Kudlow’s Money Politics

There He Goes Again

President Bush delivered a spot-on, bang-up speech promoting tax cuts and economic growth today, following his strong news conference last Friday. One key line: ‘The Democrats are consistent, they are consistently pessimistic.’

The president is cooking.

He’s hot.

He’s framing the debate.

The Democrats want to raise your taxes (by letting them expire). Republicans want to cut them. The Democrats want to take your money for more government spending. Republicans want to let you keep more of what you earn.

Bush was positive, optimistic, and confident.

He blasted corrupt budget earmarks along with overspending in general. He drew a line in the sand for the emergency supplemental budget bill. He threatened to veto.

The GOP is getting close to their tax-cut plan to extend the investor tax cuts on dividends and cap gains and relieving the AMT tax burden.

Bush is on the offensive.

He is making the case for tax-cut driven growth. He is providing the pro-growth political backdrop for the November elections.

He is appealing to the Investor Class and to small business owner operators. He is underscoring his ownership society theme.

And here’s the really interesting part of this story. While Mainstream Wall Street economists and the Fed continue to expect an economic slowdown (as they have for the last three years), the reality is the economy may actually be picking up speed.

Check out today’s factory orders report for March, where backlogs are up 13.5 percent at an annual rate over the past three months, and orders for high-tech are up 73.7 percent annually for the last three months.

These are unbelievable numbers. The ISM non-manufacturing index was significantly stronger than expected.

Let me summarize: Conventional wisdom Demand-Siders continue to ‘misunderestimate’ the economic growth incentive power of lower marginal tax rates. Especially reduced rates on capital, which is the seed-corn for new businesses, new jobs and higher incomes. Easy capital, with higher investment returns after tax, are driving this economic boom.

It is the greatest story never told.

But now the President is telling it.

Larry Kudlow — Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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