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Kudlow’s Money Politics

Larry Kudlow’s daily web log of matters political and financial.

Speedier Growth



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Retail sales beat the street. They came in almost twice what economists expected.

Gas prices haven’t slowed the consumer down, nor has the overrated (and much exaggerated) housing slump. Some Wall Street economists like Bear Stearns John Ryding are now talking about 3

An Idea Whose Time Has Come?



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Iran is supplying weapons to Taliban terrorists in Afghanistan Undersecretary of State Nicholas Burns told reporters today.

This comes on top of clear evidence that Iran is furnishing support to terrorists in Iraq via training, IEDs, etc in order to disrupt and kill U.S. and coalition military forces.

Senator Joe Lieberman and Senator John McCain have both suggested bombing Iranian bases that are actively aiding our enemies.

On Sunday, Mr. Lieberman told Bob Schieffer on Face the Nation, “I think we’ve got to be prepared to take aggressive military action against the Iranians to stop them from killing Americans in Iraq. And to me, that would include a strike into… over the border into Iran, where we have good evidence that they have a base at which they are training these people coming back into Iraq to kill our soldiers.”

Mr. Lieberman said that he was not calling for an invasion of Iran, but did say we should target specific training camps.

Is this an idea whose idea whose time has come?
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Porkbusting



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PRESS RELEASE

Americans for Prosperity Joins Porkbusters.org in Recruiting Citizens to Help U.S. Rep. Obey Evaluate 36,000 Pork-Barrel Earmark Requests

Hundreds of Taxpayers Sign Up to Review Local Projects in First Few Hours


WASHINGTON ‘” The free-market grassroots group Americans for Prosperity today joined with the Porkbusters.org website in setting up an online petition that will allow taxpayers from across America to volunteer to help House Appropriations Committee Chairman David Obey evaluate the merit of the 36,000 earmark requests he’s received from rank-and-file House members this year.

As the House begins consideration of this year’s appropriations bills, Chairman Obey has announced that he and his staff haven’t had time to adequately review this year’s earmark requests, so they will be forced to stick them into un-amendable conference reports later this year. In a letter to Chairman Obey last week, Americans for Prosperity President Tim Phillips volunteered the help of thousands of AFP’s grassroots taxpayers, and the kickoff of this new petition drive is the next step in that effort.

’As you know, Internet technology has made research faster and easier than at any previous time in human history,’ Phillips pointed out in his letter to Obey. ‘By releasing your 36,000 earmark requests to Americans for Prosperity, our allies in other pro-taxpayer groups and to concerned bloggers, we would be able to unleash taxpayers across the country in a cooperative effort to determine which Members of Congress may have financial conflicts attached to their earmark requests, which local projects may be unworthy of federal funding and which may have value to the taxpayers.’

Taxpayers can sign up to help Chairman Obey vet pork-barrel requests at Porkbusters. As of Noon Eastern time on June 12, just three business hours after the online petition was first publicized, more than 250 citizens had signed up to help evaluate earmark requests ‘” if only Chairman Obey would release them to the public.

In response to Chairman Obey’s refusal to release details of any pork-barrel earmarks until after the House passes its spending bills, Americans for Prosperity last week also challenged Members of Congress to sign an earmark transparency pledge. Signers of the pledge agree to voluntarily post details of their earmark requests on their Congressional websites within 72 hours.

CAIR Membership Plummets



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Some good news to start your day…

From the Washington Times:

Membership in the Council on American-Islamic Relations (CAIR) has declined more than 90 percent since the 2001 terrorist attacks, according to tax documents obtained by The Washington Times.

The number of reported members spiraled down from more than 29,000 in 2000 to fewer than 1,700 in 2006. As a result, the Muslim rights group’s annual income from dues dropped from $732,765 in 2000, when yearly dues cost $25, to $58,750 last year, when the group charged $35…

Monday Night Lineup



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On CNBC’s Kudlow & Company this evening:

A LOOK AT THE MARKETS…Joining us tonight are Ed Yardeni, president of Yardeni Research; Dr. Bob Froehlich, chairman of the Investor Strategy Committee of DWS Scudder; and Donald Coxe, global portfolio strategist at BMO Financial Group.

HOUSING/ECONOMY DEBATE…Squaring off tonight are Gary Shilling, president of A. Gary Shilling & Co, and economist Art Laffer, president of Laffer Associates.

SUNDAY UNSPUN…Frank Newport, editor-in-chief at Gallup will sift through all the latest media spin.

WASHINGTON TO WALL STREET DEBATE…On to debate AMT reform, Microsoft’s antitrust story and immigration are The Wall Street Journal’s Kim Strassel and Jared Bernstein, senior economist from the Economic Policy Institute.

HOUSING SECRETARY ALPHONSO JACKSON…will join us in an interview.

Please join us on CNBC at 5pm ET for another free market edition of Kudlow & Company.
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A Dead-End for Democrats



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Now that French voters are giving him a decisive parliamentary majority, President Nicolas Sarkozy is going to launch a pro-growth, tax cutting, deregulation, reform plan.

In other words, Reaganomics finally comes to France.

Here at home, all the Democrats running for president (except New Mexico Governor Bill Richardson) want to raise personal and corporate taxes. They want to punish profits.

So, let me get this right: while Reaganomics spreads from Eastern Europe’”with low flat tax plans proliferating everywhere’”into Western Europe, the supply-side model still has not infiltrated the Democratic party.

And to make matters worse, House Dems are now proposing a 4.3 percent surtax on successful earners that will allegedly solve the AMT problem, but in fact, might end up hitting families making as low as $75,000 according to last Friday’s Washington Post article.

The Democrats are stuck in a punitive, soak-the-rich time warp with class warfare written all over it.

Despite all the current polls, I still believe their Walter Mondale approach to taxes and their McGovernite soft-on-the terror war approach is a losing combination that will doom the Dems next year.

They are going the wrong way.

Star Treatment



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I believe this celebrity justice story about Paris Hilton is yet another exmple of the cultural decline in the rule of law — the spread of moral and legal relativism and a continued blurring of the standards of right and wrong.

Friday Night Lineup



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On CNBC’s Kudlow & Company this evening:

STOCK MARKET DRILLDOWN…Joining us tonight are Craig Columbus, President & Chief Market Strategist with Advanced Equities Asset Management; Ryan Beck CIO Joe Battipaglia; and Stefan Abrams, managing partner at Bryden-Abrams Investment Management.

AN INFLATION DEBATE…Joe LaVorgna, chief US economist at Deutsche Bank will square off against Brian Wesbury, chief economist at First Trust Advisors.

U.S./RUSSIAN RELATIONS…Joe Cirincione, vice president for national security at The Center for American Progress will debate Human Events editor, Jed Babbin.

THE DYNAMIC DUO…Robert Reich, former Labor Secretary and professor of public policy at the University of California at Berkeley will debate Steve Moore, senior economics writer for The Wall Street Journal editorial board.

We’ll take a look at what’s ahead with the AMT, and whether the Paris Hilton saga is evidence of a decline in American values.

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

Putin’s Russia



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We had a great interview with General Al Haig last night. The former Secretary of State under President Reagan and retired four-star general in the United States Army told us the KGB is running Russia with Putin. If General Haig is even nearly right, then that presents a big problem for this country. We have to be tough and smart to deal with it.

One idea he didn’t exactly respond to is that Russia’”backed by huge oil profits’”is forcing its way back onto the world stage and attempting to be a superpower that it really is not. (Certainly not in economic terms, nor in military terms, but it does have a superpower nuclear arsenal.) However, it looks like one of Putin’s strategies is developing a coalition of ‘fruits and nuts””a list that includes Iran, Syria, Venezuela, the Palestinian government, and perhaps North Korea. We also know they’re helping Iran develop their nukes. And they’re stopping the US and her allies from sanctioning Iran and preventing nuke development. All of this is fraught with danger. That’s the bottom line here.

All in all, General Haig did a great job painting this picture. Here’s a portion of what he had to say:


“This is now an issue of a different Russia’

Thursday Night Lineup



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On CNBC’s Kudlow & Company this evening:

We’ll begin with a stock market update from CNBC Wall Street reporter Melissa Lee live from the floor of the NYSE. We’ll also get a report from the G8 summit in Heiligendamm, Germany from CNBC’s Trish Regan.

INTERVIEW WITH ALEXANDER HAIG…President Reagan’s Secretary of State will discuss Russian/American relations and other issues du jour.

STOCK MARKET PERPSECTIVE…Our market mavens will offer some cool perpspective on the latest market gyrations.

Joining us are Michael Cuggino, president/portfolio manager for the Permanent Portfolio Family of Funds; David Sowerby, portfolio manager/chief strategist at Loomis Sayles; Bob Hormats, vice chairman of Goldman Sachs International; and Brian Flanagan, portfolio manager at Thrivent Mid Cap Stock Fund.

ECONOMIC DEBATE…Squaring off this evening are Deutsche Bank economist Joe LaVorgna and Lakshman Achuthan, managing director at ECRI.

POLITICAL DEBATE…On to debate the war on terrorism and immigration are Ann Coulter, syndicated columnist and Lawrence O’Donnell, political analyst and Emmy winning producer of NBC’s ‘The West Wing.’

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

The Thompson Interview



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Some compelling, pro-growth ideas from likely GOP presidential candidate Fred Thompson on last night’s Kudlow & Company. Here’s a sampling…

KUDLOW: Let’s pick up on a couple of those ideas. First of all, tax reform. Specifically, sir, what kind of tax reform were you thinking about?

Mr. THOMPSON: Well, I don’t want to get into a lot of details in terms of a plan before I even announce my candidacy’”but simpler without question. You know, I’m told now that most people can’t figure out how to compute their capital gains and dividend liability. Things could just get more and more complicated.

We got the ridiculous thing with the death tax where on December 31st, you know, 2010, if you die, you have zero liability. But, if you die 24 hours later, you know, you could lose over half your estate to the federal government. That’s just one indicator of the ridiculousness that’s in the tax code now. It makes us less competitive in a lot of different ways. We have, you know’”if you include state taxes’”the highest corporate tax rate in the world. That makes us less competitive. All those things have to be looked at. And all those’”especially as far as the corporate tax rate is concerned, need to be clearly reduced, I think.

KUDLOW: Yeah, it’s an interesting point. There’s been a bunch of news articles. Europe, believe it or not–I mean, old Europe, believe it or not is engaging in low tax-cutting competition. And…

Mr. THOMPSON: It’s ironic that when western Europe starts going lower than you, you need to be concerned about it.

KUDLOW: So one of your moves as president would be to go right after that…

Mr. THOMPSON: Yeah.

KUDLOW: …and then get us back into equilibrium? Is that right?

Mr. THOMPSON: Yeah. There’s no question about it. There’s no excuse for doing otherwise, other than some of this class warfare demagoguery we see coming from the Democrats. I think that you see it mostly when it comes to the individual income tax rate debate. But you see it with regard to the corporate situation also.

KUDLOW: How about just a quickie before we take our first break, sir. Extending the Bush tax cuts, all the Democrats, all the Democrats’”Hillary, Obama, Edwards’”want to rollback. They want to repeal the Bush tax cuts, which in effect would be a very large tax rate increase. Your quick thought on that.

Mr. THOMPSON: Well, it’s a no-brainer to resist them with all of our power. It’s the driving force of this good economy that we’re seeing. We’re raising more revenue with these lower tax rates than we’ve ever raised before for the federal government. It’s clearly, for them, not about raising money for the legitimate functions of government, it’s about redistribution of income and collecting votes. You set the rate where you think you can get the votes, and anything above that, you want to tax. So instead of trying to make the pie bigger, they’re trying to concentrate totally on redividing the pie. And that just means less economic growth and a worse economy.

KUDLOW: Do we have an income and wage inequality in this country necessary for government action? I mean, that again is part of the Democratic mantra, to raise taxes on the rich.

Mr. THOMPSON: Well, I don’t know who should be set up as responsible for determining how much a person ought to make. But I think a country where 5 percent of the people pay over half the income taxes in this country, that as far as the tax structure is concerned, that’s not any equality that I would name.

Wednesday Night’s SPECIAL Lineup



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On CNBC’s Kudlow & Company this evening:

CNBC’s Bob Pisani will give us a quick, live update on today’s stock market action.

*FRED THOMPSON INTERVIEW*…Former Tennessee Senator and presumed GOP presidential candidate Fred Thompson will join us live in an exclusive one-on-one interview covering the economic and political spectrum.

PANEL REACTION…Joining us to offer their insights on the Thompson interview are The Wall Street Journal’s Steve Moore; Forbes Magazine’s Quentin Hardy; The New York Observer’s Jennifer Rubin; and Jared Bernstein, senior economist at the Economic Policy Institute.

STOCK MARKET PERSPECTIVE…Michael Cuggino, president and portfolio manager for the Permanent Portfolio Family of Funds will weigh in with his thoughts on what lies ahead for stocks.

Our political panel will stick around for the show’s entirety.

Please be sure to join us tonight at 5pm ET for our special, free market edition of CNBC’s Kudlow & Company.

Reminder: Fred Thompson on Kudlow & Company Tonight



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The former Tennessee Senator may not have been on the stage at the debate last night, but he will be joining us this evening on Kudlow & Company.

We’re going to find out if he’s the pro-growth, pro-free market, pro-investor class candidate conservatives are looking for. We’ll also discuss his take on keeping America safe, Iran, Iraq, and much more.

We hope you’ll join us at 5pm ET on CNBC for our exclusive interview with Fred Thompson. It’s a key presidential interview.

A Bullish Scenario



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Here’s the simple thesis I mentioned on last night’s show: a steady, unchanged, federal funds rate from our central bank’”not higher rates, not lower rates’”is the best possible scenario for the stock market.

Going back to the early ‘

Tuesday Night Lineup



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On CNBC’s Kudlow & Company this evening:

RECESSION OR NOT? STOCK MARKET BUBBLE OR NOT?…CNBC’s Bob Pisani will get the debate started with a live report from the NYSE.

Our market panel tonight includes John Rutledge, chairman of Rutledge Capital; Doug Kass, president of Seabreeze Partners; and Dennis Kneale, managing editor of Forbes magazine.

U.S. & RUSSIA RELATIONS…CNBC’S Trish Regan will join us with a live report from the G-8 summit in Heiligendamm, Germany.

Sen. Trent Lott (R-MS) will weigh in with his perspective in a one-on-one interview from Washington.

Our market panel will also lend its insight on the G-8 meeting and Russia’s economic and political outlook.

YOUR MONEY, YOUR VOTE – THE PRESIDENTIAL DEBATES…Star Parker, founder/president of CURE, the Coalition on Urban Renewal will debate Peter Beinart, editor-at-large at The New Republic and senior fellow at the Council on Foreign Relations.

TACKLING TERRORISM – UPDATE ON FOILED TERROR PLOT AT JFK…Terrorism expert Steve Emerson will join us with all the latest.

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

The Russian Paradox



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We’re going to take a hard political and economic look at what’s going on inside Russia on tonight’s Kudlow & Company.

It’s a strange paradigm (paradox might be more appropriate) over there.

On the one hand, they’ve got their 13 percent flat tax. And of course, with more free market policies, Putin has to some extent liberalized the Russian economy. Their stock market has rocketed 900 percent since 1999. Economic growth has surged. Inflation has come down. And the ruble has been fairly steady. So that’s all to the good.

But on the other hand, politically, Russia has become much more authoritarian.

They seem to be moving further and further away from democratic principles. They’re clamping down with limits on the free press, jailing political enemies (most notably with the incredibly harsh treatment and jail sentence of Mikhail Khodorkovsky, formerly the CEO of Yukos and Russia’s richest man). That’s all crazy stuff, not good.

And of course, on foreign policy terms, Putin has been a big thorn in our side on Iraq. And just as bad, he’s been helping Iran on nuclear weaponry’”or so it appears.

To top it all off, now he’s threatening to aim missiles at Europe because he doesn’t like our plans to put a missile defense system in the Czech Republic. (Despite the fact it’s meant to protect NATO allies against a missile attack from Iran, not Russia.)

So, bottom line, it’s a very complicated relationship. President Bush needs to manage it carefully. We can do business with Putin, but there has to be some tough and clear understandings.

The other big factor in all this is the oil story. Russia is living high on the hog with $65 dollar oil. But what happens if oil drops $20 bucks? Will Russia be so cocksure in foreign policy? Will their economy survive a meltdown of oil prices?

Fred Thompson on Kudlow & Company Tomorrow Night



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We are pleased to announce that former Tennessee Senator Fred Thompson will be joining us on Kudlow & Company tommorow evening.

Mr. Thompson, who is expected to formally announce his decision to run for president sometime in the next month or so, will join us in an exclusive, one-on-one interview.

We’ll discuss the economy, taxes, homeland security, the ‘08 presidential race, and much more.

Lazear Bullish on Economy & Immigration



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In a conference call earlier this morning, top White House economist Ed Lazear predicted that future GDP growth will be much stronger than the latest 0.6 percent reading in the first quarter. He cited stocks, earnings, industrial production, the ISMs, capex, autos, and low inventories as precursors of stronger GDP growth.

Lazear also disputed the immigration cost estimates from Heritage Foundation analyst Robert Rector. According to Lazear, a dynamic analysis of the predicted results of the immigration reform bill shows a net gain to the U.S. economy of about $30 billion per year, as the economic benefits from capital, labor, lower prices, and higher tax payments overwhelm the transfer payment costs.

This is an interesting point, and one with which I agree. Put simply, at prevailing productivity rates, an increased labor force produces more GDP growth.

Lazear also argued that stronger border security and better employer enforcement through tamper-proof ID cards would help solve the growing problem of illegality.

Rudy Blasts Hillary



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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



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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.”

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