Kudlow’s Money Politics

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

Our Privacy is Not at Stake - Our Security is...


Heather Mac Donald of the Manhattan Institute wrote an illuminating column in the latest issue of The Weekly Standard about the truth behind USA Today’s reckless cover story on the NSA’s counterterrorism program.

(This little faux headline preceding her piece is priceless…)

“…Only a paranoid solipsist could feel threatened by the recently revealed calling analysis program. Since late 2001, Verizon, BellSouth, and ATT have connected nearly two trillion calls, according to the Washington Post. The companies gave NSA the incoming and outgoing numbers of those calls, stripped of all identifying information such as name or address. No conversational content was included. The NSA then put its supercharged computers to work analyzing patterns among the four trillion numbers involved in the two trillion calls, to look for clusters that might suggest terrorist connections. Though the details are unknown, they might search for calls to known terrorists, or, more speculatively, try to elicit templates of terror calling behavior from the data.

…True, the government can de-anonymize the data if connections to terror suspects emerge, and it is not known what threshold of proof the government uses to put a name to critical phone numbers. But until that point is reached, your privacy is at greater risk from the Goodyear blimp at a Stones concert than from the NSA’s supercomputers churning through trillions of zeros and ones representing disembodied phone numbers.”

Max Boot also delivers a scathing indictment of these blinded “civil-liberties absolutists” who consistently undermine our country’s national security.

In today’s Los Angeles Times, Boot writes, “When it comes to the war on terror, the biggest advantage we have comes from our electronic wizardry. The National Security Agency has its share of problems, but it has long been the best in the business at intercepting and deciphering enemy communications. Until now. If civil liberties agitators, grandstanding politicians and self-righteous newspaper editorialists have their way, we will have to give up our most potent line of defense because of largely hypothetical concerns about privacy violations.

…All this concern with privacy would be touching if it weren’t so selective. With a few keystrokes, Google will display anything posted by or about you. A few more keystrokes can in all probability uncover the date of your birth, your address and telephone number and every place you have lived, along with satellite photos of the houses and how much you paid for them, any court actions you have been involved in and much, much more.

It is only a little more work to obtain your full credit history and Social Security number. Or details of your shopping, traveling and Web-browsing habits. Such information is routinely gathered and sold by myriad marketing outfits. So it’s OK to violate your privacy to sell you something ‘” but not to protect you from being blown up.”

This latest brouhaha over supposed privacy rights violations is absolute nonsense. Garbage. The NSA calling analysis program is far from a threat; on the contrary, it is an essential component of the administration’s ongoing efforts to keep American citizens safe from those who wish us harm.

President Bush ought to take the offensive. Go straight to the American people; explain what this program entails, why we need it, and why these national security saboteurs are dead wrong – yet again.

Senator Specter, Dianne Feinstein, handfuls of other misguided politicians on Capitol Hill, as well as various television pundits and newspaper editors would do well to listen.

People’s lives are at stake here – not their privacy.

Get Back On Message


U.S. Treasury undersecretary Tim Adams told me on CNBC Monday night that he does not believe trade deficits have any strong impact on currency rates. Nor are they interested in ‘beggar-thy-neighbor’ currency policies.

From this, I take away the thought that the Treasury may not really be trying to manipulate the dollar lower. Using a thirty nation index for the dollar, there really is not much decline at all following a massive run-up during 1991-2002.

Given the U.S. investment boom, as illustrated by yesterday’s strong industrial production numbers, I would be a dollar buyer, not a seller.

Here’s a thought for you inflationists out there: The business and investment boom sparked by lower tax rates three years ago will, over time, burn off any excess monetary calories. Lower tax rates are always associated with lower inflation. Lower tax rates raise the demand for money.

Ben Bernanke needs to do two things right now to calm inflation worries. It’s real simple: First, get back on message by repeating his earlier mantra of the need for a numerical inflation target. This would reestablish the price rule.

Second, the Fed should keep raising their target rate in quarter point intervals, until the breakeven inflation TIPS spread drops down about 25 or 30 more basis points.

Fed policies have slowed the monetary base. Keep up this campaign.

President Bush Receives High Marks


Looks like the Marketer-in-Chief’s immigration speech last night earned the President some impressive marks.

According to CNN, 79 percent of those polled had a “positive” overall reaction to Mr. Bush’s speech, with 40 percent of respondents viewing it as, “very positive.”

Rove on the Bush Economy


Karl Rove delivered a dynamite speech to the American Enterprise Institute yesterday, hammering home one fact after another that demonstrates the resounding success of the Bush economy.

RealClearPolitics has the entire transcript.

Here’s a snippet:

’This president believes the government’s role is to create an environment where the entrepreneurial spirit flourishes and where small businesses can grow, where people can dream about owning their own home and have it become a reality.

And he believes that economic growth is created largely on the economy’s supply side. The best tax cuts create incentives for people to work and businesses to produce and companies to invest.

President Bush doesn’t believe government creates wealth. He understands that’s done by American workers, farmers and entrepreneurs.

His economic policies, then, are tied to a view of human beings that understands the role of incentives in shaping behavior.’

U.S. Quietly Hopes Dollar Drop Eases Trade Gap


Why won’t the Treasury make their dollar policy clear? It’s our money; the stuff in our wallets and purses. It’s also the world’s reserve currency.

I would argue that it’s time to ’strengthen’ the dollar’s value, not reduce it. Market worries over inflation have been rising, not falling. Breakeven TIPS spreads have been widening.

The dollar has lost 7 percent against the Euro and the Yen since the beginning of April. The Euro is currently 1.28 against the dollar and the Yen is 110.

Even though gold and commodities are finally correcting lower, the incredible run they’ve had does raise fears of excess money creation, the principle source of inflation. Plus, the Federal Reserve’s policies to contain inflation look to be in conflict with Treasury policies that may create inflation.

But most of all, the Treasury Secretary should be more transparent. A stealth dollar depreciation is something that should be well discussed and debated. If it’s true, it’s a very big deal.

And by the way, the linkage between dollar value and trade deficits is very weak. Remember in the 1990’s, we had a very strong dollar coupled with a very large trade gap.

In fact, a dollar depreciation policy might actually inflate the U.S. economy, while a Chinese Yuan and Asian-Japan revaluation policy might deflate those economies.

Is this really what we want?

Ending Earmarks Express Tour


The second leg of the Americans for Prosperity Foundation’s nationwide Ending Earmarks Express bus tour begins today.

These Fightin’ Fiscal Conservatives are battling politicians committed to the corrosive process of attaching hidden earmarks to legislation. Their Ending Earmarks tour has canvassed the whole country, spotlighting sites that have received ridiculous wastes of taxpayer dollars.

Judging by the recent poll showing that Americans now think that ending earmarks should be Congress’ number-one priority, it’s clear that our message is starting to get through and taxpayers are fed up with wasteful earmarks,’ said Americans for Prosperity Foundation President Tim Phillips.

The Ending Earmarks Express is scheduled to visit the following sites this week:

Baltimore, Maryland — $200,000 for the preservation of old tobacco barns
New Brunswick, NJ — $1.6 million for a parking garage at Robert Wood Johnson Hospital
Albany, NY — $9.6 million for the Center for Grape Genetics
Hartford, Conn. — $2.4 million for the Mark Twain House and Museum
Westerly, R.I. — $200,000 for an animal shelter and dog obedience school
Hyannis, Mass. — $382,000 for the Cape Cod / Hyannis Gateway and $100,000 for a life-size bronze statue of JFK

Hats off to these folks for fighting this nonsense..

Mexican Presidential Election


Felipe Calderon, the conservative presidential frontrunner from Mexico’s PAN Party, has taken a five-point-plus lead in the heated race against Andres Manuel Lopez Obrador, the former leftist Mayor of Mexico City.

This is good.

If Calderon manages to beat Lopez Obrador in the July 2nd election, his victory just might stop this leftward, socialist tide threatening Mexico; a tide that has already washed over Hugo Chavez’s Venezuela and Evo Morales’ Bolivia. Chavez and Morales are combative radicals who pose a serious threat to pro-market policies on foreign investment, energy and trade.

Calderon is no Hugo Chavez. Not by a long shot.

He appears to be a pro-growth guy and claims he’s in favor of tax reform, privatizing some foreign investment in oil and gas, as well as privatizing some state run monopolies. This type of reform is sorely needed.

Mexico’s had a weak economy of late. No news there. That’s the reason behind all the immigration flows into the United States. Vicente Fox said he’d be pro-growth, but obviously never delivered the goods.

Maybe Calderon will deliver the goods and finally implement a Reaganesque agenda in Mexico? The country (and region) certainly needs it. It would also send a strong political signal to rest of that leftist region.

Who knows, maybe the Mexican Chihuahua could become the Mexican Tiger after all?

Hillary Under Fire


Hillary Clinton’s presumed presidential run is popping up all over radar screens and raising red flags everywhere. Imagine what’s in store once she officially announces her decision!

Drudge linked to a great Human Events article (“Don’t Let ‘Moderate’ Hillary Fool You”) written by three women (intimately familiar with the Clintons) who are decidedly against Mrs. Clinton’s Oval Office bid.

They write:

“…Hillary eagerly pounces on her political opponents’ supposed betrayal of their values, but what about her values? Far from walking in the footsteps of the Good Samaritan or ‘Jesus himself,’ Hillary has consistently revealed a personal and political character the core values of which are ruthlessness, unbounding arrogance and endless ambition.

One of us had the surreal experience of being confronted by Hillary — self-declared feminist and champion of ‘women’s rights’ — as she protected her husband Bill against the charge of rape. Another of us worked with the Clintons prior to being sexually assaulted by Bill Clinton, and witnessed her dismissive, contemptuous interactions with others whenever the cameras weren’t present. Our experience of Hillary Clinton as ruthless and vindictive is validated in a newly released book, I’ve Always Been a Yankees Fan: Hillary Clinton in Her Own Words,’ by Tom Kuiper.

…Kuiper quotes multi-millionaire Hillary opining that ‘The unfettered free market has been the most radically disruptive force in American life in the last generation.’ It is difficult to discern any moderation in that statement. Or in this response by Hillary to a constituent who expressed concern over being forced into a government-run health-care plan: ‘It’s time to put the common good, the national interest, ahead of individuals.’ Or in this explanation to wealthy donors regarding her support for repealing the Bush tax cuts: ‘Many of you are well enough off that [the] tax cuts may have helped you. We’re saying that for America to get back on track, we’re probably going to cut that short and not give it to you. We’re going to take things away from you on behalf of the common good.’

This is going to get very interesting…

Larry on the Radio


The Larry Kudlow Radio Show will return again tomorrow at its usual Saturday time-slot 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 WABC radio.

Also, Larry will join Hugh Hewitt again tonight in his regular Friday night slot on Hugh’s nationally syndicated radio show. Tune in at 7:20pm (EST) to catch Larry and Hugh discuss all the latest political and financial news. (Check your local listings or listen live via Hugh’s website at

There’s a New Sheriff in Town


Look out MSM heel-biters; Tony Snow is mad as hell and he’s not taking it anymore.

An email fired off to reporters yesterday by Snow’s new and improved White House press office makes one thing clear: The White House has gone on the offensive.

The factually challenged partisan nonsense coming from the likes of The New York Times, USA Today and CBS News will no longer be tolerated. No more free rides.

Make no mistake about it, these guys are going to have their hands full with the formidable Mr. Snow.

Take this opening shot fired across that liberal Grey Lady’s wooden bow: ’The New York Times continues to ignore America’s economic progress.’

As for Dan Rather’s former ramshackle home, ’CBS News misleadingly reports that only 8 million seniors have signed up for Medicare prescription drug coverage, but 37 million seniors have coverage.

As for that colorful USA Today: ’[It] claims ‘

The WSJ Opens Its Eyes


Looks like the Wall Street Journal has seen the light on the U.S economic boom, based upon their front-page spread this morning. (Behind Surging Stock Market: Old-Fashioned Economic Boom.)

The Greatest Story Never Told is at last, garnering the attention it deserves.

Glad to have them on board, however belatedly…

’After Hurricane Katrina hobbled economic growth late last year and as oil prices soared, many investors thought the economy, corporate profits and the stock market would be running on empty by now.

Instead, an economic rebound has sent corporate profits to an 11th consecutive quarter of double-digit gains, the longest streak since at least the 1950s. Surprisingly strong growth in the economy and corporate profits has shaken stocks out of their doldrums. The Dow Jones Industrial Average is now within sight of its record close.

Unlike the great 1990s bull market, which was sustained by a wave of new technology, this one has the feel of an old-fashioned economic boom, the type investors saw in the 1950s and 1960s’

ALGORE for President?


The #1 Wall Street Journal most popular story yesterday was news that ALGORE may be considering a run for president.

Lo and behold, the ALGORE for president story is still holding strong today at #2.

This is an incredibly important story. Big news. Mr. Gore can single-handedly whoop Hillary Clinton in the primaries, and then save the Republican party from itself in the general election.

Mr. Gore is mounting an impressive subrosa campaign. He is cleverly disseminating his numerous speeches through the website. Then, in turn, all the lefty bloggers run wildly with the ALGORE ball and spread the word among the Kyoto faithful.

The inventor of the Internet will of course run as a lefty. Think global warming; think nationalized healthcare; think anti-war; think ‘tax the rich.’ Just think of it!

Hillary, meanwhile, is fast on her way to becoming the establishment Democrat on the ‘right-wing’ of the party. Rupert Murdoch is hosting a fundraiser for her!

The WSJ notes that ALGORE and Tipper recently bought a condominium in San Francisco to be closer to their two daughters in California and, let me add, to be much closer to Nancy Pelosi.

Several insiders say Mr. Gore is more likely to run if Mrs. Clinton does, than if she doesn’t. So the battle will be joined.

I can’t wait.

Thomas Sowell on Oil


Some choice snippets from Mr. Sowell’s dynamite column today entitled, “Is Thinking Obsolete?”

“The government collects far more in taxes on every gallon of gasoline than the oil companies collect in profits. If oil company profits are “obscene,” as some politicians claim, are the government’s taxes PG-13?”

“The very politicians who have piled tax after tax on gasoline over the years, and voted to prohibit oil drilling offshore or in Alaska, and who have made it impossible to build a single oil refinery in decades, are all over the television screens denouncing the oil companies. In other words, those who supply oil are being denounced and demonized by those who have been blocking the supply of oil.”

“People with no experience in business, no knowledge of history, and utterly ignorant of economics do not hesitate to leap from high prices to greedy profit-makers. Many of these ignorant people are on nationwide television and some are in Congress.”

“In the early 20th century, the A & P grocery chain became renowned for both its low prices and its high quality. Its profit rate never fell below 20 percent during the decade of the 1920s. That’s a higher rate of profit than the oil companies make.”

As former House Majority Leader Dick Armey once put it: “Demagoguery beats data.”

(You can read all of Mr. Sowell’s column at RealClearPolitics.)

On the Radio


The Larry Kudlow Radio Show can be heard live every 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

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

My Interview with President Bush


Here are a handful of noteworthy remarks the President delivered during our discussion last Friday at the White House.

On Tax Cuts and the Economic Boom:

PRESIDENT BUSH: [B]ack when I first came in here, the job market was falling off and a lot of Americans were wondering whether or not we’d ever get our footing back. We cut the taxes, and there was a big debate here in Washington, D.C., (with opponents arguing) “this won’t help the economy.”

So the 138,000 (job number) reminded me that not only are people working, which is good, but that the tax cuts are working, and the economy’s strong and vibrant, and we need to keep it that way’

***Please Be Advised***


Due to publishing problems, we have changed the address of Money Politic$ from to

Users logging on to will automatically be redirected to the new Kudlow blog.

Also, please note that the old blog site will remain. Any users wishing to access older posts are free to visit the old URL at

If you have the old site saved as a favorite, please visit the new website and update this change.

All the very best’

A Special Program This Evening


Make sure to tune into tonight’s special edition of CNBC’s “Kudlow & Company” where Larry heads to our nation’s capital for an exclusive one-on-one interview with President Bush.

Topics include the state of our economy, energy, Fed Chairman Ben Bernanke and executive compensation.

The Wall Street Journal’s Steve Moore will join former Labor Secretary Robert Reich in a spirited debate addressing Larry’s interview with the President.

“Kudlow & Company” will air at its usual time at 5:00pm EST on CNBC.

We hope you’ll join us.

Hugh Hewitt’s Radio Show


Larry will be appearing as a guest on Hugh Hewitt’s nationally syndicated radio show this evening at approximately 7:15pm EST. You can also listen online via Hugh’s website at

If you miss tonight’s show you can access the transcript at

Economic Boom Continues


According to Action Economics, daily data from the U.S. Treasury for April show that the booming economy produced soaring tax receipts that came in 15 percent above a year ago.

Spending was only 2 percent ahead of last year. So, the FY 2006 budget gap should come in around $270 billion dollars. That’s much lower than the CBO estimate of $337 billion dollars, and vastly lower than the OMB prediction of $423 billion dollars.

As a share of GDP, this year’s gap will be only 2.1 percent, and could be only 1.6 percent next year, since state and local governments are actually running surpluses. The combined budget gap will be even smaller.

Is it possible that with lower tax rates the booming economy is throwing off ever-greater tax revenues? Didn’t someone once call that the Laffer Curve?

It’s the American economic boom.

The greatest story never told.

Reality Check on Taxes from Steve Moore


From today’s Wall Street Journal:

“With the House and Senate preparing to vote on extending George W. Bush’s investment tax cuts, it’s no surprise the cries against “tax giveaways to the rich” grow increasingly shrill. Just yesterday Senate Minority Leader Harry Reid charged that the Bush tax plan “offers next to nothing to average Americans while giving away the store to multi-millionaires” and then fumed that it will “do much more for ExxonMobil board members than it will do for ExxonMobil customers.”

Oh really. New IRS data released last month tell a very different story: In the aftermath of the Bush investment tax cuts, the federal income tax burden has substantially shifted onto the backs of the wealthy. Between 2002 and 2004, tax payments by those with adjusted gross incomes (AGI) of more than $200,000 a year, which is roughly 3% of taxpayers, increased by 19.4% — more than double the 9.3% increase for all other taxpayers.

Between 2001 and 2004 (the most recent data), the percentage of federal income taxes paid by those with $200,000 incomes and above has risen to 46.6% from 40.5%. In other words, out of every 100 Americans, the wealthiest three are now paying close to the same amount in taxes as the other 97 combined. (Emphasis added). The richest income group pays a larger share of the tax burden than at anytime in the last 30 years with the exception of the late 1990s — right before the artificially inflated high tech bubble burst…”

Enough of the class warfare nonsense.

As my old friend Steve Moore points out, facts are facts.


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