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Kudlow’s Money Politics

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

Fri, June 16th - 3:11 PM



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Good News from Iraq



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Another great article by Ralph Peters.

“IRAQ’s government just released the first insider documents captured from terrorists in the raids surrounding Abu Musab al-Zarqawi’s death. The contents will horrify America haters in our media but won’t surprise Post readers:

We’re winning.

Yeah, the good guys. Our troops. And the Iraqi army. We’re winning. We were winning big even before we nailed Zarqawi. The terrorists themselves said so. In their state-of-the-troubled-union message to themselves.

…For patriotic Americans and freedom lovers everywhere, for the enemies of terror and the friends of tolerance, for the people of Iraq and of the United States, the captured terrorist documents contained nothing but great news – confirmation that we’re winning, that terror is being defeated and that Iraq is on the road to recovery.

As for me, as I wrote this column yesterday afternoon, I pledged to myself that I was going to pick up The New York Times this morning. The Times has been reporting terrorist propaganda as Gospel truth for three years. Now I can’t wait to see how the shady Gray Lady spins the truth the terrorists told each other.

Betcha we’ll start hearing that the captured documents are all forgeries – so a badly burned “mainstream” media can get back to reporting “the truth” about Haditha, Guantanamo and Abu Ghraib. In the meantime, our troops will continue to win this war.”
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Kudlow on the Radio



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The Larry Kudlow Radio Show can be heard live this Saturday from 10:00am until 1:00pm (EST) on New York’s 770 AM radio dial. If you are located outside the greater New York area, you can tune in live to Larry’s show via the Internet at www.wabcradio.com.

Larry is also a regular guest every Friday night on Hugh Hewitt’s nationally syndicated radio show. Tune in at 7:20pm (EST) to catch Larry and Hugh discuss the latest political and financial news. (Check your local listings or listen live via Hugh’s website at www.hughhewitt.com.)

Lower Taxes Work



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When you tax something more you get less of it. When you tax something less you get more of it.

The AP pointed out this week that, “‘

Some Reagan Gems



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“My philosophy of life is that if we make up our mind what we are going to make of our lives, then work hard toward that goal, we never lose – somehow we win out.”

“Republicans believe every day is the Fourth of July, but the democrats believe every day is April 15.”

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

“The problem is not that people are taxed too little, the problem is that government spends too much.”
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Bush Regains His Mojo



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Things are looking rather good right now for the President.

I’m sure he has been savoring this steady stream of good news. With some new, talented faces behind him in the West Wing, a powerful and resurgent White House team is welcoming a string of successes here at home and in Iraq. There is a new, unmistakable bounce in the President’s step. Bush is confident, he is on message, and he is fighting the good fight.

In short, he has regained his mojo.

Not everyone is happy about these developments. Those poor Democrats, they don’t know what to do with themselves. In between all their bickering, they just can’t seem to figure out what to do about Bush’s momentum and success.

Look no further than national security. In our critically important war on terror, without a doubt the most pressing issue of our time, the Dems have not changed their tune one bit. They remain off-key and more than a little suspect in protecting our safety and freedom.

Take this latest welcome blow to Al Qaeda, with the well-deserved death of their murderous leader/thug/enemy of peace and fomenter of violence, Al-Zarqawi; or the growing cohesion in Iraq’s nascent government, where Prime Minister Nuri al-Maliki’s cabinet shows increasing signs of promise. Observe the surge of American support for our vitally important Iraqi campaign in the polls.

All of this is great news. Or so you’d think.

But not for the Democrats. These positive developments have them wringing their hands, lost somewhere in outer space.

Instead of praising our progress in the war on terror, instead of getting firmly behind our Commander-in-Chief and signaling their commitment to finishing what we began, all we get is more bad ideas and a lot of head scratching from these folks. Just look at their leaders:

John ‘Flip-Flop’ Kerry has raised the rhetoric for troop withdrawal;

Harry Reid too’”he gave a talk at a lefty blogger convention this past Saturday echoing Kerry’s cut and run call;

(Murtha? Well, you know where he stands);

Hillary Clinton thinks a timetable is a bunch of nonsense (good for her). But Hillary is a minority in the party. The Senator from New York was greeted with a chorus of thunderous boos yesterday by a bee’s nest of Democratic activists. (In case you were wondering, John Kerry, who also spoke, was cheered wildly when he advocated his cut and run plan.)

The point here is that the wishy-washy Democrats still don’t have a real message. They are still running for cover. At this pivotal time in our nation’s history, a time when strong, effective leadership is needed to defeat these enemies of peace and democracy, the Democrats offer no game-plan, no leadership, and no consensus. They are defeatists.

Things don’t look much better for the Dems on the economic front. (No real surprise there.) Try as they may, they still can’t manage to kick their tax and spend habit.

As Karl Rove reminded everyone in New Hampshire yesterday, Democrats want to raise our taxes; Republicans want to reduce them. Democrats want an increase in spending; Republicans want a reduction. And, until they move towards pro-growth tax and spending reform, Democrats are not going to win elections.

The fact is that the Laffer curve tax-cut paradigm remains the most powerful policy weapon in American politics. When you tax something more, you get less of it. JFK and LBJ both adhered to this principle, as did Ronald Reagan. Papa Bush deserted it and got whooped. Bill Clinton originally opposed it, and the Dems lost Congress as a result. When Clinton finally embraced it during his second term (with a cap gains tax cut) he did well.

George W. Bush successfully used tax cuts in 2003 to re-ignite the American economy, and lead the GOP to big election victories in 2002 and 2004. And the President and Karl Rove are going to use it again in 2006. But, as long as the Dems keep banging their heads against the Laffer curve brick wall, they are doomed to defeat.

There is still a lot of time left between now and November. But, given Bush’s resurgence, Democrats’ dissension, continuing good news from Iraq and our war on terror, a continued strong economy with historically low unemployment, and the fact that Bush is on message and looking stronger than ever, well, you’ve got to reassess the conventional wisdom about the Dems picking up any seats in November.

Sure, the Dems have an opportunity to gain some ground, but it is an opportunity they will likely squander. Their message remains poor. As John Kasich pointed out recently on ‘Kudlow and Company,’ nobody ever won a close race by promising tax hikes. And, as the President correctly stated at his news conference, this is exactly what these guys will do.

No matter how they dress it up, no matter how they cut it, Democrats are angling yet again for tax hikes.

The stubborn fact remains that the Republican Party is the party of optimism and growth, while the tentacles of pessimism are still tightly wrapped around the Democrats. It remains the party of defeat and decline. They lack Ronald Reagan’s sunny vision of America and the policy ammunition to effectively nationalize these races with an attractive message. This is the real political problem for the Dems. And until they get a new message, they’re toast.

It’s only June, but right now, with the way things are shaping up, it’s looking more and more like a GOP Congressional hold to me.

Did I mention that the President regained his mojo?

Kristol on Zarqawi’ Death



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(You can read Bill’s entire column at The Weekly Standard)

Mark Cuban Launches Stock-Fraud Website



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A Reader Responds



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(Here’s a pithy email we received in response to my recent column, ’Hooray for the Death Tax!’)

Dear Larry,

Your article is interesting and illuminating.

I am considered one of those ‘rich’ people in my small Southern town, and I’m bewildered by the class envy I encounter.

I was born to a poor family not far from where I now live, and my husband and I have EARNED every dime we have.

We live in a Southern mansion we re-built ourselves (I climbed on the roof to put on shingles), but the residents of our town have forgotten that, and just seem to be blinded by the fact that we now have something they don’t.

We have a gate on our driveway, but I drew the plans for it and contracted a welder (a community business man)to create it. My husband and I took OUR tractor and mounted it. He did the wiring. But people only see the gate.

I feel so like the Little Red Hen.

No one is here when we do the work to make our lives better, but they see the result of our labor and resent our self-created wealth.

We do community service projects to better the lives of others, and we give HEAVILY to charity. We are also taxed heavily. These funds go to the government, who in turn help the poor, who resent us for having enough to give something to others.

I guess it’s so much easier to sit and curse the dark than to get up and light a candle.

I’ve bent your ear enough. I enjoyed the article.

Thank you.
Claire

Art Laffer



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My dear friend and mentor, Art Laffer, will join me on the set of CNBC’s ‘Kudlow & Company’ tonight as co-host.

Art and I, along with the rest of our guests, will dive headfirst into all the latest economic and political developments’”paying particular attention to inflation, interest rates, the Fed, and the crazy markets, here and abroad.

As Bush’s lower tax rates bring in record revenue streams, I thought it would be fitting to put up a graph of Art’s famous ‘Laffer Curve.’ It’s right out of the Laffer playbook.



(Now all we need is for those pork aficionados down in D.C. to show some fiscal responsibility for once…)

Tue, June 13th - 12:00 PM



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We are pleased to report that CNBC’s ‘Kudlow & Company’ will be broadcast twice each night this week.

We will air live at our usual 5pm EST slot, and once again at 8pm EST, for those of you unable to catch the earlier show.

Sprinting to the End



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President Bush’s surprise trip to Iraq to meet newly named Prime Minister Nouri al-Maliki is just what the doctor ordered. Americans need to be reminded of the progress we’ve made, and the high stakes of finishing what we started.

Bush in Baghdad is a big deal.

And, looking at the news recently, things certainly appear to be looking sunnier for the Bushies.

Bright spots:

1. Zarqawi dead.
2. Iraqi government getting it together ‘” key cabinet positions filled.
3. USA Today/Gallup poll shows huge boost in public confidence over Iraq.
4. Bush’s poll numbers climbing.
5. Rove cleared’

Larry and Laffer on Batchelor Radio Tonight...



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Larry and Art Laffer will appear with John Batchelor tonight on ABC Radio Network’s nationally syndicated “The John Batchelor Show” at 10pm EST tonight.

Please click here for more information.

Well Worth a Read



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Great column by Ben Stein in yesterday’s New York Times.

Ben begins, “NOW for a few words about Ben S. Bernanke, inflation, the stock market, economics and fathers.”

(The best part of the column is Ben’s touching tip of the hat to his father, the late, great economist, Herb Stein.)

Ben’s father Herb was a great friend and mentor of mine.

Even when we disagreed, Herb taught me enormously. He was one of the clearest thinkers I have ever met. His book on presidential economics is a classic. His wife Mildred, was also a wonderful person, and was a distinguished economist in her own right.

When I lived on Foxhall Road in Washington, during the Reagan years, they were frequent guests at dinners and Superbowl parties.

I continue to miss them.

Jim Moran Loves Pork



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Apparently, some folks on Capitol Hill really like pork…

From a column in a Sun Gazette newspaper:

“If Democrats win back control of the U.S. House of Representatives in November, U.S. Rep. Jim Moran said he would use his position in the majority to help funnel more funds to his Northern Virginia district.

Moran, D-8th, told those attending the Arlington County Democratic Committee’s annual Jefferson-Jackson Day dinner on June 9 that while he in theory might oppose the fiscal irresponsibility of ‘earmarks’ – funneling money to projects in a member of Congress’s district – he understands the value they have to constituents.

’When I become chairman [of a House appropriations subcommittee], I’m going to earmark the shit out of it,’ Moran buoyantly told a crowd of 450 attending the event.”

Click here to read the whole article.

Hooray for the Death Tax!



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So the estate tax cut went down in the Senate, to the cheers of class warriors everywhere. Congratulations to Democratic senators Evan Bayh, Mary Landrieu, Ron Wyden, and Mark Pryor — all of whom voted against death-tax repeal after voting in favor of it a few years ago. At last, they’ve come to their senses!

Our rich people don’t need another tax break. No, they need higher taxes. And they should be vilified, too. That’s right: America should attack rich people. In fact, we must abolish wealth, which is a tremendous drag on our economy. It’s high time that we made the rich poor.

As for all the xenophobes who want to deport the illegal immigrants who toil in this economy, may I respectfully suggest that their generals (i.e., Lou Dobbs, Pat Buchanan, and Tom Tancredo) consider expanding their dragnet? Let’s deport rich people, too!

These rich people are bad for America. We don’t need their ingenuity, their entrepreneurship, or their capital investment. In the name of egalitarian socialism, the only thing we need from them is more tax dollars. We now tax their incomes as salary, corporate profits, dividends, capital gains, and at death. But we must do better.

Perhaps we can tax their huge contributions to charities. That’s the ticket. We can tax them when they fund the building of a new church or synagogue, or when they create another college, or when they finance private scholarships or inner-city educations.

But we can’t stop there. Let’s criminalize the entire class of successful American entrepreneurs. Let’s haul out the distributional tables from the Joint Tax Committee and the Congressional Budget Office and target all upper-end earners for special wealth taxes.

Maybe we can even impose jail sentences on rich people. No more interest income at all, just like the radical fundamentalist Muslims do it!

Here’s a thought: Let’s publish the names of all rich people in the newspapers. Even better, when fat cats venture out in public, let’s swarm them like those animal-rights advocates who throw paint on women wearing mink coats.

Simply, we must strive to make America more like France and Germany — those great income-leveling, income-redistribution states. But it’s gonna take some work. When I last checked the international tax tables, I found that the U.S. has the third highest estate-tax rate out of 50 countries. We should be ashamed. Only third? We tax estates at a 46 percent marginal rate, but Japan is the best at 70 percent, followed by South Korea at 50 percent. We are pikers. How can we dare let Japan be ahead of us on taxing rich people?

The fact that 24 countries have a zero estate-tax rate, including China, should not concern us. They don’t know what they’re doing. And we do. We don’t want to be competitive in the world economy. We’d prefer to hang out a sign reading: ‘Capitalists are unwelcome in the U.S.’

This whole idea of keeping more of what you earn and own is just plain stupid. In fact, this whole capitalistic notion is just one of those bizarre global trends that undoubtedly will be reversed as people come to their senses.

The Czech Republic, Estonia, India, Indonesia, Malaysia, Mexico — they’re obviously all nuts with their zero tax rates on estates. Did I say Mexico? That’s perfect. Instead of creating thousands of new businesses and millions of new jobs in America, our rich can do this for Mexico. If we deport them, that is. What a great idea!

Forget Sen. Jon Kyl’s fallback position of a 15 percent death-tax rate, after exempting the first $5 million of an estate. That would move us too close to Canada, Australia, and Argentina, which also have zero rates. It would also promote the foolish idea that there is a link between reward and work, and reward and risk.

The ultra-right-wing idea that it must pay after-tax to work and invest is simply insane. Forget what the brilliant Arthur Laffer says. The best way to generate more saving and investment is to tax both more.

This may all sound wrong, but our soak-the-rich guys are deep thinkers. They have their fingers on the pulse of the hundred-million-strong investor class. They know that the worldwide spread of free-market economics, which was launched by Reagan and Thatcher twenty-five years ago, which has raised global prosperity to record heights, and which has caused the phenomenal growth of the middle class in places like India, China, and Russia, is absolutely nuts.

After all, capital is the enemy of labor! Forget the obvious facts that you can’t create a new job without a business and that you can’t fund a new business without capital. That’s obviously wrong.

Once again, capital is the enemy. Rich people are evil. We have to put an end to all this capitalist, supply-side nonsense.

By the way, when is Karl Marx’s birthday? I have to stop writing now, so I can go look it up. Next May? Well, at least that will give me time to prepare a triumphant celebration for the greatest soak-the-rich advocate of all time.

Tipping Point?



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I really like this lead story in today’s New York Sun, America Readying Major Offensive Against Al Qaeda.

As I said on last night’s program, if all the rodents are under the sink, then we can destroy them in one spot, with one action.

It makes a lot of sense; based on the ‘treasure trove’ of information gathered in yesterday’s seventeen spot raid that accompanied Zarqawi’s bombing. Special ops troops will descend on Al Qaeda hangouts based on these newly discovered documents.

This follow-up could have a major positive impact on the Iraq insurgency, and could be a huge victory for American coalition forces.

Since almost all commentators believe the Zarqawi death (and what hopefully will be a fruitful follow-up) is not a true turning point in the war, then I am forced to believe this story could be a real tipping point.

One reason for my counter conventional point of view is my absolute confidence in U.S. military forces, their wisdom, their bravery, and their determination.

The Deeper Currents



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My friend Claudia Rosett has a great op/ed today on how far we’ve come in our war on terror.

(The last paragraph really hits the nail on the head…)

“…[T]his is an excellent moment to step back and look at just how far in this war we have come. Five years ago, al-Qaeda’s commanders, from their safe haven in Afghanistan, were training thousands of terrorists and planning the Sept. 11 strike on a sleeping America. In Iraq, Saddam Hussein ruled by terror, with a record of exporting brutality and war from Baghdad at any opportunity to wherever he could reach – invading his neighbors, rewarding Palestinian suicide bombers, and openly rejoicing over Sept. 11.

Today, elected governments lead Afghanistan and Iraq, which has just completed its cabinet lineup. Bin Laden is afraid to venture out of hiding; Hussein, pulled from his spider hole, is on trial in Baghdad. And now, Zarqawi is dead, and the circumstances of his death may encourage decent people in Iraq and elsewhere to help hunt down his collaborators.

The greatest weakness of the United States in this war has been our tendency, within our own domestic debate, to quickly dismiss our victories and dwell on each al-Qaeda bombing or beheading as a sign of impending defeat. The death of Zarqawi needs to be understood as a sign that the deeper currents are running our way.”

Talking with Iran



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A week ago, I wrote a post (“To My Friends on the Right”) where I argued that the U.S. should attempt, in good faith, to strike a trade and investment deal with Iran, along with strict weapons restrictions and inspections.

I also stated that I was convinced by the arguments of my brilliant friend, Tom Barnett, who strongly believes that connectivity is vitally important, even in the darkest corners of the world.

Well, from the looks of things, some folks in the White House appear to be coming around to Mr. Barnett’s out-of-the-box approach with Iran.

Here’s an excellent recent blog entry from Tom.

Hoping on the Iran offer

That the Iranians haven’t dismissed Bush’s package offer yet is indeed a hopeful sign, as Bush himself noted. So the undisclosed package of economic and diplomatic connectivity, in combination with the offer to start direct talks for the first time since 79, must be substantial. If Tehran says yes by suspending (but not terminating) its uranium enrichment program, then the potential for direct talks to spill over to other security issues (something the stay-in-our-lanes crowd with this administration usually loathes to do in a weird definition of non-linkaging) is at least raised–and that alone would be cause for real optimism that the soft-kill option can work itself out over time (and administrations).

You can check out his blog here.

Good Things



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Whether Zarqawi’s death represents a real turning point in the Iraq war remains to be seen. But it sure is a good thing.

U.S. and coalition forces have cleaned out Saddam; cleaned out his sons; cleaned out virtually all of the Saddam hierarchy; and now cleaned out Zarqawi and a bunch of his henchmen. This too is a real good thing.

Iraq, the United States and the rest of the world will benefit.

I’m very interested in the 17 bombing sortie missions that accompanied the Zarqawi action. I’m also very interested in the ‘treasure trove’ of intelligence information that has been secured. More will be revealed on these fronts.

Let’s not overlook that the new Iraqi government has filled the key security positions of defense, energy and national security. This is another big positive.

So, when you consider the great news of Zarqawi’s demise, definitive progress in Iraq’s government, plus the fact that Iran’s Ahmadinejad is ready to talk, well, it strikes me that risk premiums in world financial markets, including oil, could decline as a result of these important events.

Here’s hoping.

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