Friday, June 29, 2007

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

CNBC's Bob Pisani will get us started with a quick stock market report from the NYSE.

STOCK MARKET & ECONOMY...Our core market panel tonight includes Don Luskin, CIO at Trend Macro; John Browne, editor of Financial Intelligence from; Michael Panzner, Wall Street trader and author of Financial Armageddon; and Michael Cuggino, president/portfolio manager at the Permanent Portfolio Family of Funds.

SUBPRIME & HOUSING...Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair will offer her perspective. Our market panel will weigh in with their thoughts.

NOT SO FRIENDLY SKIES?...Leslie Raye, a passenger on JetBlue's latest ill fated flight will tell her story. Our market panel will weigh in on the state of the U.S airline industry.

LONDON TERROR PLOT...Steve Emerson, NBC terrorism analyst and author of Jihad Incorporated: A Guide to Militant Islam in the US will join us with the latest developments and perspective.

PUTIN COMES TO MAINE & TROUBLE IN IRAN...Joining us to discuss are Dennis Ross, counselor at The Washington Institute for Near East Policy and author of The Missing Peace: The Inside Story of the Fight for Middle East Peace and Frank Gaffney, president of the Center for Security Policy.

Please join us on CNBC at 5pm ET for another free market edition of Kudlow & Company.

Good News on Taxes

There’s no doubt that President Bush will veto any capital gains tax hikes that congressional Democrats are proposing for buyout funds, hedge funds, and other private partnerships.

Through White House spokesman Tony Snow, the president said he’s prepared to veto any measures to increase taxes.

Treasury chief Henry Paulson said, “I don’t believe it makes sense to single out one industry….We need to be careful dealing with something like this piecemeal.”

SEC Chairman Chris Cox testifying before Congress said, “The funds that Blackstone manages are indeed investment companies but the fund manager is not, under the law.” Cox stressed that Blackstone management is a partnership that’s entitled to the 15 percent capital gains tax, not an investment company liable for paying higher income taxes.

This is good news.

Democrats are assaulting the capital gains tax itself, as well as the differential between the 15 percent capital gains rate and the 35 percent tax rate on individual and corporate income.

With countries around the globe racing to reduce their tax rates, it is foolhardy for the United States to be raising them. We should be encouraging and rewarding investment risk and all forms of entrepreneurship.

Congratulations Brits

My hat goes off to the exceptionally brave officers in London who successfully defused what had the makings of certain disaster. What a job.

This car parked in the bustling Haymarket district was packed to the gills with gasoline, gas canisters, and nails. It was a tragedy in the making that could have killed countless innocent Brits.

This latest foiled terrorist plot comes on the heels of the second anniversary of the 2005 London subway bombings when four Muslim suicide bombers killed over 50 people.

It’s another reminder that our terrorist enemy is still on the prowl.

We mustn't let our guard down.

As Rudy Giuliani has said many times, we must stay on offense, not retreat to defense.

Thursday, June 28, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll begin with a recap of today's stock market action and reaction to the Fed from CNBC's Bob Pisani on the floor of the NYSE.

FED REPORT...Wayne Angell, former member of the Federal Reserve Board will offer his perpsective along with Bob Stein, senior economist at First Trust Advisors.

STOCK MARKET: PROFITS BOOM VS. BUYOUT BOOM...Joining us to discuss are Brian Arsenault, high-yield debt strategist at Morgan Stanley; Jeffrey Kleintop, chief market strategist at LPL Financial Services; Doug Kass, president of Seabreeze Partners; and Michael Ozanian, Forbes Magazine Sr. Editor.

CAN CONGRESS GET ANYTHING DONE?...CNBC Washington reporter John Harwood will give us a political rundown with a look at immigration and taxes.

MICHAEL MOORE & HEALTHCARE...On to debate are Michael Tanner, director of health and welfare studies at the Cato Institute and Jonathan Cohn, senior editor at The New Republic.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

The Walls Are Closing in Mr. Ahmadinejad

Is Iran coming apart at the seams?

Wacky Iranian President Mahmoud Ahmadinejad has totally mismanaged his country’s economy. It’s in total disarray. Inflation is spiraling off the charts, hovering somewhere around 30 percent, while growing unrest from the Iranian middle class threatens to undermine his grip on power.

All this comes on top of the government’s recent surprise gas rationing announcement. This decision—designed to lower fuel consumption over fears of possible UN sanctions over their nuclear program—sparked a surge of violent protests across the country.

Iranians are furious. Gas stations are being set ablaze. Iranians are marching in the street calling for Ahmadinejad’s head.

Despite their huge energy reserves, Iran’s moribund refining infrastructure forces them to import roughly 40 percent of its energy needs. In addition, gas in Iran only costs about 2 1/2 cents a gallon due to massive subsidies. This has caused enormous strain on the country’s finances which, of late, have been propped up by higher oil prices.

To make matters worse for Ahmadinejad, 57 Iranian economists recently signed a letter publicly denouncing his mismanagement of the economy. He denies all this and insists inflation is under control. He even offered to debate all 57 economists on television.

The guy is clearly off his rocker.

The powers that be recognize they have a serious problem on their hands. They are cracking down and ordering journalists not to report any of the unrest. They even went so far as to turn off Tehran’s mobile text messaging system to prevent people from organizing further protests.

One of the key issues facing Iran is the huge number of young people fed up with their leadership's tyrannical rule. As an Investors Business Daily editorial pointed out today, two-thirds of Iran's 70 million people are under 30 years old, roughly 45 percent are under 18. These kids have no recollection of the 1979 revolution, nor do they seem much to care. “They live in an age in which technology makes it easy for them to compare their lives and futures with those in the West, and they don't like how they are faring under an oppressive and militant religious master.”

Clearly, troubles abound in Iran.

In the meantime, the United States ought to be doing everything in its power to tighten the vise grip on these tyrants. Hit them in the wallet where it hurts. Toughen up existing sanctions, put in place some new ones, and put even more heat on these guys. If done right, the question will soon become how much more unrest it will take before the mullahs are forced to make a decisive political leadership change.

And, who knows? If we're really lucky, perhaps the present Iranian power structure will be toppled from the inside, courtesy of 70 million young people desperate for freedom.

Wednesday, June 27, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will lead us off with a quick hit from the NYSE.

Our market experts tonight inlcude Fritz Meyer, senior investment officer at Aim Investments; Kevin Divney, chief investment officer at Putnam; Barry Ritholtz of Ritholtz Research & Analytics; and economist Art Laffer, former Reagan economic adviser, chairman and chief investment officer of Laffer Investments.

OIL & ENERGY TENSIONS...Joining us live from Turkey...Dan Yergin, chairman of Cambridge Energy Research Associates & CNBC global energy analyst. He'll offer his unique perspective on all the latest energy news, including Exxon and Conoco's decision to exit Venezuela.

Our market panel will weigh in with their perspective following Mr. Yergin.

ECONOMIC DEBATE...CNBC's senior economics reporter Steve Liesman will battle it out with Mr. Laffer.

POLITICAL DEBATE...Ann Coulter, columnist and author of "Godless: The Church of Liberalism" will debate radio talk show host Leslie Marshall.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

The Grey Lady's Murdoch Envy

Interesting exchange on Kudlow & Company last night with Ken Chandler, a former top editor with three decades worth of experience at Rupert Murdoch's News Corp.

KUDLOW: What's The New York Times doing? Hit job [on Mr. Murdoch] every day this week. I'm getting bored. I assume the Times is, too. Is this about Murdoch envy?

Mr.CHANDLER: Well, I would say, personally, don't you find it an extraordinary coincidence that they would choose this week of all weeks to unload these pieces on Murdoch?

KUDLOW: What a coincidence.

Mr. CHANDLER: What a terrible coincidence! And, you know, this is agenda-driven journalism at its worst. If Murdoch did something like this there would be an absolute uproar. But the Times does it, nobody says a word about it. And the reason they're doing it, of course, is that they are absolutely terrified.

KUDLOW: Quaking in their boots, knees are knocking.

Mr. CHANDLER: Quaking in their boots at the prospect of Murdoch owning The Wall Street Journal . Because they know that if Murdoch owns The Wall Street Journal, he is going to come after them. You know, right now they have the national marketplace to themselves, but Murdoch is going to do to The New York Times what he did to CNN when he launched the Fox News Channel.

Tuesday, June 26, 2007

Washington’s ‘War Against Winners’

A snippet from my latest syndicated column:

"...Ironically, a lot of today’s anti-cap-gains momentum is the handiwork of former Clinton Treasury secretary Robert Rubin. He actually believes a low cap-gains tax has no economic growth impact at all. However, back when Clinton and Rubin were running things, the personal income-tax rate was lifted from 31 to 40 percent, while the cap-gains tax was reduced from 28 to 20 percent, making for a 20 percentage point tax advantage for cap-gains over regular income. Flashing forward, the current Bush administration lowered the income-tax rate to 35 percent and the cap-gains rate to 15 percent, preserving that 20 percent differential.

Hmm...Is Rubin saying the cap-gains tax advantage was good for the Clinton boom, but not the Bush boom?

Truth is, that differential provides a strong incentive for entrepreneurial risk taking and higher-risk, cutting-edge investment -- both of which lend real torque to the economy...."

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

THE STOCK MARKET & ECONOMY...Joining us to discuss are Stefan Abrams, managing partner at Bryden-Abrams Investment Management; David Kotok, chairman and chief investment officer of Cumberland Advisors; and Kevin Landis, chief investment officer of Firsthand Funds.

RUPERT'S DOW JONES BID...Eric Alterman, senior fellow at the Center for American Progress & media columnist for The Nation will discuss with Ken Chandler, former NY Post publisher and top editor with 30 years experience at Rupert Murdoch's News Corp.

POLITICAL RUNDOWN...CNBC Chief Washington correspondent John Harwood will fill us in on all the latest news from Capitol Hill including immigration and the union secret ballot.

THE DYNAMIC DUO...Steve Moore, senior economics writer for The Wall Street Journal's editorial board will square off against Robert Reich, former labor secretary/professor of public policy at Cal Berkeley.

Topics tonight include a business friendly Supreme Court & globalization.

Please be sure to join us at 5pm ET on CNBC where we still believe free market capitalism is the best path to prosperity.

Dr. Bob's Still "Very Bullish"

Economic insight from Dr. Bob Froehlich, Vice Chairman/Chief Investment Strategist at DWS Scudder on last night's Kudlow & Company.

KUDLOW: There's always a wall of worry, there are always worries. Now it's subprime coming back. Is there going to be a contagion meltdown? I don't believe that for a minute, Dr. Bob. But what's your current thinking?

Dr. BOB FROEHLICH: Yeah. I don't believe it, either. I think what you have to do is put it in context, Larry, and I think if you look over the last two years—2005, 2006—over that two year period there were 16 million mortgages issued for both new and existing homes. Of that amount, only 20 percent of those were subprime, which means 3.2 million subprime mortgages in its peak. There's 114 million mortgages outstanding. Even if every single one when into default, which we know that isn't going to happen, that's 2 percent of the overall outstanding mortgages. I think this is a lot of hype.

Now, if you're invested in that area, maybe it's a problem, but as far as this spilling out to the overall economy, spilling out to the overall market, I absolutely don't see that happening...If you know you're investing in subprime, you shouldn't be surprised when people aren't paying you back. But at the end of the day, I still think the economy grows at above-trend growth. If the economy grows at above-trend growth, I still think we have a chance to see close to double-digit earnings. I still think the market is going to rebound from this.

Big Win for Secret Ballot

From the AP: Senate Republicans on Tuesday blocked a bill that would allow labor unions to organize workplaces without a secret ballot election. Democrats were unable to get the 60 votes needed to force consideration of the Employee Free Choice Act, ending organized labor's chance to win its top legislative priority from Congress.

This is a key victory. This was all about the Democratic Congress’s war on prosperity. They were trying to somehow resurrect a growing union movement by abolishing the secret ballot. It’s a loser. So we’re glad the GOP won this battle.

Former GE CEO Jack Welch told me this thing would set U.S. competitiveness back 30 years with outsized benefit plans, featherbedding, work stoppages and other anti-growth, anti-productivity measures.

Incidentally, union membership in the private sector has plummeted to around 7 percent of the workforce. That tells you something.

Of course, union organizers and the Dems aren’t going to throw in the towel on this thing. They’re determined to pass this bill.

But, at least for now, we can breath a sigh of relief.

Poll: Most American Adults Rate Labor Unions Negatively

Good op-ed in today's New York Sun:

"...while many Democratic politicians still view labor unions as critical for the middle-class, objective public opinion polls have reached a different conclusion. A Harris Interactive survey found that "Most American adults overall, most employed adults and, surprisingly, many union households rate labor unions negatively." The poll, which was taken after the recent spate of corporate scandals, said that respondents even rated corporate America more positively than labor unions.

If workers are browbeaten, intimidated, and harassed into joining a labor union, they might start blaming the political party behind the bill for all of the chaos at their workplace.

As we have found out so far, the Employee Free Choice is a bill that will take a long time to actually pass. If that day ever does come, it might haunt Democrats well into the future."

Monday, June 25, 2007

Monday Night Lineup

On CNBC's Kudlow & Company this evening:

CNBC's Bob Pisani will start us off with a report from the floor of the NYSE.

BULL & BEAR DEBATE...Joe Battipaglia, investment strategist at Ryan, Beck and Company will square off with Dr. Bob Froehlich, chairman of the Investor Strategy Committee at DWS Scudder.

INTERVIEW WITH CONGRESSMAN BARNEY FRANK...The House Financial Services Committee Chairman (D-MA) will join us in a live one-on-one interview from Washington.

HOUSING & ECONOMY DEBATE...Housing bear Gary Shilling, president of A. Gary Shilling & Co will debate Michelle Girard, senior economist at RBS Greenwich Capital Management.

SUNDAY UNSPUN...Frank Newport, Gallup Poll's editor-in-chief will sift through all the latest media spin in our weekly segment.

HILLARY & BUSINESS...The Wall Street Journal's Kim Strassel and Jared Bernstein, author of "All Together Now" and senior economist from the Economic Policy Institute will debate.

THE FAIRNESS DOCTRINE...Ms. Strassel & Mr. Bernstein will weigh in with their perspective.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

A Political Death Wish?

"I really believe [Democrats] have some kind of political death wish. I mean, if you listen to their message over the last two or three weeks, Larry, what has it been?

Pork barrel spending...“we're not going to give up our earmarks” oil and gas in the energy bill...Tax hedge private equity...increase taxes on capital gains and dividends by repealing the Bush tax cut.

This is not [the mandate], as you said, that the Democrats ran on. Then you've got this terrible farm bill that's coming down the pike.

Democrats just three months ago had very high numbers. Nancy Pelosi was on her honeymoon. And instead the Democrats have moved right back to the left with a kind of lose the war, earmark spending, tax, tax, tax agenda…

What are the Democrats doing? They're going to lose this election if they keep up this message."

-Steve Moore, senior economics writer for The Wall Street Journal's editorial board, on Kudlow & Company.

Friday, June 22, 2007

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll begin tonight's program with a look at today's steep stock market selloff amidst new tax hike fears stoked by the Democratic Congress.

STOCK MARKET SELLOFF...Our stock market pros tonight include Don Luskin, CIO at Trend Macro; Craig Columbus, President/Chief Market Strategist at Advanced Equities Asset Management; and Michael Panzner, Wall Street trader and author of "Financial Armageddon: Protecting Your Future from Four Impending Catastrophes."

THE ECONOMY...A debate between Joe LaVorgna, Chief US Fixed Income Economist and Robert Stein, senior economist at First Trust Advisors.

WASHINGTON'S WAR AGAINST PROSPERITY...CNBC Chief Washington Correspondent John Harwood will join us with a report on the latest news from Capitol Hill.

Our panel will consist of John Fund, columnist for The Wall Street Journal's; Steve Moore, senior economics writer for The Wall Street Journal editorial board; Jared Bernstein, senior columnist, Economic Policy Institute, author of "All Together Now: Common Sense for a Fair Economy"; and Democratic strategist Julian Epstein.

LIBERAL MEDIA BIAS?...A debate between GOP strategist Cheri Jacobus and Nico Pitney from the Center for American Progess.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Washington’s Tax War on Prosperity

Today’s precipitous stock market plunge—presently down over 150 on the Dow—is all about Washington’s war on prosperity.

Make no mistake here: if the Democrats in Congress get their way, their punitive, soak-the-rich, tax hiking program would constitute the biggest attack on capital since the 1930s.

Two key, front-page, news stories (yesterday’s New York Times by Aaron Ross Sorkin, and this morning’s Wall Street Journal by Sarah Lueck et al) lay out the Democrats’ reckless strategy to essentially abolish the 15 percent capital gains tax preference for risk investing, and raise it by 20 percentage points to the already too high 35 percent corporate rate.

And, that’s not all.

The left wing’s broad based assault on wealth, investment, and savings would extend far beyond Blackstone’s successful Wall Street IPO today. The Democratic strategy would affect all private partnerships engaged in investment risk—this includes buyout funds, hedge funds, venture capital firms, real estate partnerships and oil & gas deals that qualify for the 90 percent passive income tax preference.

Their ill-advised strategy would strike a dagger into the heart of U.S. capital formation.

Nobody knows for sure whether Congress will green light these anti-growth ideas. The great presumption (and hope) is that President Bush would veto them if they did.

But right now, these newspaper reports are giving the stock market serious heartburn. The mere threat that Congress would embark on such a program of wealth destruction and economic impoverishment—all in the name of taxing rich people with the usual inside-the-beltway mantra of “tax fairness”—has investors reeling.

Worrisome Economic Trends...

***Smoot-Hawley Redux? Great editorial in the Washington Post today on Congress’s latest China bashing. “…Were [this legislation] to pass and be implemented, the bill would rain on the ongoing global party of prosperity and would unnecessarily worsen U.S.-China relations without solving the problem it nominally is aimed at.”

That's dead right. China bashing legislation is bad news. It's a horrible idea.

***Witch Hunt Against Rich People...Wall Street Journal front-page story on congressional class warfare. Washington’s war on prosperity and rich people's wallets rages on. We've been banging this drum on Kudlow & Company for a while now. The Democratic thinking seems to be if it moves, tax it. Regulate it. If it's prosperous, kill it. It's in their DNA. One lobbyist (former aide to Sen. Max Baucus) was quoted saying the Blackstone tax "is just the tip of the iceberg. It could be death by a thousand cuts."

This is craziness.

***Jimmy Carter Industrial Policy Planning Nonsense. The latest Energy bill is awful. It's jacking up food prices. Sky high. Why don't they grasp this? Almost everything about this Senate bill stinks. Investors Business Daily has two good articles on this.

Here's one.

Thursday, June 21, 2007

Prosperity Killers

We took another look at Washington’s war on prosperity on last night's Kudlow & Company .

We were joined by Dan Clifton, Director of Policy Research at Strategas Research Partners. Dan’s one of the best in the business. Here’s an excerpt from our conversation:

KUDLOW: So, what about this Washington war against prosperity, especially the high tax story? We've been following this all week, going back to last week. Precisely because it could derail this glorious bull stock market…Dan, what happens here? The Blackstone tax has now been referred to the Treasury and the SEC. But you think there's more where this is coming from.

DAN CLIFTON: That's right, Larry. What we're warning our clients is this: last week's announcement was the first piece of news that was designed to basically block private companies from being able to go public.

Now they'll come back in the next few weeks and look to tax-carried interest on private hedge funds and private equity, who are not going public. That's where the real money is—about $6 billion a year that could be used to offset new spending or social tax cuts.

KUDLOW: You think the Blackstone tax will pass, Dan? What's your estimate, guesstimate? You think it'll pass? It's going to have to get through both houses of Congress.

DAN CLIFTON: Yeah, well, I think that it could pass both houses of Congress. The question is what vehicle it’s attached to. If it's attached to a provision that has broad support—such as education tax cuts or possibly the alternative minimum tax reform—then I think the Bush administration is in a really hard position to veto the bill itself. (End)

This latest round of congressional class warfare is bad news.

Market historians will recall that twenty years ago, a Ways and Means Committee threat to levy a big tax that would block the merger wave spelled trouble for the stock market. In fact, the official Federal Reserve report said that it played a role in the October '87 crash.

Why is Washington waging war on prosperity?

Wednesday, June 20, 2007

Apocalypse Not: Krugman Four Years Ago Today

Blogger Eddy Elfenbein over at Crossing Wall Street takes a trip down memory lane today-back to June 20th, 2003. Hat tip to Mr. Elfenbein...

(From Mr. Krugman's June 20, 2003 New York Times column, "Still Blowing Bubbles")

The big rise in the stock market is definitely telling us something. Bulls think it says the economy is about to take off. But I think it's a sign that America is still blowing bubbles — that a three-year bear market and the biggest corporate scandals in history haven't cured investors of irrational exuberance yet.


In short, the current surge in stocks looks like another bubble, one that will eventually burst.

Bowyer Touts Benefits of Deregulation

Here's an email my friend Jerry Bowyer sent over this morning. As usual, Jerry offers some very good insight...

From: Jerry Bowyer
Subject: FW: DealBook: Morgan Stanley's Profits Rise, Defying Subprime Slump first there's Lehman bros income up, Goldman did okay and now we see that Morgan's doing well. All of these guys were fingered as threatened by the 'sub-prime-contagion-apocalyptic melt-down. Well it looks like not so much. Sure, they got hit a little in the fixed income divisions but what the press missed is the tremendous benefit of deregulation.

In 1995 Clinton and the Rs in Congress, dismantled FDRs banking regulation regime, allowing commercial and retail banking in the same entities. A wave of mergers (along with a wave of media handwringing about them) followed. Now they're diversified. The guys doing mortgages are under the same roof as the guys doing big corporate deals, so if mortgages get a little dicey, that's okay, because mergers and acquisitions business is making up for it.

Deregulation is the driver of banking resiliency and is, I think, the missed angle of this story.

Have a nice day,

Jerry Bowyer

Bowyer Media

Triple Taxing Blackstone

Terrific op-ed in today's Wall Street Journal:

"...Senators [Baucus and Grassley] do ask a fair question: Why should private equity partnerships have the advantages of corporate designation -- most importantly the access to capital markets -- without having to pay corporate income tax? One answer is that the companies owned by these equity funds do pay corporate income tax when they earn income. The payments these companies make to the equity partnership are dividend payments -- and thus should be taxed as such. There is a sound rationale for the passive income exclusion: It ensures that corporate income tax isn't collected twice on the same income stream.

Under the Baucus-Grassley proposal, Blackstone's investment income would be taxed first at a 35% corporate tax rate on, say, American Widget Company when it earned the profits; taxed again when those profits are passed on to Blackstone at another 35% corporate income tax rate; and then taxed a third time at a 15% capital gains tax when Blackstone distributes its earnings to partners and shareholders. Surely Senators Baucus and Grassley don't favor triple taxation?..."

Tuesday, June 19, 2007

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll begin tonight's show with a quick recap of today's market news from CNBC's Bob Pisani on the floor of the NYSE.

A ONE-ON-ONE INTERVIEW WITH ROB PORTMAN...the departing White House budget director will fill us in on his decision to leave the Bush White House.

STOCK MARKET & ECONOMY...our market mavens will offer up their perspective on a host of subjects this evening.

On board: John Rutledge, chairman of Rutledge Capital; Forbes Magazine's Elizabeth MacDonald; Wendell Perkins, portfolio manager for the JohnsonFamily funds; Barry Ritholtz, president of Ritholtz Research; and senior MarketWatch columnist Herb Greenberg.

Our market panel will stick around throughout the course of the show.

POLITICAL RUNDOWN...CNBC Chief Washington Correspondent John Harwood will offer up the latest news out of Washington.

MIDDLE EAST TENSIONS...Dr. Michael Evans, Middle East expert and four-time New York Times best-selling author will be aboard.

TACKLING TERRORISM...Jed Babbin, editor of Human Events will offer his insight.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Protecting the Secret Ballot

The war against prosperity rages on this week down in Washington with class warriors inching closer to overturning 65 years of secret balloting for union membership.

The liberals behind this so-called "Employee Free Choice Act" ignore the fact that an overwhelming number of Americans are dead set against it. One recent poll revealed nearly 90 percent of respondents believe a worker's vote to unionize or not should remain private.

If this thing gets through, it'll be bad news for the stock market and economy.

A few months back, Jack Welch told me on Kudlow & Company that it would turn American competitiveness back 25 years. He said this union power play is headed straight for Silicon Valley and would jeapordize American innovation and competitiveness.

According to Mr. Welch, "This [legislation] is such a bad idea...[T]hose guys ought to be ashamed of themselves...We absolutely can't let this bill, with its motherhood-like name, this absolute misnomer, be allowed to come across. It will kill US competitiveness. Larry, this is not a minor issue. This is really a big deal."

Steve Moore, senior economics writer for The Wall Street Journal's editorial Board told me this legislation would permit unions to go into shops and factories and use thuggish, intimidation tactics to try to get unionization where they haven't been able to get the unions certified under fair and secret ballots.

Bottom line: This legislation is anti-growth and un-American.

Rudy Talks Blackstone, Hillary & Taxes

Here's a snippet from my interview last night with the GOP presidential candidate on the subject of taxes and the war on prosperity.

KUDLOW: How do you like it that Congress seems to be singling out a New York fund, New York buyout fund, Steve Schwarzman's Blackstone, on the eve of an IPO, and they're saying, `We're going to double your tax rate.' What's your thought on the Blackstone tax?

GIULIANI: Well, you know, the single biggest contributor to New York City’s surplus every year was the Wall Street bonuses.

KUDLOW: Right.

GIULIANI: Wall Street had big bonuses, New York City had big surpluses. Wall Street had a bad year, New York City was struggling. This is our biggest industry, the finance industry. So it would seem to me, like steel used to be to Pittsburgh...

KUDLOW: Right. Corn in Iowa. This would be like an Iowa senator asking for a higher tax on corn.

GIULIANI: Yeah. Or, you know, don't do much about ethanol if you're from the Midwest and you got a lot of farms.

KUDLOW: But wait, this isn't all. Senator Hillary Clinton then says in her speech, `US corporations are not paying their fair share.' And then she says that's it's very important--let me get this right, `It is irresponsible tax breaks for upper income people must expire.' Now, I want to know, what's your view on that? And is there now, in the Democratic Party, a war on prosperity going on?

GIULIANI: No question about it. This is the same senator who, a few years ago said, `We have to take things from you for the common good.' Well...

KUDLOW: What does that mean? What does that mean?

GIULIANI: I think that means--I think that means that she and the government can figure it out better than you and I can.


GIULIANI: I usually tell people my general philosophy is I'm going to give a few things back to you for the common good, because you're probably going to spend it more intelligently. You're going to spend it in a wiser way. You're going to create more jobs.

And I think that this will be a very stark, dramatic difference, particularly if I'm the Republican nominee, between my philosophy and theirs and my history and theirs. [My history] has been a history of lowering taxes and seeing the results of that work to taking on an economy that was anemic--New York--and make it into a robust economy. I did it by lowering taxes, not by that--whatever you call those policies.

Monday, June 18, 2007

Monday Night Lineup

On CNBC's Kudlow & Company this evening:

Tonight's show will be live from the New York Stock Exchange

STOCK MARKET DRILLDOWN. . . CNBC's Bob Pisani will give us a brief market update from the floor. Our market experts will follow: Quentin Hardy of Forbes magazine, Dr. Bob Froehlich of DWS Scudder, and Gary Shilling of A. Gary Shilling & Co.

WASHINGTON TO WALL STREET EXCLUSIVE. . . Former New York City Mayor and current GOP presidential frontrunner Rudy Giuliani will join us in an exclusive one-on-one interview from the NYSE.

SUNDAY UNSPUN . . . Frank Newport, editor-in-chief at Gallup will sift through all the latest media spin.

DYNAMIC DUO . . . Robert Reich, former Labor Secretary and professor of public policy at the University of California (Berkeley) will debate Steve Moore, senior economics writer for The Wall Street Journal editorial board.

America's Mayor

America's mayor, Rudy Giuliani, will appear on CNBC's "Kudlow & Company" from the New York Stock Exchange tonight at 5:00 p.m. (EDT). We will discuss his 12 commitments plan, the Blackstone buyout fund tax, Democrat's war on prosperity, and military action in Iran.

The War Against Prosperity

Democrats in Congress and on the presidential trail are intensifying their high-tax war against prosperity and the so-called rich. Their latest salvo includes more tax penalties on successful investors and entrepreneurs, such as a proposed 4.3 percent surtax on high-income earners and a tax assault on the private-equity buyout industry.

The surtax allegedly would raise sufficient revenues to exempt middle-class folks from paying the alternative minimum tax. But the income threshold for this surtax has been alternatively suggested at $500,000, $200,000, or as low as $75,000 to $100,000, depending on the amount of new spending and earmarking envisioned by the Democratic Congress.

Meanwhile, Democrats (and some Republicans) are taking aim at the booming private-equity buyout industry, especially the much-ballyhooed public offering of Steve Schwarzman’s Blackstone Group. It seems these buyout guys are just too rich.

Up to now, Blackstone’s authoring statement had envisioned some kind of two-tiered tax plan, where ordinary corporate compensation would be taxed at the 35 percent corporate rate while high-risk investment-fund profits would be taxed at the 15 percent cap-gains rate. And now, senators Max Baucus (D., Mon.) and Charles Grassley (R., Iowa) want Blackstone to pay the much higher corporate tax on all its income.

Normal salaries and income from straight-out financial services arguably should be taxed at the corporate rate. But the investment partnerships inside Blackstone constitute risk-taking. For example, if the risks don’t pay off with profits, there is no income to be taxed. So, should the Baucus-Grassley plan set up a new multiple tax on capital, it would have negative consequences on economic growth while diminishing the economic clout for risk-taking.

And this is just the start. The next step will be to raise the overall tax on private buyout partnerships, even though there’s no intent to go public. Former Clinton Treasury secretary Robert Rubin suggests more than doubling capital-gains taxes on these partnerships, telling a Washington conference that the lower rate on capital gains hasn’t contributed one iota to the economy.

Class envy is behind all this. It’s an envy that despises the investment clout of buyout firms, even though these buyouts create leaner, more-productive, more-efficient companies that are better able to compete in the era of globalization. These buyouts are a necessary capitalist churning, but many politicians would prefer the status quo. In particular, labor unions are pushing their Democratic allies to stop the buyout movement in order protect inefficient jobs and oversized benefits.

Ironically, all this is happening while low-tax Reaganomics is spreading worldwide. Hence, this would be the exact wrong moment for U.S. politicians to raise taxes and impair American economic competitiveness. There’s really a much better way. Supply-side guru Arthur Laffer suggests that we embrace one simple flat-rate tax plan that would do away with false distinctions between corporate and capital-gains tax rates and abolish the multiple tax on investors. Don’t raise tax rates, lower them. Why not tax all this income once, and only once, at a 15 or 20 percent rate?

We better do something. Indeed, a tax-cut war is spreading across Europe, where lower levies on corporate profits in Spain, Germany, France, and the U.K. are aimed at better competing with the U.S. in the global race for capital. The successful supply-side experiment in Ireland has become a Euro-wide model. Average EU corporate tax rates have dropped to 25 percent, compared to the U.S. federal, state, and local average of 40 percent. Newly elected French president Nicholas Sarkozy intends to cut his country’s corporate tax, as does Spanish prime minister Zapatero, as does Italian premiere Romano Prodi. All this would follow large business tax reductions in Poland, Slovakia, and Hungary.

Aren’t the Democrats watching?

Out on the campaign trail, leading Democrats Clinton, Obama, and Edwards are all talking tax hikes. Sen. Clinton says, “The president’s irresponsible tax breaks for high- income Americans” must be allowed to expire. She then claims that the percent of taxes paid by corporations has fallen as corporate profits have skyrocketed. That’s backwards. During the Bush boom, business tax collections as a share of overall tax revenues have skyrocketed -- well above levels witnessed during the Clinton 1990s.

Point is, whether we’re talking individuals, corporations, or cap-gains, if you tax something you get less of it. If you take away the tax advantages from private partnerships, future deals will dry up. Or they will go offshore, where no taxes will be paid at all. And since capital is the seed corn of future economic growth, the Democratic war against prosperity will soon include the middle class as collateral damage.

In a recent interview, senior White House advisor Al Hubbard made it crystal clear that President Bush would pull out his veto pen on any tax-hike proposals coming across his desk. Let’s hope Mr. Bush follows through.

Friday, June 15, 2007

Goldie's Looking Good

Stocks surged higher for the third straight day as Fed rate hike concerns dissipated further. In fact, Fed funds futures contracts show no sign of a Fed move through mid-2008.

It’s a Goldilocks economy--not too hot, not too cold, and the stock market loves it.

For all the hand wringing over inflation, core prices are staying well contained. This is even more evident in the data for non-energy non-food commodity prices, which have dropped 0.7 percent from a year ago.

Inflation is contained, real growth is ramping up to a solid pace, and the Fed is out of the picture.

No wonder markets are happy.

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

STOCK MARKET SURGE...CNBC's Bob Pisani will start us off with a report on the stock market's third consecutive day of gains.

Our market pros tonight include Art Laffer, president of Laffer Associates; Craig Columbus, president/chief market strategist at Advanced Equities Asset Management; Dan Fitzpatrick, publisher of; and Michael Panzner, Wall Street trader and author of Financial Armageddon.

TAXES, BLACKSTONE, CLASS ENVY & MORE...House Ways and Means Committee Chairman Charlie Rangel (D-NY) will join us in a one-on-one interview to discuss the latest tax plans being hatched in Washington.

PANEL REACTION...Joining us to discuss the latest tax threat are economist Art Laffer; The Wall Street Journal's Steve Moore; former Clinton Labor secretary Robert Reich; and Daniel Adamson, Co-founder and President of The Blue Fund.

THE CLINTON PORTFOLIO...the aformentioned panel will discuss former President Clinton's stock holdings.

RUSSIA, IRAN & CHINA...CNBC's Trish Regan will give us a quick update on U.S./Russian relations regarding the missle defense shield.

Messrs. Reich & Moore will weigh in.

PAYCHECK PROTECTION...The "Dynamic Duo" will discuss yesterday's Supreme Court ruling that states may require unions to get permission from nonmembers before using their dues money for political activities.

Please join us for another free market edition of CNBC's Kudlow & Company at 5pm ET.

Washington’s War on Prosperity

Wall Street and Washington are all atwitter about the so-called “Blackstone tax” that would force the New York investment firm’s IPO to pay the 35 percent corporate tax on all income, rather than allowing it to pay a 15 percent capital gains tax on its investment income.

While numerous tax accounting issues exist here, the key, bottom line point is that this is the new front in Washington’s war on prosperity. It is being waged by Democrats in Congress and Democrats on the presidential campaign trail.

This is all about class envy. It’s a fight against wealth creation and a war against prosperity.

While class warriors in Congress try to figure out new ways to punish wealth creation, the global movement to reduce corporate taxes, not raise them is moving full steam ahead. You see it all across Europe, you're seeing it in Asia, you're even seeing it in China and India.

Washington is asleep at the switch.

Art Laffer has a better idea: Stop the multiple taxation on capital by abolishing the corporate tax altogether. Convert to a fifteen or twenty percent flat tax rate system for all income. In other words, reform by lowering taxes and simplfying the code.

But make no mistake, this a class-envy fueled war against prosperity.

Lieberman on Iran & Iraq

One of many strong points made by Senator Joe Lieberman in his Wall Street Journal op-ed today:

"Iran is doing everything in its power to drive us out of Iraq, including providing substantive support, training and sophisticated explosive devices to insurgents who are murdering American soldiers. Iran has initiated a deadly military confrontation with us, from bases in Iran, which we ignore at our peril, and at the peril of our allies throughout the Middle East."

Thursday, June 14, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will start us off with an update on the second consecutive day of market gains.

Our market panel tonight includes Fritz Meyer, senior investment officer with AIM Advisors; Barry Ritholtz, Chief Market Strategist for Ritholtz Research; and Jimmy Pethokoukis, senior writer at U.S. News & World Report.

The market panel will remain with us throughout the show.

MARKET BUBBLES...Washington Post columnist Steve Pearlstein will weigh in.

POLITICAL RUNDOWN...CNBC ace John Harwood will be aboard with the latest news from Washington.

IRAQ & THE MIDDLE EAST...Retired General Barry McCaffrey will offer his perspective along with Mort Zuckerman, editor-in-chief/publisher of U.S. News and World Report.

ENERGY & OIL...Dan Clifton, Strategas Research Partners director of policy research will offer his insight.

INFLATION, SECRETARY PAULSON'S COMMENTS & THE ECONOMY...Henny Sender from the US Money and Investment team for The Wall Street Journal will weigh in.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Hubbard Says No New Taxes

Senior White House economic advisor Al Hubbard threw cold water over any and all tax hikes in our interview on Kudlow & Company last night.

Hubbard made it crystal clear that President Bush would pull out his veto pen on any tax hike proposals coming across his desk.

He said, “The one thing you know about this president, Larry, is he’s a tax cutter, not a tax raiser. This president's never going to support an increase in taxes.”

This includes former Clinton Treasury secretary Robert Rubin’s tax on private equity and hedge fund managers that would more than double the capital gains tax for them. Rubin by the way, is itching for a hike in the cap gains rate for everybody, telling a conference in Washington earlier this week that Bush’s capital gains tax cut hasn’t contributed “one iota” to the economy.

Hubbard also made it clear that the president would veto the Democratic House’s proposal to levy a 4.3 percent surtax on high-income earners, allegedly designed to solve the AMT problem. (The definition of “high-income” remains ambiguous—some in Congress say it could be $500,000, while others say it could hit earners making $75,000.)

Hubbard said he “absolutely” disagrees with Rubin’s tax hike proposals and added that the president was “totally opposed” to raising taxes.

He made it clear that the top priority should be to extend and maintain the Bush tax cuts which have stimulated the economy, created over 8 million jobs, raised stock market asset values, and launched a revenue avalanche of tax collections as the budget deficit continues to evaporate.

Putin & Chavez = Khrushchev & Castro?

More evidence of a hostile Putin and his KGB-led government, awash with oil money.

In the last two years Chavez-led Venezuela has spent over $3 billion dollars buying Russian arms - 24 fighter planes, 35 military helicopters, air defense systems and 100,000 kalashnikov rifles, etc.

The latest deal between Chavez and Putin involves a Venezuelan purchase of nine Russian submarines.

Wednesday, June 13, 2007

Wednesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will give us an update on today's market gains.

Our market panel tonight includes John Rutledge, chairman of Rutledge Capital; Michael Pento, Senior Market Strategist at Delta Global Advisors; and Jim Awad, chairman of Awad Asset Management.

ENRON, "UNNECESSARY LAWSUITS" & MORE...Al Hubbard, President Bush's chief economic adviser and director of the National Economic Council will join us in a one-on-one interview.

POLITICAL UPDATE...CNBC's John Harwood will offer up all the latest news from Washington.

CHINA TRADE...Rep. Duncan Hunter (R-CA) will join us in an interview.

RUSSIAN OIL...Dan Yergin, Chairman of Cambridge Energy Research Associates will offer his perspective.

THE LATEST ON IRAN...Michael Evans, author of Showdown with Nuclear Iran and Ken Pollock, former CIA analyst and author of Countdown to Crisis: The Coming Nuclear Showdown with Iran will be aboard.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

Speedier Growth

Retail sales beat the street. They came in almost twice what economists expected.

Gas prices haven’t slowed the consumer down, nor has the overrated (and much exaggerated) housing slump. Some Wall Street economists like Bear Stearns John Ryding are now talking about 3 ½ to 4 percent growth in Q2.

By the way, business sales are picking up steam once again. They’re up nearly 12 percent at an annual rate over the past three months. This suggests that corporate profits will continue to outperform expectations.

Rising bond rates are also telling this stepped up economic growth story. The real (or growth) component of the 10-year Treasury has spiked up in expectation of a speedier economy.

Did someone say the greatest story never told?

Tuesday, June 12, 2007

An Idea Whose Time Has Come?

Iran is supplying weapons to Taliban terrorists in Afghanistan Undersecretary of State Nicholas Burns told reporters today.

This comes on top of clear evidence that Iran is furnishing support to terrorists in Iraq via training, IEDs, etc in order to disrupt and kill U.S. and coalition military forces.

Senator Joe Lieberman and Senator John McCain have both suggested bombing Iranian bases that are actively aiding our enemies.

On Sunday, Mr. Lieberman told Bob Schieffer on Face the Nation, "I think we've got to be prepared to take aggressive military action against the Iranians to stop them from killing Americans in Iraq. And to me, that would include a strike into... over the border into Iran, where we have good evidence that they have a base at which they are training these people coming back into Iraq to kill our soldiers."

Mr. Lieberman said that he was not calling for an invasion of Iran, but did say we should target specific training camps.

Is this an idea whose idea whose time has come?

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

MARKETS...CNBC's Bob Pisani will get the ball rolling with a quick hit from the NYSE.

Our market guests tonight include Joseph Keating, chief investment officer at First American Asset Management; Barry Ritholtz, Chief Market Strategist for Ritholtz Research; senior MarketWatch columnist/CNBC contributor Herb Greenberg; and Dennis Kneale, managing editor at Forbes magazine.

POLITICAL RUNDOWN...CNBC's Chief Washington Correspondent John Harwood will update us on all the latest immigration, earmark, and energy news out of Washington.

"ENTITLEMENT CULTURE" DEBATE...Amity Shlaes, columnist and author of The Forgotten Man: A New History of the Great Depression will square off with Dean Baker, co-director of the Center for Economic and Policy Research .

IRAN ARMING THE TALIBAN, TACKLING TERRORISM & MORE...Steve Emerson, NBC terrorism analyst and author of Jihad, Incorporated: A Guide to Militant Islam in the United States will weign in with his perspective.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.



Americans for Prosperity Joins in Recruiting Citizens to Help U.S. Rep. Obey Evaluate 36,000 Pork-Barrel Earmark Requests

Hundreds of Taxpayers Sign Up to Review Local Projects in First Few Hours

WASHINGTON – The free-market grassroots group Americans for Prosperity today joined with the website in setting up an online petition that will allow taxpayers from across America to volunteer to help House Appropriations Committee Chairman David Obey evaluate the merit of the 36,000 earmark requests he’s received from rank-and-file House members this year.

As the House begins consideration of this year’s appropriations bills, Chairman Obey has announced that he and his staff haven’t had time to adequately review this year’s earmark requests, so they will be forced to stick them into un-amendable conference reports later this year. In a letter to Chairman Obey last week, Americans for Prosperity President Tim Phillips volunteered the help of thousands of AFP’s grassroots taxpayers, and the kickoff of this new petition drive is the next step in that effort.

“As you know, Internet technology has made research faster and easier than at any previous time in human history,” Phillips pointed out in his letter to Obey. “By releasing your 36,000 earmark requests to Americans for Prosperity, our allies in other pro-taxpayer groups and to concerned bloggers, we would be able to unleash taxpayers across the country in a cooperative effort to determine which Members of Congress may have financial conflicts attached to their earmark requests, which local projects may be unworthy of federal funding and which may have value to the taxpayers.”

Taxpayers can sign up to help Chairman Obey vet pork-barrel requests at Porkbusters. As of Noon Eastern time on June 12, just three business hours after the online petition was first publicized, more than 250 citizens had signed up to help evaluate earmark requests – if only Chairman Obey would release them to the public.

In response to Chairman Obey’s refusal to release details of any pork-barrel earmarks until after the House passes its spending bills, Americans for Prosperity last week also challenged Members of Congress to sign an earmark transparency pledge. Signers of the pledge agree to voluntarily post details of their earmark requests on their Congressional websites within 72 hours.

CAIR Membership Plummets

Some good news to start your day...

From the Washington Times:

Membership in the Council on American-Islamic Relations (CAIR) has declined more than 90 percent since the 2001 terrorist attacks, according to tax documents obtained by The Washington Times.

The number of reported members spiraled down from more than 29,000 in 2000 to fewer than 1,700 in 2006. As a result, the Muslim rights group's annual income from dues dropped from $732,765 in 2000, when yearly dues cost $25, to $58,750 last year, when the group charged $35...

Monday, June 11, 2007

Monday Night Lineup

On CNBC's Kudlow & Company this evening:

A LOOK AT THE MARKETS...Joining us tonight are Ed Yardeni, president of Yardeni Research; Dr. Bob Froehlich, chairman of the Investor Strategy Committee of DWS Scudder; and Donald Coxe, global portfolio strategist at BMO Financial Group.

HOUSING/ECONOMY DEBATE...Squaring off tonight are Gary Shilling, president of A. Gary Shilling & Co, and economist Art Laffer, president of Laffer Associates.

SUNDAY UNSPUN...Frank Newport, editor-in-chief at Gallup will sift through all the latest media spin.

WASHINGTON TO WALL STREET DEBATE...On to debate AMT reform, Microsoft's antitrust story and immigration are The Wall Street Journal's Kim Strassel and Jared Bernstein, senior economist from the Economic Policy Institute.

HOUSING SECRETARY ALPHONSO JACKSON...will join us in an interview.

Please join us on CNBC at 5pm ET for another free market edition of Kudlow & Company.

A Dead-End for Democrats

Now that French voters are giving him a decisive parliamentary majority, President Nicolas Sarkozy is going to launch a pro-growth, tax cutting, deregulation, reform plan.

In other words, Reaganomics finally comes to France.

Here at home, all the Democrats running for president (except New Mexico Governor Bill Richardson) want to raise personal and corporate taxes. They want to punish profits.

So, let me get this right: while Reaganomics spreads from Eastern Europe—with low flat tax plans proliferating everywhere—into Western Europe, the supply-side model still has not infiltrated the Democratic party.

And to make matters worse, House Dems are now proposing a 4.3 percent surtax on successful earners that will allegedly solve the AMT problem, but in fact, might end up hitting families making as low as $75,000 according to last Friday’s Washington Post article.

The Democrats are stuck in a punitive, soak-the-rich time warp with class warfare written all over it.

Despite all the current polls, I still believe their Walter Mondale approach to taxes and their McGovernite soft-on-the terror war approach is a losing combination that will doom the Dems next year.

They are going the wrong way.

Friday, June 08, 2007

Star Treatment

I believe this celebrity justice story about Paris Hilton is yet another exmple of the cultural decline in the rule of law -- the spread of moral and legal relativism and a continued blurring of the standards of right and wrong.

Friday Night Lineup

On CNBC's Kudlow & Company this evening:

STOCK MARKET DRILLDOWN...Joining us tonight are Craig Columbus, President & Chief Market Strategist with Advanced Equities Asset Management; Ryan Beck CIO Joe Battipaglia; and Stefan Abrams, managing partner at Bryden-Abrams Investment Management.

AN INFLATION DEBATE...Joe LaVorgna, chief US economist at Deutsche Bank will square off against Brian Wesbury, chief economist at First Trust Advisors.

U.S./RUSSIAN RELATIONS...Joe Cirincione, vice president for national security at The Center for American Progress will debate Human Events editor, Jed Babbin.

THE DYNAMIC DUO...Robert Reich, former Labor Secretary and professor of public policy at the University of California at Berkeley will debate Steve Moore, senior economics writer for The Wall Street Journal editorial board.

We'll take a look at what's ahead with the AMT, and whether the Paris Hilton saga is evidence of a decline in American values.

Please join us at 5pm ET on CNBC for another free market edition of Kudlow & Company.

Putin's Russia

We had a great interview with General Al Haig last night. The former Secretary of State under President Reagan and retired four-star general in the United States Army told us the KGB is running Russia with Putin. If General Haig is even nearly right, then that presents a big problem for this country. We have to be tough and smart to deal with it.

One idea he didn’t exactly respond to is that Russia—backed by huge oil profits—is forcing its way back onto the world stage and attempting to be a superpower that it really is not. (Certainly not in economic terms, nor in military terms, but it does have a superpower nuclear arsenal.) However, it looks like one of Putin’s strategies is developing a coalition of “fruits and nuts”—a list that includes Iran, Syria, Venezuela, the Palestinian government, and perhaps North Korea. We also know they’re helping Iran develop their nukes. And they’re stopping the US and her allies from sanctioning Iran and preventing nuke development. All of this is fraught with danger. That’s the bottom line here.

All in all, General Haig did a great job painting this picture. Here’s a portion of what he had to say:

"This is now an issue of a different Russia…It's a Russia that is run by the KGB, who thinks strategically and surreptitiously and dangerously, and will murder at whim. They've murdered every opposition leader they can find, not only at home, but abroad as well. And they are in control of most of the federal republics, even those that are not independent--or that are independent, they're beginning to move in. They're blackmailing every country for energy. They now control a good part of the energy. And Western Europe, for reasons which I can remember quite well, seemed to make the Western Europeans more dependent on the Soviet Union. So they are more dangerous rather than less dangerous.

…They're very well armed with nuclear weapons and very capable long-range nuclear weapons. Their rocketry is somewhat better than ours, in most cases. And we learned that after the wall collapsed and we got in and got an opportunity to see what these liquid fuel systems could do. So we shouldn't be complacent about it, and we've got to keep our own inventory modernized and plentiful. And that's even the case because of the emergence of radical states with nuclear weapons, Iran and North Korea.

The good news is that Russia is equally threatened by these kooks. And so I think Mr. Putin knows, as well as most of us, that the Islamic populations are growing by the day in influence and in radicalism. And so he's got to be a little more cautious than he has been in recent weeks.

At the same time, the president needs the Russians today to deal with Iran, to deal with North Korea and a number of other measures that are necessary to control this Islamic fundamentalist revolution.

…They are more dangerously threatened than many in the West are, because they have these huge populations, which some of our Western Europeans friends have thanks to their own immigration policies. But be that as it may, Putin is no fool. He's the most experienced internationalist they have had running that state since the inception of the revolution. And we've got to watch him. It doesn't mean we have to pick fights with him at a time when we're weak, when we need help, when we are, you know, grievously undermanned in our military capabilities. And I think the next president, whoever he or she may be, is going to have to give that primary, priority attention."

Thursday, June 07, 2007

Thursday Night Lineup

On CNBC's Kudlow & Company this evening:

We'll begin with a stock market update from CNBC Wall Street reporter Melissa Lee live from the floor of the NYSE. We'll also get a report from the G8 summit in Heiligendamm, Germany from CNBC's Trish Regan.

INTERVIEW WITH ALEXANDER HAIG...President Reagan's Secretary of State will discuss Russian/American relations and other issues du jour.

STOCK MARKET PERPSECTIVE...Our market mavens will offer some cool perpspective on the latest market gyrations.

Joining us are Michael Cuggino, president/portfolio manager for the Permanent Portfolio Family of Funds; David Sowerby, portfolio manager/chief strategist at Loomis Sayles; Bob Hormats, vice chairman of Goldman Sachs International; and Brian Flanagan, portfolio manager at Thrivent Mid Cap Stock Fund.

ECONOMIC DEBATE...Squaring off this evening are Deutsche Bank economist Joe LaVorgna and Lakshman Achuthan, managing director at ECRI.

POLITICAL DEBATE...On to debate the war on terrorism and immigration are Ann Coulter, syndicated columnist and Lawrence O'Donnell, political analyst and Emmy winning producer of NBC’s “The West Wing.”

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

The Thompson Interview

Some compelling, pro-growth ideas from likely GOP presidential candidate Fred Thompson on last night's Kudlow & Company. Here's a sampling...

KUDLOW: Let's pick up on a couple of those ideas. First of all, tax reform. Specifically, sir, what kind of tax reform were you thinking about?

Mr. THOMPSON: Well, I don't want to get into a lot of details in terms of a plan before I even announce my candidacy—but simpler without question. You know, I'm told now that most people can't figure out how to compute their capital gains and dividend liability. Things could just get more and more complicated.

We got the ridiculous thing with the death tax where on December 31st, you know, 2010, if you die, you have zero liability. But, if you die 24 hours later, you know, you could lose over half your estate to the federal government. That’s just one indicator of the ridiculousness that's in the tax code now. It makes us less competitive in a lot of different ways. We have, you know—if you include state taxes—the highest corporate tax rate in the world. That makes us less competitive. All those things have to be looked at. And all those—especially as far as the corporate tax rate is concerned, need to be clearly reduced, I think.

KUDLOW: Yeah, it's an interesting point. There's been a bunch of news articles. Europe, believe it or not--I mean, old Europe, believe it or not is engaging in low tax-cutting competition. And...

Mr. THOMPSON: It's ironic that when western Europe starts going lower than you, you need to be concerned about it.

KUDLOW: So one of your moves as president would be to go right after that...


KUDLOW: ...and then get us back into equilibrium? Is that right?

Mr. THOMPSON: Yeah. There's no question about it. There's no excuse for doing otherwise, other than some of this class warfare demagoguery we see coming from the Democrats. I think that you see it mostly when it comes to the individual income tax rate debate. But you see it with regard to the corporate situation also.

KUDLOW: How about just a quickie before we take our first break, sir. Extending the Bush tax cuts, all the Democrats, all the Democrats—Hillary, Obama, Edwards—want to rollback. They want to repeal the Bush tax cuts, which in effect would be a very large tax rate increase. Your quick thought on that.

Mr. THOMPSON: Well, it's a no-brainer to resist them with all of our power. It's the driving force of this good economy that we're seeing. We're raising more revenue with these lower tax rates than we've ever raised before for the federal government. It's clearly, for them, not about raising money for the legitimate functions of government, it's about redistribution of income and collecting votes. You set the rate where you think you can get the votes, and anything above that, you want to tax. So instead of trying to make the pie bigger, they're trying to concentrate totally on redividing the pie. And that just means less economic growth and a worse economy.

KUDLOW: Do we have an income and wage inequality in this country necessary for government action? I mean, that again is part of the Democratic mantra, to raise taxes on the rich.

Mr. THOMPSON: Well, I don't know who should be set up as responsible for determining how much a person ought to make. But I think a country where 5 percent of the people pay over half the income taxes in this country, that as far as the tax structure is concerned, that's not any equality that I would name.

Wednesday, June 06, 2007

Wednesday Night's SPECIAL Lineup

On CNBC's Kudlow & Company this evening:

CNBC's Bob Pisani will give us a quick, live update on today's stock market action.

*FRED THOMPSON INTERVIEW*...Former Tennessee Senator and presumed GOP presidential candidate Fred Thompson will join us live in an exclusive one-on-one interview covering the economic and political spectrum.

PANEL REACTION...Joining us to offer their insights on the Thompson interview are The Wall Street Journal's Steve Moore; Forbes Magazine's Quentin Hardy; The New York Observer's Jennifer Rubin; and Jared Bernstein, senior economist at the Economic Policy Institute.

STOCK MARKET PERSPECTIVE...Michael Cuggino, president and portfolio manager for the Permanent Portfolio Family of Funds will weigh in with his thoughts on what lies ahead for stocks.

Our political panel will stick around for the show's entirety.

Please be sure to join us tonight at 5pm ET for our special, free market edition of CNBC's Kudlow & Company.

Reminder: Fred Thompson on Kudlow & Company Tonight

The former Tennessee Senator may not have been on the stage at the debate last night, but he will be joining us this evening on Kudlow & Company.

We're going to find out if he's the pro-growth, pro-free market, pro-investor class candidate conservatives are looking for. We'll also discuss his take on keeping America safe, Iran, Iraq, and much more.

We hope you'll join us at 5pm ET on CNBC for our exclusive interview with Fred Thompson. It's a key presidential interview.

A Bullish Scenario

Here’s the simple thesis I mentioned on last night’s show: a steady, unchanged, federal funds rate from our central bank—not higher rates, not lower rates—is the best possible scenario for the stock market.

Going back to the early ‘90s, the S&P 500 boasts a bullish track record during periods when the Fed sits on its hands.

Since last June stocks are up 23 percent. From March ‘97 to September '98, the S&P was up 35 percent; January '96 to March '97, up 27 percent; September '92 to February '94, up 17 percent. (This info comes courtesy of distinguished veteran mutual fund reporter Chet Currier.)

I believe Fed rate hikes are off the table now. The economy is strong and starting to hum again. Two percent growth, possibly even 3 percent, is just around the corner. Inflation looks contained. Tax rates are going to stay low.

Goldilocks is knocking the permabear recessionistas out of the water yet again.

Tuesday, June 05, 2007

Tuesday Night Lineup

On CNBC's Kudlow & Company this evening:

RECESSION OR NOT? STOCK MARKET BUBBLE OR NOT?...CNBC's Bob Pisani will get the debate started with a live report from the NYSE.

Our market panel tonight includes John Rutledge, chairman of Rutledge Capital; Doug Kass, president of Seabreeze Partners; and Dennis Kneale, managing editor of Forbes magazine.

U.S. & RUSSIA RELATIONS...CNBC'S Trish Regan will join us with a live report from the G-8 summit in Heiligendamm, Germany.

Sen. Trent Lott (R-MS) will weigh in with his perspective in a one-on-one interview from Washington.

Our market panel will also lend its insight on the G-8 meeting and Russia's economic and political outlook.

YOUR MONEY, YOUR VOTE - THE PRESIDENTIAL DEBATES...Star Parker, founder/president of CURE, the Coalition on Urban Renewal will debate Peter Beinart, editor-at-large at The New Republic and senior fellow at the Council on Foreign Relations.

TACKLING TERRORISM - UPDATE ON FOILED TERROR PLOT AT JFK...Terrorism expert Steve Emerson will join us with all the latest.

Please join us at 5pm ET for another free market edition of CNBC's Kudlow & Company.

The Russian Paradox

We’re going to take a hard political and economic look at what’s going on inside Russia on tonight’s Kudlow & Company.

It’s a strange paradigm (paradox might be more appropriate) over there.

On the one hand, they’ve got their 13 percent flat tax. And of course, with more free market policies, Putin has to some extent liberalized the Russian economy. Their stock market has rocketed 900 percent since 1999. Economic growth has surged. Inflation has come down. And the ruble has been fairly steady. So that’s all to the good.

But on the other hand, politically, Russia has become much more authoritarian.

They seem to be moving further and further away from democratic principles. They’re clamping down with limits on the free press, jailing political enemies (most notably with the incredibly harsh treatment and jail sentence of Mikhail Khodorkovsky, formerly the CEO of Yukos and Russia’s richest man). That’s all crazy stuff, not good.

And of course, on foreign policy terms, Putin has been a big thorn in our side on Iraq. And just as bad, he’s been helping Iran on nuclear weaponry—or so it appears.

To top it all off, now he’s threatening to aim missiles at Europe because he doesn’t like our plans to put a missile defense system in the Czech Republic. (Despite the fact it's meant to protect NATO allies against a missile attack from Iran, not Russia.)

So, bottom line, it’s a very complicated relationship. President Bush needs to manage it carefully. We can do business with Putin, but there has to be some tough and clear understandings.

The other big factor in all this is the oil story. Russia is living high on the hog with $65 dollar oil. But what happens if oil drops $20 bucks? Will Russia be so cocksure in foreign policy? Will their economy survive a meltdown of oil prices?

Fred Thompson on Kudlow & Company Tomorrow Night

We are pleased to announce that former Tennessee Senator Fred Thompson will be joining us on Kudlow & Company tommorow evening.

Mr. Thompson, who is expected to formally announce his decision to run for president sometime in the next month or so, will join us in an exclusive, one-on-one interview.

We'll discuss the economy, taxes, homeland security, the '08 presidential race, and much more.

Friday, June 01, 2007

Lazear Bullish on Economy & Immigration

In a conference call earlier this morning, top White House economist Ed Lazear predicted that future GDP growth will be much stronger than the latest 0.6 percent reading in the first quarter. He cited stocks, earnings, industrial production, the ISMs, capex, autos, and low inventories as precursors of stronger GDP growth.

Lazear also disputed the immigration cost estimates from Heritage Foundation analyst Robert Rector. According to Lazear, a dynamic analysis of the predicted results of the immigration reform bill shows a net gain to the U.S. economy of about $30 billion per year, as the economic benefits from capital, labor, lower prices, and higher tax payments overwhelm the transfer payment costs.

This is an interesting point, and one with which I agree. Put simply, at prevailing productivity rates, an increased labor force produces more GDP growth.

Lazear also argued that stronger border security and better employer enforcement through tamper-proof ID cards would help solve the growing problem of illegality.