Frank (D-MA) will join us to discuss private equity, inflation, taxes, and more.

MARKETS, THE ECONOMY & INFLATION...Our market mavens tonight include Jerry Bowyer, economic advisor to Blue Vase Capital Management and author of The Bush Boom; Barry Ritholtz, chief market strategist at Ritholtz Research & Analytics; and Michael Cuggino, president and portfolio manager for the Permanent Portfolio Family of Funds.

TAX HIKES ON THE HORIZON?...Rep. Charlie Rangel (D-NY) will join us to discuss.

GOP DEBATE...Gov. Mark Sanford (R-SC) will be aboard to discuss the GOP debate this evening in his home state.

EINSTEIN...Walter Isaacson will join us to talk about his latest work, “Einstein: His Life and Universe,” which debuted in the No. 1 spot on The New York Times best-sellers list.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Tax Hikes Ahead?

WSJ Washington Wire headline yesterday:

"Grassley Predicts Huge Tax Increase on Wealthy"

Sen. Chuck Grassley says the top tax rate would have to jump to 46 percent from 35 percent to offset costs of a House Democratic plan to "fix" the AMT. In a floor statement, he said the result would be a “shocking” tax increase for the wealthy.

Let me also add that rumors are circulating that the House plan would take the capital gains tax to 31 percent from 15 percent. Yes, these penalty rates would hurt the most successful earners and investors.

But there’s a bigger point here: This would significantly reduce the amount of capital supplied to the economy for all manner of growth and job creation.

Tax something more, you get less of it.

Big tax rate hikes on upper-end earners and on capital gains would raise capital costs and reduce investment returns.

Remember, you can’t have a job without a business to create the job. And you can’t have a business without the capital to finance it. As a result, high tax rates on capital damage the outlook for all businesses and wage earners throughout the economy.

Think of it this way: You can’t have capitalism without capital.

Monday, May 14, 2007

Monday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS, THE ECONOMY & A HARD LOOK AT THE CORPORATE CAPITAL GAINS TAX...Our market mavens tonight include Jason Trennert, chief investment strategist at Strategas Research Partners; Jeff Matthews, general partner of Ram Partners, LP; and Gary Shilling, president of A. Gary Shilling & Co.

Loews CEO James Tisch will also be aboard and offer his unique perspective on the issue of the corporate capital gains tax.

SUNDAY UNSPUN...Frank Newport, editor-in-chief of The Gallup Poll will sift through all the latest media distortions.

YOUR MONEY, YOUR VOTE...We'll take a look at Senator Barack Obama, taxes and more with Kim Strassel, member of The Wall Street Journal's editorial board and Jared Bernstein, economist at the Economic Policy Institute.

GOTCHA POLITICS...Ms.Strassel and Mr. Bernstein will discuss.

HOUSING...Housing and Urban Development Secretary Alphonso Jackson will weigh in with his insights.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Same Old Song and Dance

Obama says he’s the candidate of fresh, new ideas, but what’s so new about tax hikes on the rich?

And what’s so new about bailing out Detroit’s vastly overgenerous pension and health benefits? That’s a UAW union bailout.

And how to explain Obama’s repeated assertions on “This Week with George Stephanopoulos" yesterday that when it comes to Social Security reform, “everything should be on the table”—everything, that is, except for privatization?

No surprises here from the Democratic contender.

Senator Obama also told Mr. Stephanopoulos that a part of him has always been “a little bit conservative.”

Yet, nonpartisan National Journal’s analysis of voting records reveals Obama to be the most liberal of all the Democratic presidential hopefuls. His score was an 84.3. That means he’s more liberal than over 84 percent of his Senate colleagues—more liberal than Hillary, John Kerry, Harry Reid and Russ Feingold.

Nothing new here so far.

Friday, May 11, 2007

The Dems' First Four Months

Excerpt from last night's Kudlow & Company.

KUDLOW: The House has passed a budget resolution for the next five years. The Senate is passing one too. It's going to go to conference. That does not include extension of the Bush tax cuts for investors, capital gains, particularly, and dividends also. That's going to be a tax hike. What's your take on this? Is there any recourse left, or is this just going to go through?

REP. ADAM PUTNAM: Let me give you the highlight video here. The Democratic Congress, in their first four months, are retasking our intelligence agencies to track polar ice caps instead of al-Qaeda. They're trying to send a message to the Iraqi government by cutting off funds for American troops. They are raising taxes by the largest increase in American history. The second largest tax increase in American history was done under Clinton's administration. They are eliminating the rate relief that we have provided for families, for family farmers and small businesses, and most importantly, for investors that are contributing to a mind-blowing, record breaking economy. That's what they've been able to produce in four months.

Raising tax rates slows the economy, diminishes revenues, and widens the budget gap.

Yank the Bank

George Will absolutely blasts the World Bank in his latest column. Will is dead right. We don't need the World Bank. On top of the billions of dollars in waste and corruption, private capital markets are much more efficient.

From Will's column:

The kerfuffle over whether Paul Wolfowitz, the World Bank's president, behaved badly regarding the contract for his companion to facilitate her departure from the bank involves no large issue. The bank's existence does. The bank's rationale, never strong, has evaporated.

Born in 1944, at the apogee of confidence in governments and international governmental organizations, the bank's mission is ''to fight poverty with passion and professionalism.'' The great prerequisite for curing poverty is, however, economic growth, and the world has learned, during a 63-year retreat from statism, that the prerequisite for growth is free markets allocating private capital to efficient uses...

Thursday, May 10, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will get us started with a report from the NYSE.

Our market/political panel tonight includes Stefan Abrams, Quantamental Capital Partners managing partner; John Browne, NewsMax Media’s Financial Intelligence editor; John Fund from The Wall Street Journal; and Seth Tobias, president of Circle T Partners.

The panel will stick around for the whole show.

CONGRESS WAR FUNDING...Rep. Joe Sestak (D-PA) and Rep. Adam Putnam (R-FL) will be aboard.

IMMIGRATION...Commerce Secretary Carlos Gutierrez will join us for a one-on-one interview.

CHINA CURRENCY MANIPULATION...Rep. Tim Ryan (D-OH) will offer his perspective.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

The Widening of King Arthur’s Court

Another terrific NRO column by my friend Jerry Bowyer.

Elizabeth MacDonald of Forbes magazine revealed on CNBC’s Kudlow & Co. that she refers to the founding father of modern supply-side economics as “Saint Arthur Laffer,” since his economic reckonings have done so much good for the world. Larry Kudlow likes the monicker, and so do I. But over here at Bowyer Media’s central command, we call him King Arthur. Why? Because Arthur Laffer has both conquered his foes and liberated untold people. (Plus, “King Arthur” sounds cool.)

The realm of King Arthur has done well of late. Last week, the Laffer curve, a much maligned though powerful predictive tool, got another notch in its belt: Tax revenues hit the highest one-day point in U.S. history.

Of course, there’s a bit more to the story. President Bush cut tax rates in 2003, and tax revenues have been climbing ever since — a trajectory the Laffer curve predicts when tax rates are made less prohibitive. The process may seem counterintuitive, yes. But anybody who bet against it lost out.

Today, it’s still the fashion for American pundits and pols to snicker at the revenue-enhancing power of tax cuts. But while they laugh, the world at large is shifting toward what works. First it was Estonia going for a Forbesian flat tax. Then Germany elected the Rhineland’s answer to Margaret Thatcher. That was good for as far as it went, but now France? Yes, the people of Gaul found their inner Charlemagne and put tax-cutting Nicolas Sarkozy into office.

The realm King Arthur continues to widen.

Democrats Dooming Themselves to Defeat

(My latest syndicated column.)

The Democratic Party may be convincing itself that it's riding high in the polls toward a White House victory in next year's election. But you know what? On two key themes -- taxes and national security -- the Democrats may be dooming themselves to defeat.

Watching the two presidential debates, one can't help but notice the stark differences between each party's approach to these core issues. And it's hard to see how the general electorate is going to buy what the Democrats are selling.

To a person, each Democratic presidential candidate wants to undermine the global war against jihadist terrorism -- wherever it may be, and especially in Iraq. The Democrats see a civil war in Iraq, where the Republicans view a growing al-Qaida threat. And while Republicans talk about significantly increasing the defense budget and expanding American force levels for all the armed services, the Democrats are hoping for some sort of Iraqi peace dividend upon immediate withdrawal -- one that can be re-channeled into higher domestic social spending.

To a person, each Democratic presidential candidate also wants to raise taxes on the rich and roll back President Bush's tax cuts. The Republicans, however, understand that those tax cuts have propelled economic growth and contributed to a stock market boom. And they recognize that Bush's Goldilocks bull-market economy -- which I call the greatest story never told -- relies on extending the investor tax cuts and perhaps even moving forward with a flat tax or national sales tax.

Finally, to a person, each Democratic presidential candidate also has it in for corporate America. The Democrats discuss various punishments for business -- especially oil companies, but also drug, utility and insurance firms. Not so for the Republicans, who talk about helping businesses and promoting entrepreneurship in our successful free-enterprise economy.

The differences between the two parties couldn't be clearer, and next year the voting public will have a very stark choice. But with this election season only two debates old, that choice already favors the Republican position.

Think of it: The Democrats talk about ending "tax cuts for the rich," all while bashing American corporations. But isn't this the same tired message that sunk Al Gore, Mike Dukakis, Walter Mondale and Jimmy Carter? It's never been a winner, and it's going to help cripple whoever grabs the Democratic nomination next year.

And as former Commentary editor Norman Podhoretz has written, as the Democrats pay too much attention to the left wing of their party, their defeatist, weak-on-national-security riff may have already sunk them in 2008.

Consider this: When the appropriate time comes for a gradual troop withdrawal from Iraq, the voting public is far more likely to want a tough-on-defense president to negotiate the event. Go all the way back to the Korean War. Voters selected Gen. Dwight D. Eisenhower to negotiate withdrawal, rather than the much more liberal Adlai Stevenson. Or recall that in 1968 voters chose the tough-minded Richard Nixon to manage a pullout from South Vietnam, rather than the fuzzy-thinking Hubert Humphrey.

Here's another example of the ever-widening void that separates each party's stable of candidates, and of the fact-versus-fiction choice that awaits voters in 2008: House and Senate Democrats are in the process of crafting a five-year budget resolution that leaves out investor tax-cut extensions for capital gains and dividends. They say they are trying to balance the budget and increase tax revenues. Yet the latest budget report unequivocally shows that these very same investor tax cuts have paid for themselves.

Non-withheld income taxes -- read cap-gains, dividends and income from small owner-operated businesses -- hit a record high of $49 billion on April 24. So far this year, this tax-collection category has shot up 30 percent, while withheld income-tax collections at lower tax rates have jumped 17.5 percent.

In other words, the Laffer curve is working: Lower tax rates lead to higher tax revenues through a growing economy and a larger income base. By removing pro-growth tax cuts, the Democratic budget will actually slow the economy, diminish revenue growth and increase the out-year budget gap.

Ignoring all this, in addition to the reality of a 4.5 percent unemployment rate and Dow 13,000, is a Democratic triumph of liberal ideology over objective empirical analysis.

It's also a recipe for Democratic disaster about a year and half from now.

Wednesday, May 09, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS/FED/ECONOMY...CNBC's Bob Pisani will lead us off with a report from the NYSE.

We'll have a debate between Deutsche Bank's chief US economist, Joe LaVorgna, and Michael Darda, chief economist and director of research for MKM Partners.

MARKETS & COMMODITIES...Metals trader/president of Resolved Inc, David Threlkeld will join Frank Holmes, chairman of U.S. Global Investors to discuss what's ahead.

Messrs. LaVorgna and Darda will weigh in with their perspective.

"WHERE HOME PRICES ARE HOT NOW"...CNBC's Diana Olick will get us started with a special report. She will be followed with insight from our market/economic panel.

SENATE AGENDA...CNBC's John Harwood will give us an update on all the hot topics on Capitol Hill including immigration, taxes & fuel standards.

Senators John Cornyn (R-TX) and Sen. Bernie Sanders (I-VT) will be aboard.

"CONSERVATIVES FOR HILLARY"?...A debate between Pat Toomey, president of the Club for Growth and Bruce Bartlett, author/former senior fellow with the National Center for Policy Analysis.

Please be sure to join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Hats off G-Men

Thank God for the men and women in the FBI.

The G-Men struck a big blow for freedom by capturing the Fort Dix terrorists. These jihadists wanted to kill as many American soldiers as possible. Their arrest and capture is a pivotal homeland security event.

Shame on CNN for editorializing in their news report that these jihadists were not hardcore terrorists. That’s insane. As terrorism expert Steve Emerson said on last night’s show, it is unfortunately indicative of an attitude at CNN that sometimes minimizes the threat of radical Islam.

And shame on the Democrats (and handful of Republicans) hamstringing law enforcement’s ability to move swiftly through electronic surveillance. In other words wiretapping, eavesdropping, cell-phone tapping, Internet tapping, etc. These are the essential tools.

We may not be able to stop all the terrorists from getting into the US, but once they’re here, we sure can monitor them electronically. Why on earth they try to tie the good guys hands behind their backs in digging up these jihadists is beyond me.

Make no mistake here: the capture of these terrorists is further proof of why we must give our Homeland Security authorities all the necessary tools to break these evil murderous plots up. We need to give them all the ammunition they need.

At any rate, this is a big win for the FBI. It’s a big win for homeland security. And it's a big win for this great country and freedom.

Wrong on Taxes, Wrong on Defense

The House passed a budget resolution yesterday that leaves out investor tax-cut extensions for capital gains and dividends. While it does include extension of the kiddy credits and the marriage deduction, it’s actually the investment tax cuts that deliver the real economic growth impact by reducing the tax rate on the extra dollar earned from the sale of assets or the receipt of dividends.

Ironically, the latest budget report clearly shows that these investor tax-cuts have paid for themselves. Remember, non-withheld income taxes hit a record high on April 24th at $48.7 billion dollars. So far this year, this tax collection category has shot up 30 percent. By the way, income tax collections at lower tax rates have jumped by 17.5 percent.

Democrats and the official Washington scorekeepers never acknowledge the Laffer Curve that shows lower tax rates lead to higher tax revenues through a growing economy and larger income base.

What the Dems have done in their budget resolution is to endorse the least growth-sensitive tax cuts and to eliminate the tax-cuts that possess the largest growth impact.

By the way, with congressional Dems once again vowing to end “tax cuts for the rich” and the same tired message coming from the Democratic presidential hopefuls—Hillary, Obama, Edwards—the party is crafting a losing election year tax message. Tax cuts for the rich have never worked in presidential elections. (Just ask Mike Dukakis, Walter Mondale, or Jimmy Carter. Or ask Al Gore if you can find him.)

This high tax Democratic message is a key reason why I believe Republicans will recapture the White House next year. The other key reason is the Democrats’ defeatist message on the terror war, jihadism, and Iraq.

High taxes and weak on national security is a losing presidential message.

Tuesday, May 08, 2007

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

TERROR ARRESTS...CNBC reporter John Harwood will lead us off with all the latest from New Jersey.

Terrorism expert and author Steve Emerson will weigh in with his analysis.

MARKET REACTION...We'll discuss the impact on the stock market, if any, from today's terror arrests.

On board to discuss are John Rutledge, chairman of Rutledge Capital; David Kotok, Chairman and Chief Investment Officer at Cumberland Advisors; and Herb Greenberg, CNBC contributor and senior Marketwatch columnist.

HOMELAND SECURITY, DEFENSE STOCKS & ETFs...Messrs. Rutledge, Kotok & Greenberg will weigh in.

IMMIGRATION: AN ECONOMIC INDICATOR...Dawn McLaren, a research economist at Arizona State's business school will lead us off with her analysis. She will be followed by the market panel.

SARKOZY & THE INTERNATIONAL MARKETS...our market panel will regroup to discuss the latest news out of France and what it means for markets going forward.

SARKOZY & REPUBLICANS IN '08...The Dymanic Duo of former Clinton Labor Secretary Robert Reich and The Wall Street Journal's Steve Moore will debate the meaning here at home of Sarkozy's win in France.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

The Spirit of Sarkozy

All along, Nicolas Sarkozy ran for president in France as a capitalist and a friend of America. He made it very clear that he wants France to move toward a true market economy—one that creates a more hospitable environment for business, investors and entrepreneurs.

In particular, he hopes to appeal to young people, so they will stop migrating to London and New York in search of wealth creation. Smart, ambitious French expats have been proliferating in Britain and the United States in search of financial opportunities that are denied in abysmally high-taxed France. So, Mr. Sarkozy will attempt to reduce taxes, curb unions, and reform labor laws.

Essentially he wants a new France where it pays to work and invest, after-tax.

Many of the labor restrictions on working will be loosened or removed. He also wants to cut spending, especially the bloated French bureaucracy of socialist planners. Think a dose of Thatcherism—a freeing of the French economy. Hopefully he will not protect French companies from fierce global competition.

However, Sarkozy still has a dose of protectionism for the EU. This could be a problem. And, of course, he needs a much better national assembly, which has been where the left wing union and crazy socialist parties have thwarted French efforts for decades to move toward American-style capitalism.

The top personal tax rate in France is 49.6 percent, plus a near 20 percent value-added tax. Corporations are taxed at 34 percent.

Of note, in the run-up to the Sarkozy election, the French CAC stock market from mid-March rose 14 percent in Euro terms, and 17 percent in dollars, thereby outperforming the S&P 500’s 9 percent gain in the U.S.

The Sarkozy win also suggests that Ségolène Royal/Hillary Clinton won’t win here in the U.S. It also suggests that Jacque Chirac/George W. Bush (although this is terribly unfair to Bush) will not necessarily weigh down their party’s candidate in the next presidential election.

After watching the debates by Republican and Democratic presidential contenders in the U.S., I believe the low-tax, strong on defense GOP will recapture the White House against the high-tax, defeatist on defense Democrats.

In any event, the Sarkozy story is a good one. It lifts the spirits for freedom-loving capitalists like myself.

Monday, May 07, 2007

"Battle of France"

From the editors at National Review Online:

"...So, if representative democracy works as it is supposed to do, Sarkozy will push through the market reforms that France has needed for at least two decades. He will deregulate its labor market, slim down the public-sector payroll, abandon the symbolic 35-hour work week, reduce public spending from its current 52 percent of GDP, and reform the French welfare state. Friends and admirers of France will hope that he succeeds. Americans will be especially supportive since he has said that with his election the U.S. has a “friend” — presumably he will end the anti-Americanism that has shaped French foreign policy under Jacques Chirac, his old patron and recent bitter rival. But will Sarkozy be able to push through such an ambitious and contentious program against opposition in the streets as well as in the corridors of power?...."

We certainly hope so.

Click here for more.

Friday, May 04, 2007

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...Which party is the best for the stock market? Republicans or Democrats? Plus, the impact of the jobs number on the market and much more...

Our market panel tonight includes Craig Columbus, chief market strategist with Advanced Equities; Joe Battipaglia, Ryan Beck CIO; and Doug Kass, president of Seabreeze Partners.

THE ECONOMY & FED...Joe LaVorgna, chief US economist at Deutsche Bank will debate Lakshman Achuthan, Economic Cycle Research Institute Managing Director.

REPUBLICAN PRESIDENTIAL DEBATE...CNBC Chief Washington Correspondent John Harwood will offer his perspective.

YOUR MONEY, YOUR VOTE...On to debate are Jerry Bowyer, economic advisor to Blue Vase Capital Management and the author of The Bush Boom; Lawrence O'Donnell, MSNBC political analyst and producer of “The West Wing”; Jimmy Pethokoukis from U.S. News & World Report, and Edward Gresser, director of the Project on Trade and Global Markets at the Progressive Policy Institute.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Thoughts on Last Night's GOP Debate

Governor Mitt Romney and Senator John McCain were the overall winners in last night’s presidential debate—but tax, trade, and business polices were the losers, because so little was said about them.

When the Democrats debated last week, they were uniformly in favor of higher taxes and various punishments for business—especially oil—but also drug companies, utilities, insurance, and the usual litany of business bashing.

In the GOP debate last night, there was nothing said about business regulatory polices. And while all the candidates responded to a tax question by favoring lower taxes of one kind or another, there were almost no details, and no protracted discussion or debate.

One statement by Mr. Romney confused me. Namely, he proposed to eliminate taxes on saving and investment including interest, dividends and capital gains for the “middle class.” I don’t know what this means. Was it possible that he is leaving the door open for tax hikes on upper end successful investors? I find that hard to believe given his earlier statements and speeches. But I was confused by the middle class designation—it sounded like a Democratic talking point.

On the whole, I thought Mr. Romney did very well last night on a number of subjects. And he looked very much like a president. But I was puzzled by his middle class reference to tax reform.

Most interestingly, I heard many echoes of Ross Perot and his 1992 independent candidacy from Sen. John McCain. It is very clear that Mr. McCain intends to emphasize spending control and pork barrel busting for the U.S. federal budget. It’s also clear that the Arizonan attaches a higher priority to this than any particular new ideas on tax cuts or tax reform. He did state clearly that he will keep the Bush tax cuts and that is a good thing.

But it was fascinating to me that numerous times—perhaps half a dozen during the debate—McCain referred to “out of control spending” and the need to veto pork measures and make their authors famous.

Of course Sen. Backbone was very strong on defense, the Iraq war, and chasing down the al Qaeda, Islamic jihad terrorists. In other words, strong defense and strong budget cutting. This was Ross Perot’s successful message when the Texas businessman captured nearly 20 percent of the vote and inflicted large-scale damage on President George H.W. Bush. In some sense, McCain’s Perot strategy is very clever, because the Republicans were crushed last November in large part because they lost the so-called Perot independent vote.

Back in 1994, the Gingrich Contract with America Republicans captured the House for the first time in forty years by bringing the Perot independents into the GOP congressional tent. That strategy emphasized federal spending control and deficit reduction over and above broad based tax reform and tax cutting.

In 1996, Steve Forbes ran for president on a 17 percent single rate flat tax program in part as a response to Gingrich timidity on big bang tax reform. When Forbes ran again in 2000, he forced then Governor George W. Bush to include lower marginal tax rates in the Texan’s campaign litany.

What John McCain appears to be doing this year is essentially to say ‘tax rates are low enough and I’ll keep them that way’. But his principle emphasis is definitely on spending cuts and a much-strengthened military posture to fight the global terror war. It’s almost as though Mr. McCain’s implied thinking is to try and shift unnecessary wasteful and pork barrel domestic spending into a much needed buildup in military spending. And again, he is clearly reaching out to what’s left of the Perot independent voters to bring them back into the GOP big tent in 2008.

At one point, McCain referred to overspending as the “burgeoning deficit.” He does want to repeal the AMT and he did mention a simpler, flatter, fairer tax system, but spending cuts are clearly his top economic priority. The McCain strategy has political merit because the GOP can’t win the White House next year unless it recaptures the independent vote. Fixing federal finances and rebuilding defense resources could be a winning message.

Rudy Giuliani referred to his New York City successes in cutting taxes and spending, but last night was not his night. He didn’t project well, he was uncomfortable, almost indecisive in many of his responses, including his confusing answers to abortion questions.

It’s still early in the game, and there’ll be plenty more debates to clarify the GOP race. Of course former Sen. Fred Thompson looms large as a potentially significant player in a Republican party where some polls show that half of likely GOP voters are not happy with the current field.

But I would give first blood to Sen. McCain, whose reach out to the old Ross Perot base was a very crafty gambit.

Thursday, May 03, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS/ECONOMY...Joining us tonight are Jerry Bowyer, economic advisor to Blue Vase Capital Management and the author of The Bush Boom; Gary Gensler, former Treasury Undersecretary; Don Luskin, CIO at Trend Macrolytics LLC; and Daniel Adamson, co-founder and President of The Blue Fund.

SIMI VALLEY SHOWDOWN...We'll dicuss tonight's GOP presidential debate in a one-on-one interview with Sen. Lamar Alexander (R-TN) close friend/supporter of Fred Thompson.

We'll also talk with Ed Goeas from Rudy Giuliani's campaign, Vin Weber from Mitt Romney's campaign and Steve Schmidt from Sen. McCain's camp.

POLITICAL PANEL...Weighing in with their perspective will be The Wall Street Journal's John Fund; Kellyanne Conway, president of the polling company; and Chris Cillizza from The Washington Post.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Reagan's Heirs?

So let me get this straight – earnings are up, ISM-manufacturing is up, ISM-services is up, productivity is up, factory orders are up, media stocks are up, the overall stock market is breaking records, household net worth is up, financial assets of individuals and corporations have increased vastly more than their liabilities, and jobless claims are way down. These are just a few snippets of continued economic prosperity.

There is no bubble. There is no recession. And with core inflation a mere 2.1 percent over the past twelve months, the Fed can declare victory and go home.

The Dow is enjoying its best winning streak since 1955. It has risen in 21 of the last 24 sessions. The S&P 500 crossed 1500 this morning for the first time since September 2000 (when Dick Cheney first said that the economy was on the “front end” of a recession).

Now, as the Republican presidential candidates prepare for tonight’s debate at the Reagan Library in Simi Valley, California, will they talk about the Bush stock market/economic boom?

Will they talk about George W. Bush’s low tax rate economic strategy that rescued the economy?

Will they talk about the Democrats high tax strategy unveiled in their debate last week?

Will they talk about Ronald Reagan’s low tax, deregulatory, disinflation restructuring of free market American capitalism 25 years ago that unleashed a 25 year long boom that has produced 95 percent prosperity with only 5 negative GDP quarters?

There is a clear difference between the two parties on taxes and the economy, just as there’s a clear difference between the two parties on war and national security. Will the Republican 10, or the Big 3, make these key points in this evening's debate?

Wednesday, May 02, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will get us started with a look at another record breaking day for the Dow.

Our market pros tonight include John Rutledge, chairman of Rutledge Capital; Jeff Saut, Raymond James Chief Investment Strategist, and Vahan Janjigian, V.P. and Exec. Director at Forbes Inc. and host of MoneyMasters.

WASHINGTON TO WALL STREET...Mort Zuckerman, magazine editor/publisher/real estate developer will join Walter Isaacson, president of the Aspen Institute/former managing editor of Time and chairman of CNN and Robert Reich, former Clinton Labor Secretary.

Topics will include what a U.S troop pullout from Iraq would mean to oil/business, Murdoch's Dow Jones bid, and a preview of tomorrow's GOP debate.

TAX DEBATE...Mr. Reich will square off with Steve Moore from The Wall Street Journal's editorial board.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Confession of a Permabear

An exchange with my good friend Herb Greenberg on last night's Kudlow & Company:

KUDLOW: [Portfolio manager Noah Blackstein] called you a permabear, Herb. I believe he called you a permabear. You're part of the three bears and Goldilocks. What's your take?

GREENBERG: I've been wrong. I've been wrong. I've been dead wrong about what I thought stocks would do, because I thought there would be some reality brought into it. And you can't hide from that. But I also think that this is a market that just wants to go so much higher, Larry. There's so much money out there. There’s so much liquidity. You can't fight that.

Tuesday, May 01, 2007

Tenet’s Take on the Clinton Administration

While the mainstream media has focused on former CIA Director George Tenet’s battle against the Bushies—namely what a “slam dunk” really means—and whether the administration fully considered the consequences of an Iraq war, it turns out that Mr. Tenet was highly critical of the Clinton administration as well in his new book, At the Center of the Storm. reports that the Tenet book rips former President Clinton for defunding the CIA budget by 25 percent. That is incredible. Former budget and defense official William Schneider (who chaired one of the Rumsfeld Defense Department advisory planning boards) told me this a few years ago, but I plum forgot it.

As it turns out, Tenet made a special deal with then House Speaker Newt Gingrich for supplemental appropriations increases to help out the CIA in the late 1990s, to help get around the Clinton budget cuts. But that’s no way to run a railroad.

I intend to go out and purchase Tenet’s book and read it. I suspect it’s more balanced than the MSM would have us believe.

At President Reagan’s memorial funeral service in Washington during the summer of 2004, I sat next to Mr. Tenet. We chatted at length before the ceremony began. I was very impressed at the time. Bush spokesman Dan Bartlett is calling him a patriot.

I intend to read the book.

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

RUPERT MURDOCH'S $5B BID FOR DOW JONES...We're going to dig down deep into this huge media story.

Our guests include Forbes Magazine's Dennis Kneale; The Chicago Tribune's Jim Warren; former New York Post Publisher Ken Chandler; Newsmax's John Browne; National Review's Stephen Spruiell; Human Events editor Jed Babbin; and political commentator Bill Press.

Sen. Bernie Sanders (VT) will join us to talk about "The Fairness Doctrine."

A LOOK AT THE STOCK MARKET...Noah Blackstein, lead portfolio manager for the Dynamic Power American Growth Fund will debate CNBC contributor/Marketwatch columnist Herb Greenberg.

THE ECONOMY & THE DOLLAR...Economist Art Laffer will debate John Browne, NewsMax Media’s Financial Intelligence editor.

IMMIGRATION DEBATE...The Wall Street Journal's Kim Strassel will square off with Jared Bernstein, senior economist with the Economic Policy Institute.

It's going to be another great show tonight...please join us at 5pm ET on CNBC.

Murdoch on the Move

The combination of Rupert Murdoch and the Wall Street Journal’s Dow Jones & Co. is totally awesome. The left wing media may scream like stuck pigs, but this is one powerful combination.

Think of it: the conservative Mr. Murdoch aligned with Fox News and possibly the WSJ’s editorial page, which is unquestionably the greatest conservative opinion platform in the world. Add to that the WSJ and the expected Fox business channel and you get one powerful combination.

Many believe that the WSJ online—with roughly 800,000 paying subscribers—is the best web property in the media.

Yes, as a CNBC talk show host, losing the WSJ link to Fox’s business channel will hurt. But that will all get sorted out later. Business aside, the consolidation of conservative editorial forces is something that pleases me enormously.

We’ll see how it all plays out.