Kudlow’s Money Politics

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

Hang ‘Em Up


The American Spectator has an excellent article (’Hastert La Vista, Baby!’) explaining the countless reasons why it’s time for Dennis Hastert to go.

Here’s an excerpt:

’[T]he recent embarrassment of his wild over-reaction to the FBI’s search of Rep. William Jefferson’s office is merely the 100-pound load that, combined with tons of ethical dead-weight, broke the elephant’s back.

…Hastert has exhibited the arrogance of power that leaves him clueless both as to ethical concerns and as to the political damage such arrogance can cause to his own party. The House GOP’s hubristic culture, the culture that makes its members feel immune to expected mores and to any blowback from a disgusted public — the culture that, even after the Abramoff and DeLay scandals, makes them unwilling to pass serious reforms on ethics, lobbyist disclosure, and earmarks — is what has led the House overall into even-worse poll ratings than the stupendously low scores President George W. Bush has been receiving in recent months.

…If Hastert’s outburst against the Jefferson search were an isolated incident, a rare lapse in judgment, it certainly would be forgivable. Because, however, it is part of a consistent pattern of abuses of ethical norms or of simple fairness, and because Hastert’s own compromised image is helping drag down his whole party’s electoral prospects for November, this Speaker should silence himself politically.’

It’s time.

Corruption Has No Party Loyalty


Nancy Pelosi has been wagging her finger a lot lately (Harry Reid a lot less…); pointing out the ‘culture of corruption’ she claims has an exclusive grip on the GOP.

Apparently, Mrs. Pelosi has chosen to overlook a spate of Democratic malfeasance occurring right underneath her nose. To name a few:

Rep. William “How’d that cash get in my freezer?” Jefferson’s (LA) $100,000 cold hard cash bribery scandal (while the Congressman continues lying and stonewalling);

Rep. Alan Mollohan’s (WV) laundry list of financial improprieties involving nonprofit organizations receiving millions of dollars in federal funds while he was involved in real estate deals with officials from those groups. Mollohan has since stepped down from his post on the ethics committee and is now being asked to step down from his position on the appropriations committee;

And, all the way to the top, with news that Senate Democratic Leader Harry Reid accepted free ringside tickets to three boxing matches from the Nevada Athletic Commission, while the agency was trying to influence him on boxing regulation. (To make matters worse, two Republicans who attended the fights with Reid dealt with matters above deck’”Sen. John McCain insisted on paying for his tickets, while Sen. John Ensign (R-NV), recused himself from participating in Reid’s pending legislation.) All this, on top of Harry Reid’s involvement in the Jack Abramoff scandal where he swung the bat on behalf of a number of the disgraced lobbyist’s clients.

There’s no question that corruption exists in Congress. A thorough clean-up is long overdue. And Denny Hastert’s dopey rush to impugn the FBI’s handling of the William Jefferson investigation was nauseating and emblematic of this problem.

In fact, Hastert’s pathetic, meathead, numbnut, first response to defend ‘Cold Cash’ Jefferson, and attack the FBI G-Men, is just about the worst, most absurd political thing I’ve seen in ages.

When I first read Hastert’s ridiculous response, the first thought that sprung to my mind was, ’You know what? You Republicans don’t deserve to be in the majority in the House. You deserve to lose.’

Oh, and by the way, I’m still waiting for the “Great Budget Earmark Reform” to stop the corrupt lobbyist cash for legislative favors that has exploded in recent years.

You know, with a Democratic House and Senate majority, one that will undoubtedly legislate higher taxes and higher spending, George Bush will become the great ‘Veto-Man’. Maybe he’ll look a lot more like Grover Cleveland, the greatest veto man in Presidential history; and a lot less like The Great Society man LBJ.

(In fact, Grover Cleveland, who was free trader and wanted lower tariffs, stuck by the gold standard, and vetoed spending, is one of one of our most underrated presidents of all time.)

As for Nancy Pelosi; she has it all wrong–again. This corruption nonsense knows no party loyalty.

Wed, May 31st - 9:58 AM


If President Bush is a “renegade rightwing extremist,” then what does that make ALGORE?

Just wondering…

Eating His Words


“John Snow will have a replacement, and he may very well come from the corporate world. But if it’s an A-list Wall Street CEO, I’ll buy a copy of Dow 36,000 and eat the first chapter.”

-’s Moneybox columnist, Daniel Gross, in the final paragraph of his April 7th column, “Snow’s Job: Why no Wall Street CEO wants to be the new Treasury secretary”

According to The New York Sun, it appears Mr. Gross intends to fulfill his promise in light of Goldman Sachs CEO Hank Paulson’s nomination.

Tue, May 30th - 1:22 PM


Larry will co-host with John Batchelor tonight on ABC Radio Network’s nationally syndicated “The John Batchelor Show” from 9:00pm – 1:00am EST.

Please click here for more information.

Tue, May 30th - 12:44 PM


According to the Financial Times: “The internet will this year overtake national newspapers to become the third biggest advertising medium by spend, according to authoritative forecasts.”

Paulson is a Good Choice


People tell me it’s not easy being a pro-Bush Republican in the executive suite at Goldman Sachs.

So give Treasury nominee Hank Paulson some credit for holding the line. And give Josh Bolten credit for indefatigably recruiting Paulson, his former Goldman partner, even in the face of apparent turndowns.

Mr. Paulson is a well-regarded, top-rated Wall Street exec at the powerful Goldman Sachs who will bring considerable credibility to the top Treasury job. He is a confirmed free trader who strongly supports deepening economic relations with China.

Mr. Paulson also supported Bush’s investor tax cuts, and has worried out loud about the impact of SarBox on American competitiveness.

Goldman insiders tell me that he is something of a ‘greenie,’ having been active in the Nature Conservancy, but they say he’s no Al Gore, and prefers technology advances by private enterprise to solve energy and any global warming issues.

We don’t know his specific view on the value of the U.S. dollar, but hopefully he’ll work with Ben Bernanke to strengthen the greenback and hold down inflation expectations.

Whether there’s a pro- growth tax reform agenda, or a new look at Social Security and other entitlements remains to be seen.

My guess is Mr. Paulson will command much more policy influence at the Treasury than his predecessors had. All in, Paulson looks like a good choice.

The head of arguably the world’s most prominent banking company, a Republican (who actually served in the Nixon administration 30 years ago) and stayed on board with George W. Bush, looks like a good, strong, capitalist choice.

Snow’s Replacement?


My pal Andy Roth over at The Club for Growth emailed me earlier today asking me my opinion about who ought to replace John Snow over at the Treasury — specifically, what my thoughts were on David Mulford who presently serves as the U.S. Ambassador to India.

I thought you might enjoy reading our little exchange…

—– Original Message —–
From: Andy Roth
To: Lawrence Kudlow
Sent: Friday, May 26, 2006 2:25 PM
Subject: treasury?


What are you thoughts on who might replace Snow at Treasury? Here at the Club, we’re getting asked that question from members and the press so I thought I’d ask you.

Know anything about this Mulford guy? David Keating, our executive director, has heard good things about him. I’m skeptical of almost anybody who would take the job considering how the White House controls everything in the executive branch — no unapproved, independent thinking allowed.


Andrew Roth | Director of Government Affairs | The Club for Growth

And my response to Mr. Roth:

—– Original Message —–
From: Lawrence Kudlow
To: Andy Roth
Sent: Friday, May 26, 2006 2:44 PM
Subject: Re: treasury?

Mulford could be good. He wasn’t great under Papa Bush and Nick Brady when he was undersecretary, but he has moved away from the IMF and toward harder money over the past decade. I think he’s a low-taxer. Don’t know about tax reform.

Look, the two best would be Steve Forbes and Phil Gramm. No question. Far and away. That’s where Bush and Bolten should go. Would really send a message on tax reform and budget reform and a hard dollar. Would electrify the markets. Would energize the base.

Longer shot good candidate would be Bill Thomas.

Have a good memorial day.

(House leadership on earmarks is pathetic. Pathetic. Senate isn’t even that good.)

Best, Larry

Adam Smith’s Message


We learned a couple of hundred years ago from Adam Smith’s The Theory of the Moral Sentiments that capitalism requires a moral and ethical center if it is to function effectively to the benefit of all involved. Many have read (or pretend to read) The Wealth of Nations, but many more should read Smith’s earlier book on the moral base necessary for markets to properly operate and thrive.

Nearly thirty years ago, I came to an appreciation of this through the great Irving Kristol. Mr. Kristol’s writings often emphasized the importance of capitalism’s moral compass. Not surprisingly, his wife, (the brilliant historian Gertrude Himmelfarb), often wrote about the importance of morality in society, culture and the economy’”including her great book called, The De-Moralization of Society: From Victorian Virtues to Modern Values. Bea Himmelfarb admires the Victorians in English history as an example of a moral society.

These thoughts come to mind as I peruse the accounts in today’s papers of the convicted Enron crooks Ken Lay and Jeffrey Skilling. Of course, we all knew they were crooks, well before yesterday’s decision’”and therefore a disgrace to modern American capitalism. So, in this sense, there’s no particularly new news in the jury’s decision.

Interestingly, the stock markets rallied yesterday, as they did the day before, and as they are today (as of this posting).

On the whole, the state of American capitalism is pretty darn good.

Under assault ever since FDR’s mistaken central planning of the New Deal 1930’s, when a number of socialist type alphabet agencies attempted to control America’s industrial and farming sectors, people soon realized that the whole experiment was a dismal failure. Unemployment ran 20-25 percent up until World War II, when Roosevelt started unleashing business to produce wartime goods that ultimately resurrected the economy.

Long before, the Supreme Court had thrown out many of the counter-productive government planning as unconstitutional. But still, the American welfare state grew mightily in the 1960’s and 1970’s, as liberal Keynesians pushed for their version of socialism’”one which completely self-destructed in the 1970’s during the wealth-destroying, big government stagflation administered by LBJ, Nixon, Ford and Carter.

Providentially, Ronald Reagan changed all that with his economic revolution launched in the 1980’s. Reagan’s bold initiative fired up the U.S. economy by slashing tax rates, deregulating industries, and rescuing the dollar through disinflation.

Since then, as the forces of entrepreneurial capitalism were unleashed for the first time since the post Civil War period, the American economic system again became the envy of the world. Since the early 1980’s, over 46 million new jobs have been created, while inflation adjusted gross domestic product increased $6.2 trillion, or 120 percent.

As deregulated stock markets democratized the American financial system, a great new Investor Class grew up. Over the ensuing decades, roughly 20 million investors evolved into over 100 million share buyers, and they got rich in the process.

Since 1982, according to the Federal Reserve, stock market wealth owned by family households appreciated by over $9 trillion dollars, or nearly 900 percent. During this period, the Wilshire 5000 Index of virtually all actively traded companies, appreciated by nearly 800 percent.

This Investor Class has also become the nation’s most powerful voting block. In recent elections, nearly 2 out of every 3 voters were also stockowners (and yes, they are voting for capitalism) meaning votes for lower tax rates, limited government, greater opportunities for entrepreneurship, and a general distaste for any and all policies that smack of central planning and government economic controls.

The great failure of the Democratic Party during this entire period has been its consistent antipathy towards the Investor Class. Though I can’t prove it, I’m willing to bet that the cultural characteristics of hard work, thrift, personal responsibility and law-abiding behavior, go hand-in-hand with demand for lower tax rates and entrepreneurial activity.

George W. Bush, who calls this the ‘ownership class,’ is a lineal descendant of Reagan. The self-help virtue of ownership is held in much higher political and cultural esteem than the vice of government dependent welfarism.

And of course, the investor culture has at its core, the very same ethical foundation that Adam Smith wrote about in 1759, which includes the rule of law that was so badly violated by Messrs. Lay, Skilling and Fastow, along with some other rotten apples like Tyco’s Dennis Kozlowski, WorldCom’s Bernard Ebbers, and Adelphia’s John Rigas.

These selfish crooks disregarded morality and the law, and in so doing, temporarily demoralized the stock market and American capitalism. They’re the kind of people who would be celebrated by totalitarian socialists like a Marx, Engel, Lenin, Stalin, Mao, Castro, Saddam Hussein or Iran’s Ahmadinejad, people of that ilk’”enemies of America and our incredibly successful market based system of market capitalism.

Government prosecutors deserve three cheers for busting these anti-Americans as they work to reimpose the rule of law and remoralize our economic system.

Much more important than the misbegotten congressional regularity scheme called Sarbanes-Oxley, is the Justice Department’s excellent work to simply enforce laws already on the books. Hopefully, the thought of a 25-year jail sentence will concentrate the corporate mind with sufficient intensity to disincentivize future corporate crooks, wherever they may be.

There are approximately 5.5 million businesses in this country, according to the Commerce Department’s national accounts and tax returns administered by the IRS. So these notorious crooks on today’s front pages really do amount to a small basket of bad apples.

But the G-Men have more work to do. A new state of corporate fraud and insider self-dealing has sprung up recently in a number of technology and other companies where CEOs have engaged in the practice of backdating stock option grants and other related forms of anti-shareholder compensation chicanery. The biggest demoralizing miscreant right now appears to be William McGuire, CEO of United Health Group and McGuire’s $1.6 billion in unexercised stock options.

And in Washington, book cooking at the government company, Fanny Mae, has still not been properly punished. Clearly, there is still more work to do on the enforcement front, so necessary to plug some of the small glitches that will always be present in our huge free-market system.

But as I stated earlier, on the whole, the state of American capitalism is pretty darn good.

And, looking down from his perch in heaven, Adam Smith would be very proud.

Competition Among Capitalists


‘Through competition among capitalists, capital itself is every year more effective in production, and tends ever to increasing abundance. Under its working the commodities that have been the luxuries of one generation become the comforts of the next and the necessities of the third’

Fri, May 26th - 8:30 AM


Great American Boom Continued


The greatest story never told continues with the latest GDP report that shows strong growth, low core inflation, and record after-tax profits.

Roughly three years since the Bush tax cuts lowered capital costs and strengthened investment incentives, and about eighteen months after the Fed started tightening its liquidity policy, the American economy remains healthy.

Smoothing out the Hurricane Katrina fourth quarter, with the bounce back in the first quarter, gets you about 3.5 percent growth, slightly more than 2 percent inflation, and a stock market that is undervalued in relation to after-tax profits.

Interest rates are still mild, at around 5 percent for both short and long yields.

It’s a steady economy.

Economic pundits keep telling us about the impending slowdown. Well, they’ve been waiting for a slowdown for years. Actually, I’ve heard about this slowdown for 25 years, ever since Reagan restructured and revived American capitalism through low tax rates, deregulation, and disinflation.

The reality is about 3.5 percent growth since the early 1980’s with very few interruptions. Total employment and wealth creation have soared during this entire span of time.

There’s a lesson here: Tax incentives matter. Price stability matters. Markets are smarter than central planners.

Think of it.

Net Neutrality is a Loser


As I’ve said here before, net neutrality is an awful idea.

Investors Business Daily offers an insightful editorial explaining why this anti-capitalist nonsense deserves to be soundly rejected by Congress.

“It’s clear that one of the most liberating developments of recent history has been the Internet. But those who would obstruct Web freedom are on the move.

Massachusetts Rep. Edward Markey seldom has used the language in such an exquisitely Orwellian fashion since he tried to thwart the Reagan administration’s space-based defense project by comparing it to “Star Wars.”

This time, he’s joined by far left groups such as in demanding new regulations to ensure “nondiscriminatory” content.

These political activists are teaming with Web giants Google, Yahoo and Microsoft who want new rules to protect their established dominance. Doing them all a huge favor, Markey has introduced a bill to guarantee what proponents call “net neutrality.”

Markey and his legionnaires aren’t too worried. Armed with Internet-gathered petitions, they expect the House Judiciary Committee to take up “net neutrality” in coming days.

As you might expect, their objective cannot be realized without introducing seriously anti-competitive, indeed anti-capitalistic, enforcement measures.

The bill targets Internet service providers, who must find ways to pay for making content accessible to the seemingly limitless world of online users.

That could mean charging content providers – like Google, Yahoo and Microsoft – extra for faster service and other fees. So Markey would put the government behind the big content providers, sparing them any inconvenient expenses through “neutrality.”

(Click the link above to read the editorial in its entirety.)

What is Hastert Thinking?


Why is Dennis Hastert openly opposing the FBI, when in fact, the G-Men are doing their job?

Congressman William Jefferson (D-LA) apparently took a $100,000 bribe and stashed it away in his freezer in his Congressional office. (It’s not only hard cash, it’s cold cash’”cold hard cash that is illegal and this guy has been repeatedly subpoenaed and refuses to respond.)

So let me get this right. Are Congressional members above the law?

Nancy Pelosi wants this crook to submit his immediate resignation from the Ways and Means Committee. And Hastert is out in front of the microphones going to bat for this guy? Huh?

She should call for his immediate resignation as House member. Hastert should do likewise.

What kind of message is Hastert sending to a voting public that already hates Congress? And, in particular, a voting public that is pissed off at Republicans?

Meanwhile, Hastert himself may be in a heap of trouble, stemming from his close ties to disgraced lobbyist Jack Abramoff, based on information from convicted lobbyists now cooperating with the government according to ABC News.

Hastert denies it, but between 2001 and 2004, Hastert collected more than $100,000 in donations from Abramoff’s firm and tribal clients.

More cold cash Dennis?

Google’s Liberal Bias


It appears my old friend Bruce Bartlett has had his own problems with lefty Google’s censorship.

Here’s a note Mr. Bartlett sent me after reading my post, Beware of Google last night:

“For a long time, whenever I would Google myself, the versions of my column on Townhall and National Review would always turn up. But some months ago, I noticed that they had stopped. Of course, one result of this is to reduce the number of hits on conservative web sites, thus reducing their attractiveness for advertisers and lowering their revenue.”

(Looks like Google’s censorship extends all the way from China, to right here in good, old America…)

Off Message


Fed Chairman Ben Bernanke is totally off message.

His admission to Senator Jim Bunning of a ‘lapse of judgment’ in the Bartiromo kerfuffle is pure process’”not content. His ‘data-driven’ approach to policy is backward looking driving through the rear view mirror.

Bernanke should go back to his confirmation hearing statement, when he stated that price stability is the cornerstone of economic growth. This should be his main message. He should resurrect his numerical inflation target. And he should publicly say that enhanced dollar value is vital to price stability.

Also, he should reemphasize forward-looking market price indicators, which includes a widening breakeven inflation spread in the TIPs bond market, abnormally high gold and commodities and a dollar exchange rate that is too low. A few more quarter-point rate hikes will contain inflation and actually strengthen the economy, along with the stock market.

The rising volatility in U.S. and worldwide stock markets is because Bernanke is off message. The U.S. Fed calls the tune for world money. Right now, the tune is off key.

Until Mr. Bernanke gets back on message, with clarity, expect more market volatility.

Again, the message should be: price stability, price stability, price stability.

Kudos to McCain


Kudos to John McCain for going after ‘nativist’ elements within the GOP, and singling out Lou Dobbs, Mike Savage and Rush Limbaugh, for helping to ’fuel the problem’ when it comes to immigration.

Kudos to Senator McCain for voting in favor of investor tax cut extensions.

Kudos to Senator McCain for steadfastly supporting the Iraq war, the troops, and the Bush mission of democratization as a means of protecting America’s national security.

Also, kudos to the Arizonan for his campaign against corrupt and wasteful budget earmarks and excess budget spending overall.

Beware of Google


The American Thinker has a rather significant article (Is Left-Leaning Google Censoring Right-Leaning Websites?) concerning Internet behemoth Google that absolutely deserves a read.

This is a big deal.

Here’s an excerpt:

“Something frighteningly ominous has been happening on the Internet lately: Google, without any prior explanation or notice, has been terminating its News relationship with conservative e-zines and web journals.

At first blush, one can easily ignore such business decisions by the most powerful company on the Internet as being routine. However, on closer examination, such behavior could give one relatively small (when measured by the size of its workforce) technology corporation a degree of political might that frankly dwarfs even its current financial prowess.

…Few people with an above room temperature intelligence quotient question the existence of bias in the media, although there is great debate about the slant. However, it is conceivable that few folks have considered the possibility of Internet news aggregators possessing such partiality, and, maybe more important, the ramifications.

In the case of Google, there is some evidence that its employees lean strongly to the left. According to a February 2005 USA Today article on the subject:

’As it claws for greater power, the Democratic Party has found a newly rich ally in one of the fastest-growing U.S. companies: Google.’

The article stated that of the over $200,000 Google employees gave to federal candidates in 2004, ‘98% went to Democrats, the biggest share among top tech donors.’ And, with a largely successful public stock offering making ’scores of millionaires among [Google's] 3,000 workers,’

’Democrats now have a potentially potent source of cash as they fight to retake the White House and Congress.’

Potentially more telling, a May 15 ‘Washington Prowler’ piece at The American Spectator disclosed a link between Google and the ultra-left wing

’Google has become the single largest private corporate underwriter of MoveOn. According to sources in the Democrat National Committee, MoveOn has received more than $1 million from Google and its lobbyists in Washington to create grassroots support for the Internet regulation legislation ['Net Neutrality']. Some of that money has gone to an online petition drive and a letter-writing campaign, but the majority of that money is being used to fund their activities against Republicans out in the states.’

Beyond this, Google appears intimately tied to former vice president and potential 2008 Democratic presidential candidate Al Gore. It is no secret that Gore is a senior advisor to Google, a position that garnered him a sizable number of shares according to Fox News political analyst Susan Estrich. On May 19’s The Big Story, Estrich discussed with host John Gibson Gore’s connection with Google, and how the wealth generated from the shares he owns in the Internet behemoth could give him enough money to finance his own presidential campaign.

This relationship goes further. According to a recent Wired magazine article about Gore, he is extremely close to Google’s CEO Eric Schmidt who ’supported Gore’s 2000 presidential campaign.’ Moreover, in April 2005, Google partnered with Gore’s cable channel, Current.”

About that $1 million Google and its Washington lobbyists lavished on in its (ostensible) support of the Internet regulation legislation, a.k.a. ‘Net Neutrality’: That is bad news too. It is a lousy idea.

The people that built the fiber optic pipes own it. So if they choose to rent it to whomever, or to whomever’s customers, for whatever reason, they get to set the rent based on free-market forces. The government should not step in to subsidize Google or anybody else. Because if they do, they’re going to stop the expansion of the whole network buildout since it won’t be profitable.

The bottom line here is that Google is using left wing politics and lobbying.

This is not a good thing. Not by a long shot.

Low Taxes Spur Growth Mayor Bloomberg


Despite loads of taxpayer dollars sitting in New York City’s coffers (an estimated $3.4 billion dollar surplus this year), tax cuts are not in the game-plan Mayor Bloomberg said yesterday.

E.J. McMahon of the Manhattan Institute told the New York Post this is really bad news. “You’re talking about the most heavily taxed big city in the country, which happens to be in the mode where it can do some tax cutting.

McMahon warned the city’s high taxes would one day take their toll on the economy.

“Something in him thinks taxes don’t matter because they never mattered to him,” he said of the mayor.

I wrote a column in The Wall Street Journal back in January (“Low-Tax Tiger”) discussing the tax reform commission I chaired at Governor Pataki’s request.

“[W]e concluded that there is a clear relationship between state tax burdens and state economic health. States with high and rising tax burdens are more likely to suffer economic decline; those with low and falling tax burdens are more likely to enjoy strong economic growth. Academic studies, as well as real-world experience, show clearly that low-tax states consistently outperform high-tax states.

…It is absolutely essential that New York be more competitive in the global race for capital. New York competes regionally, nationally and internationally. What is overlooked, however, is the state’s need for new capital and new capital formation. New jobs require new businesses, and new business formation requires new capital sources. Nothing will make New York more prosperous than improving its economic climate to make the state a more hospitable place for the treatment of smart money and smart people. We compete daily with low-tax states elsewhere in the U.S. and with newly attractive destinations for capital in places like Russia, Eastern Europe, China and India. Smart money and smart people are highly mobile. In the world race for capital, they go to where the return on capital is highest.”

The same applies to New York City.

We’re Winning


My old friend Ralph Peters has an op/ed worth reading in today’s New York Post (Defeating Terror: Despite the Pols, We’re Winning).

According to the military expert, America is winning the war against terror, despite the MSM and the ususal politicians playing partisan politics.

“The mainstream media said it couldn’t be done, so the Iraqis did it: Under new Prime Minister Nouri al-Maliki, they formed a permanent government based on free elections. (Those free elections were supposed to be impossible, too – remember?)…”

…Headlines from Afghanistan always read “Five Soldiers Killed and Wounded,” not “150 Taliban Killed.” If today’s journalists reported the Battle of Midway, we’d read “U.S. Aircraft Shot From Skies,” with a brief mention of the destruction of the Japanese carrier fleet buried at the bottom…”

…Al Qaeda has been broken. Yes, its remnants remain deadly. Yes, autonomous terror cells pose a growing threat. But the organization behind 9/11 has seen its surviving leaders driven into caves and remote villages where they live in constant fear. Islamist terror may have moved beyond al Qaeda, but our government and our military deserve credit for shattering the greatest international terror ring in history.”

With respect to Iran, Mr. Peters told me on the radio recently that the U.S. should be talking to Iran. One of the benefits is we’ll pick up intelligence. I completely agree. If we were ever to bomb them, we need to talk to them first.

In fact, the American public will not allow a such a campaign until talks are fully exhausted. This view is also supported by another old friend, brilliant miltary analyst Thomas P.M. Barnett.


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