Wednesday, May 31, 2006

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.
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.

Tuesday, May 30, 2006

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.
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.

Friday, May 26, 2006

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….The plane of what constitutes a comfortable subsistence is constantly rising, and as the years go by greater and greater numbers attain this plane.”

--19th century cotton magnate Edward Atkinson, quoted by Jonah Goldberg in National Review, “Your ‘Robber Barron,’ My American Hero” you think the BBC has an agenda?

Kudlow on the Radio

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

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

Thursday, May 25, 2006

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?

Wednesday, May 24, 2006

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.

Tuesday, May 23, 2006

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.

Monday, May 22, 2006

What Goes Around Comes Around

Terrific op/ed in today’s Wall Street Journal on Milberg Weiss.

“As the nation's premier filer of class action lawsuits, Milberg Weiss Bershad & Schulman LLP has long presented itself as a fearless watchdog of America's financial markets. Milberg lawyers are famed for their skill at seizing on missteps by the businesspeople they sue -- a missed earnings projection, an omitted disclosure, a too-rosy accounting practice -- and portraying them as evidence not of inadvertent or technical slip-ups, but of systematic and brazen crookedness.

All the while, if one is to credit the 102-page indictment by a federal grand jury in Los Angeles last week, Milberg Weiss was passing at least $11 million in payoffs under the table to plaintiffs in its suits. Since such payoffs are baldly illegal, prosecutors claim the firm took elaborate steps to keep them concealed from judges and othe...

...Milberg and partners David Bershad and Steven Schulman (who have taken leaves of absence from the firm) flatly deny the charges and say they're victims of overzealous prosecution. There's irony in this -- since the firm is known for zealous tactics akin to those it's now facing, such as the use of charges under the RICO (Racketeer Influenced and Corrupt Organizations) law.

...The two celebrity lawyers who made Milberg famous, Melvyn Weiss and the now-departed William Lerach, have thus far escaped indictment: Of course, if they were prosecuting such a case, they would miss no opportunity to insinuate that misconduct by part of a team of top executives must have been at least tolerated by the others, that the rot goes straight to the top, that senior partners turned a convenient blind eye to signs of misconduct because they profited handsomely from that misconduct, and so for...”

"Mexico Works to Bar Non-Natives From Jobs"

Drudge linked to an interesting AP story on Mexican immigration policies:

"...Even as Mexico presses the United States to grant unrestricted citizenship to millions of undocumented Mexican migrants, its officials at times calling U.S. policies "xenophobic," Mexico places daunting limitations on anyone born outside its territory.

In the United States, only two posts — the presidency and vice presidency — are reserved for the native born.

In Mexico, non-natives are banned from those and thousands of other jobs, even if they are legal, naturalized citizens..."

Mexico is a mess from the economy on down. And, yes, their immigration policies are hypocritical.

But the blunt fact remains that it’s the wage differential that continues to magnetize Mexicans to the U.S. economy.

Until that problem is solved, nothing will be solved.

Ray Nagin’s Magnanimous Remarks

From today’s Washington Times:

"NEW ORLEANS -- Rebuilding this city will take a team effort, said its newly re-elected Mayor C. Ray Nagin, who extended his hand to the governor and state officials, but most notably thanked President Bush for the aid he already has given.

"To President Bush, I want to thank you, Mr. President. You and I have probably been the most vilified politicians in the country. But I want to thank you for moving on that promise you made at Jackson Square," Mr. Nagin said during his acceptance speech.

Mr. Nagin said that the president called to congratulate him on his victory and said he was pleased with the opportunity to continue working on recovery with Mr. Nagin, instead of having to begin anew with a different administration..."

Whatever his shortfalls, Nagin is a classy guy for praising President Bush. Democrats never do this. Our political culture has become so polarized. But as Ray Nagin shows, it doesn’t always have to be that way.

Bush himself has acknowledged making mistakes in handling the Katrina disaster. So, here is an unusual example of civility in American politics.

Nagin himself is an interesting political character. DNC Chairman Howard Dean opposed him, as did the New Orleans business community. But Nagin let bygones be bygones last night saying, “I forgive you,” referring to the business community.

Conservative Republican businessman Robert Couhig supported Nagin after being highly critical earlier on. The Republican's support proved critical to Nagin's victory.

Friday, May 19, 2006

No More Bacon!

Certain members of Congress just don't get it.

According to an editorial in today's Wall Street Journal, House Members inserted one loophole after another in the recently passed lobbyist-reform bill.

These lawmakers turned a blind eye to polls showing that voters have absolutely had it with earmarks. One recent poll indicates earmark reform is the single most important issue facing Congress right now.

The WSJ writes, "When the House passed its lobbyist-reform bill last month, we praised the earmark transparency provision as a rare bright spot. Maybe we spoke too soon. Outsiders have now had a chance to inspect the fine print, and if Sarbanes-Oxley were this full of loopholes, few businesses would complain.

...Oh, and earmarks directed to state and local governments are also exempt from the requirement under some circumstances. How big a loophole is that? "It could be as big as the appropriators are clever," Representative Jeff Flake (R., Ariz.) told us. "And they're pretty clever." Congressman Flake has been fighting the earmark tide since long before it became a cause celebre, and he's hoping the loopholes can be narrowed when the House and Senate sit down to agree on a common version of the bill."

These folks in Washington ignore the wishes of the electorate at their own peril. Come November, some of these bacon-lovers may be browsing through the "Help Wanted" ads.

Maybe they can get a job with Oscar Meyer...

CBS Poll: Bush's Numbers Head Higher

President Bush's overall approval rating jumped 4 percent according to the latest CBS poll.

The President's immigration policies are also polling well with voters:

- 62 percent favor his plan to station National Guard troops at the Mexican border.

- 61 percent approve of Mr. Bush's proposal for a guest worker program to allow foreign workers to stay in the U.S. on a temporary basis and then return to their home country.

- 77 percent support a program that would clear the way for illegal immigrants to seek citizenship if they've been in the United States for at least five years, pay a fine and back taxes, learn to speak English and have no criminal record.

The CBS poll also found a majority of Americans approve the government collecting phone records to use in the fight against terrorism.

Kudlow 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

Thursday, May 18, 2006

"National Security 101"

From today's New York Post:

"...[T]here is every reason to believe - albeit inferentially - that the NSA and military intelligence-gathering efforts are paying substantial dividends.

Since 9/11, the terrorists' butcher's bill has been horrific.


* The October 2002 bombing of a Bali nightclub took 202 lives and injured 209.

* The October 2002 attack by Chechen separatists on a Moscow theater resulted in the deaths of 130 hostages.

* The March 2004 bombing of the Madrid rail system killed 192 people and wounded 2,050.

* The September 2004 Chechnyan siege of a Beslan school ended with 344 people dead (186 children) and 700 injured.

* The July 2005 bombings of London trains and a bus killed 56 people and wounded another 700.

* Ongoing suicide and car bombings in Iraq have killed thousands of innocent civilians.

But notably not on that list is an attack within the United States.

This absence has several causes - and not one of them is because the terrorists have suddenly forgotten about America or have given up trying to inflict various levels of harm on these shores.

One reason is that George W. Bush decided to take the war to the enemy rather than wait for the enemy to strike again on American soil.

Another, just as significant, is because the above-mentioned intelligence agencies have pulled out all the stops to prevent another 9/11.

The NSA initiatives are a huge part of that effort - and its success, knock on wood, speaks for itself..."

Mexico on the Brink?

According to an AP story:

"Police enraged by the kidnapping of six officers club unarmed detainees. A bloody battle between steelworkers and police leaves two miners dead. Drug lords post the heads of decapitated police on a fence to show who's in charge.

Less than two months before Mexicans elect their next president, many fear the country is teetering on the edge of chaos - a perception that could hurt the ruling National Action Party's chances of keeping the presidency and benefit Mexico's once-powerful Institutional Revolutionary Party, whose candidate has been trailing badly..."

To top it all off, a recent Mexican poll found 50 percent of respondents feared the government was on the brink of losing control.

No wonder they're flocking here in droves.

Wednesday, May 17, 2006

The Cruelest Tax of All

The President signed investor tax cut extenders today, which is a very good thing. Cheaper capital and stronger investment incentives are key themes in the American economic boom.

Unfortunately, inflation is the cruelest tax of all.

Since the capital gains tax remains unindexed for inflation, the effective tax rate on real stock market profits has been gradually rising from 22.5 percent to 28.6 percent, over the past two years, as the chained CPI has increased to 3.2 percent from 1.7 percent.

This means that investors keep $71.40 cents of every hundred-dollar capital gain today, but they kept $77.50 cents two years ago. That comes to an 8 percent disincentive, or drag, on stock market wealth.

All the more reason for the Fed to strengthen the dollar by withdrawing greenbacks from the financial system. Otherwise, the cruel inflation tax will continue to exact a stock market toll.

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.

Tuesday, May 16, 2006

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.”

Monday, May 15, 2006

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..

Friday, May 12, 2006

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

Thursday, May 11, 2006

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 ‘poor, often minority’ Medicare beneficiaries are not enrolling in Medicare drug coverage. But by April, more than 70 percent of eligible African Americans, more than 70 percent of eligible Hispanics, and more than 75 percent of eligible Asian Americans are enrolled or have retiree drug coverage.”

Snow is setting the record straight. Finally.

My hat goes off to you Tony. Take no prisoners.

You’re off to a heckuva start...

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… The situation resembles the Goldilocks economy of the 1990s -- not too hot, not too cold -- with inflation moderate and economic growth downright strong. The annual economic-growth rate hit 4.8% in the first quarter, the fastest pace since 2003...”

Wednesday, May 10, 2006

Just What the Doctor Ordered

Looks like Congress finally got its act together over the Easter break.

The final version of the pro-growth tax bill, which ought to be passed by both the House today and Senate tomorrow, extends the 15-percent tax rate on cap gains and dividends from the end of 2008 through 2010. President Bush will sign the bill later this week.

This is very good news. Had me jumping for joy last night when I heard it.

The tax bill also extends the AMT patch by raising exemptions, thereby protecting millions of middle-income taxpayers who would have been hit had Congress failed to act.

Very good news all the way around.

Good for stocks. Good for the economy. Good for capital formation.

Oh, and by the way, good for a lower budget deficit as the Laffer Curve revenue surge from the expanding economy will once again confound all the revenue forecasting geniuses at the Congressional Budget Office and the Joint Tax Committee.

Tuesday, May 09, 2006

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.)

Monday, May 08, 2006

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… if you look at the tax code after we cut taxes, for everybody who paid taxes, by the way, the tax code is more progressive. The richer people in America pay more of the tax load than they did prior to the tax cuts. That's a fact.

[M]ost small businesses pay tax at the individual income tax level. If you're subchapter S, or a limited partnership, you pay tax as if you're an individual. And so when you cut, when we cut all rates, you're really helping the small business sector grow and prosper, which has two benefits: One, most new jobs are created by small businesses, and so when the small business owner has got lower taxes, which means more capital to invest, that means that he or she is more likely to be able to expand the job base of their company.

And secondly, when you cut taxes and make it more beneficial for someone to own a small business, you really expand ownership in our society, and one of the wonderful things about America is the fact that we've got people owning something.

We've got more people owning a home than ever before. I want people owning and managing their own health care accounts through health saving accounts. And the idea of more small business owners is such an important part of a hopeful future for the country.

So the tax relief has not only benefited small business owners, it has benefited the economy as a whole; and at the same time has made our tax code more progressive...But I am still going to talk about the facts. Facts are stubborn things, and the American people have got to know that this economy is strong and we've got a plan to keep it strong.

Bush Itching to Veto

MR. KUDLOW: The Wall Street Journal has an editorial this morning talking about this huge overspending in the emergency budget bill in the U.S. Senate. They say this is a challenge to presidential manhood with respect to a veto. Will you veto it?


Bye-bye to the Ethanol Tariff?

MR. KUDLOW: Secretary Sam Bodman hinted that you might change position on the ethanol tariff, particularly with respect to Brazil. I guess there's a 54-cent tariff on that thing. And the market responded--gasoline futures dropped nine cents, a huge drop. If you had a few of those you'll be back to $2.25 at the pump. Will you drop the tariff on ethanol?

PRESIDENT BUSH: I do want to work with Congress on that. I think it makes sense to. When there's a time of shortage of a product that's needed, so that consumers can have a reasonable price, it seems to me to make sense to address those shortages, and dropping a tariff will enable the foreign export of ethanol into our markets, which will particularly help on our coasts.

On CEO Pay

MR. KUDLOW: Speaking of regulation and deregulation, let’s come back to the business front for a minute, you obviously were a former CEO. There's a lot of talk on Wall Street and among investors that executive compensation has gotten too high. In your view, sir, is there a role for government to play here?

PRESIDENT BUSH: No. I think the main governance for executive compensation ought to be at the board of director level. You know, I am staggered by some of the compensation levels, and I think it's very important for boards of directors to understand that they represent shareholders and that compensation packages need to be fully transparent, in easy-to-understand language, so that the shareholders can understand whether or not the compensation package is fair or not.

...[P]roxies are sometimes very difficult to understand, you have to really dig in and try to make calculations to determine exactly what the compensation package will look like. In my view, there ought to be a very straightforward, transparent explanation to the owners of the company—the shareholders—and let them come to their own conclusions. But the board of directors needs to represent the shareholders, not the management, when it comes to compensation.

On Backdated Options

MR. KUDLOW: This morning, on CNBC, it was reported that another company looks to be guilty of backdating stock options, which surely is not in the shareholder benefit. Your thoughts?

PRESIDENT BUSH: My thought is that there's a regulatory body that ought to hold them to account. It's very important for those of us in public office not to be expressing belief of guilt or innocence. That's up to an objective group of people. But we put a good man in the head of the SEC, in Chris Cox, and I'm sure he'll fully investigate that.

My point to corporate America is that people watch this and they know overcompensating or trying to backdate (stock options) is bad for America; and there ought to be consequences (for executives) when people don't tell the truth and are not transparent.

On United Flight 93

MR. KUDLOW: [T]he late Scott Beamer's dad, David, was on our program. He wrote a great article in The Wall Street Journal, and he said essentially, that when the passengers retook that plane, he called it the first counterattack for World War III.

PRESIDENT BUSH: I believe that. I believe that it was the first counterattack to World War III. It was unbelievably heroic of those folks on the airplane to recognize the danger and save lives.

Friday, May 05, 2006

***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

Thursday, May 04, 2006

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.

Wednesday, May 03, 2006


We mourn the passing of our dear, good friend Louis Rukeyser. He was the original, first-of-a-kind, one-of-a-kind, television financial journalist, who really spawned all the business and financial shows, including CNBC.

He was a wonderful friend who did much for my career.

After I fell off my horse, and began my new sober journey in life, Lou brought me back on his program on a regular basis. For that I will be eternally grateful.

Much, much more important, it was Lou Rukeyser who spawned the Investor Class by bringing investment news and opinions every week to millions of people in a clear way that they could understand and act on.

He introduced the general public to numerous financial experts with diverse opinions, always presented with clarity and good humor.

Lou was brilliant man and a classy gent.

Two summers ago, he spoke to a large dinner party at our home in Redding, Connecticut. It was one of his last public appearances. As always, he was an optimist.

May this good man rest in peace.

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.

Mr. Kudlow Goes to Washington

Larry is headed to the White House for an exclusive one-on-one interview with President Bush on Friday.

Larry's interview with the President will air on Friday night's "Kudlow & Company," at its usual time, 5:00pm EST.

We hope you'll join us.

Tuesday, May 02, 2006

The Tide Turns

“Yesterday's immigration protests will be remembered as a turning point. The pro-amnesty, zero-enforcement coalition gambled that it could take to the streets and intimidate the majority of Americans into backtracking on their plans to toughen immigration law. It was a bold gamble for the open-borders bunch - and they lost.” – James P. Pinkerton writing in today’s Newsday

Over a month ago, I wrote that all these big pro-immigration rallies across the country might backfire. It looks like I was right, and the tipping point may have occurred yesterday.

Throughout this contentious debate, I’ve remained resolute in my support for a comprehensive pro-immigration policy—one which includes beefed-up border security and law enforcement, but one that also includes some kind of guest-worker program for undocumented immigrants and a path to citizenship. Illegals should pay a fine, should go to the "back of the line" of green card applicants, but they should not be felons and should not be forced to return home.

Unfortunately, it’s looking more and more like these illegal immigrants and their brash leaders are becoming their own worst enemies. For whatever reason, Americans have been mistaken for doormats. Look no further than “Nuestro Himno,” the Spanish-language version of our expropriated “Star-Spangled Banner.” (Make sure to check out today’s Investor’s Business Daily editorial for more on this subject.)

This Spanglish “national anthem” was an incredibly poor decision; a smack in the face to Americans; a tone-deaf manuever made all the worse by the fact its lyrics are completely different from the original. Consider verse two:

“My people keep fighting
It's time to break the chains”

Huh? The time has come to break the chains? What the heck is that? That sounds like some Marxist mumbo-jumbo to me.

Let’s get this straight once and for all: English is our language. It forms the foundation of our culture. It encourages national unity and the free-flow of commerce. And for hundreds of years, immigrants have come to our shores, jumped right in, and learned our language. They did not make ridiculous demands that we acquiesce to their native tongue. It was this way with the Irish, Italians, Koreans, Germans, and so forth. That’s the way it’s always been and the way it ought to remain.

Under no circumstances should we allow bilingualism in school. None. Latin immigrants can come to our fertile soil seeking freedom and opportunity, but not to change culture.

I wonder if the left is taking over these pro-immigration marches? If so, it will kill comprehensive reform and play right into the hands of the know-nothing xenophobes like Pat Buchanan, Lou Dobbs and Tom Tancredo.

But make no mistake about it: This Spanglish national anthem is a culture war that they will lose. The same goes for these misguided boycotts of business and schools. Poor decisions all the way around. And I will fight this culture war even though I support a balanced immigration reform bill.

It’s not “time to break the chains.”

It’s time for these people to open their eyes.

Communist Reincarnation in Latin America

With much of the national attention and debate fixated on Iran and Iraq, a number of folks are missing the growing communist threat rifling through Latin America.

Ronald Reagan fixed this in the 1980’s with a strong, principled stand for democracy and backing the freedom fighters in El Salvador and Nicaragua. CIA Director Bill Casey undertook covert actions even in the face of left-wing Democratic congressional outrage and the stupid debate over the War Powers Act.

It worked in Central and South America, as the dominoes of democracy started falling everywhere.

Now, twenty years later, leftist governments are rearing their ugly heads in Venezuela, Bolivia, Argentina, and perhaps Mexico and Peru. U.S. oil companies are being nationalized. China is aligning itself with Cuba and Venezuela to explore and drill offshore oil just forty-five miles off the Florida Keys.

That begs the question, why isn’t the United States drilling there?

And, perhaps more importantly, what is our government policy regarding this burgeoning leftward tilt in Latin America—which by the way is a safe harbor for a number of terrorist groups including Hamas, Hezbollah and Islamic Jihad, all of which are actively plotting to destroy the United States?

This is very serious stuff. The U.S. government needs a clear and aggressive response to this leftist revolt that threatens our hemisphere.

And by the way, what actions will our government take to defend our corporations from expropriation? Since when do we allow foreign governments to take over the assets of American companies?

Monday, May 01, 2006

United 93

I saw United 93 on Sunday night. And I’m glad I did. It was riveting.

Yes, parts of it made me sad, as all Americans were on 9/11. But underneath that sadness came the usual anger at what the bloodthirsty terrorists had done to us.

The documentary style storytelling of what actually happened inside United 93 was unbelievably tense. And suspenseful. (Yes, suspenseful; though we already knew the outcome of the episode, my wife and I did not of course know what happened inside the plane, as Todd Beamer and other courageous passengers mounted their attack on the terrorist guards in order to get inside the cockpit.)

Writer/director/producer Paul Greengrass’s rendition from interviews with family members and friends of the deceased was absolutely remarkable. So was the whole perspective of that terrible day as seen through the eyes of various civilian air-controllers and the military command center.

At one point, late in the movie, the head air-controller in New York finally said, “Someone is at war with us and we are closing down all flights, domestic and international.” Got that completely right.

The idea that this was war and nothing but war, would of course, later surface in President Bush’s post 9/11 war time strategy. And many of the air controllers (both civilian and military) played themselves, another brilliant idea from Greengrass.

Should this movie have been made now? Is it too soon? Yes, to the first, and no to the second.

As David Beamer (who lost his heroic son Todd on United 93) wrote in the Wall Street Journal recently, this flick is a wake-up call. I wish it had been made earlier.

And the shots of the World Trade Center attacks, both up close and from the distant tower of the Newark air control center, reminded me of this: Why the hell haven’t the quarrelsome, dingbat New York and New Jersey politicians rebuilt those towers?

The Empire State Building was built in one year during the 1930’s.

We will never be whole as New Yorkers or as Americans until those towers are rebuilt.