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Hugh Hewitt's Radio Show

Larry Kudlow 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 www.hughhewitt.com.

If you miss tonight's show you can access the transcript at www.radioblogger.com.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

We have a dynamite markets panel tonight with Barry Ritholtz of Ritholz Capital; Noah Blackstein, portfolio manager for the Dynamic Power American Growth Fund; CNBC's Herb Greenberg, and hedge fund manager/columnist Cody Willard.

Topics will include the American economic boom's effect on the stock market, Moussaoui's sentencing and more.

Commerce Secretary Carlos Gutierrez will join our markets panel and address President Bush's "Framing of the Debate."

CNBC's Jim Goldman will discuss "Gates vs. Google," while Ron Insana will delve into a possible commodities bubble.

Also, a budget-taxes-spending debate between California Congressmen Xavier Becerra (D) and David Dreier (R).

TONIGHT'S POLL QUESTION:

Do you agree with the jury's decision to sentence Zacarias Moussaoui to life in prison?

Cast your vote at www.kudlowcnbc.com.

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.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

We will begin the program with an emphasis on taxes and spending in light of President Bush's speech earlier this morning.

Rep. Sheila Jackson Lee (D-TX) and Rep. Marsha Blackburn (R-TN) will square off on these issues, followed by a debate between former Labor Secretary Robert Reich and Steve Moore of the Wall Street Journal, who will also address the current energy crisis and mixed messages from the Fed.

We will discuss the markets with Jeffrey Kleintop, Chief Investment Strategist of PNC Advisors; Barry James, President of James Advantage Funds, and John Augustine, chief investment strategist at Fifth Third Asset Management.

Also, Hunter Harrison, Canadian National Railway CEO will discuss railroads and CNBC's Jim Goldman will talk tech.

TONIGHT'S POLL QUESTION:

Does patriotism play a role for you when purchasing a car?

Cast your vote at www.kudlowcnbc.com.

RIP

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 Heads 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.

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?

Tonight's Lineup

On CNBC’s “Kudlow & Company” tonight:

A look into the ongoing immigration flare-up with Washington Post Columnist E.J. Dionne; WSJ’s Opinion Journal.com columnist John Fund; Human Events’ Terry Jeffries and Christina Lopez from Center for Community Change.

We will have a market panel with guests John Augustine, Chief Investment Strategist at Fifth Third Asset Management; John Rutledge, Chairman of Rutledge Capital and Kimberly Greenberger, retail analyst at Citigroup.

Melissa Francis will join us with her take on oil.

We are honored to have David Beamer (father of United 93 passenger Todd Beamer) and Alice Hoglan (mother of United 93 passenger Mark Bingham) to discuss the release of the movie “United 93.” They will be accompanied by talk-show host/film-critic Michael Medved.

Steve Malanga, Senior Fellow at the Manhattan Institute will address the status of the rebuilding of the World Trade Center site.

TONIGHT’S POLL QUESTION:

Do immigrant boycotts have the power to impact the U.S. economy?

Cast your vote at www.kudlowcnbc.com.

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.

Tonight's Lineup

On CNBC’s “Kudlow & Company” tonight:

The Wall Street Journal’s Steve Moore and former Clinton Labor Secretary/ UCB professor Robert Reich and will join us in their always spirited political/economic debate.

Tonight’s focus will be upon the U.S. economic boom, windfall profit tax on oil, and President Bush’s speech earlier today.

We will also have a jam-packed economic/markets discussion with an all-star panel.

Our guests include Brian Wesbury, Chief Economist for First Trust Advisors; Mike Holland, Money-Manager and Chairman of Holland & Company; author/nationally syndicated columnist Joel Mowbray; former Treasury undersecretary Gary Gensler; and Stefan Abrams, Chief Investment Officer at Trust Company of the West.

TONIGHT’S POLL QUESTION:

Should the government mandate CAFÉ fuel standards?

Cast your vote at www.kudlowcnbc.com.

Good for Mr. Bush

The President went right out there in today’s news conference touting the near five percent GDP report, as well as other strong indicators released earlier in the week. He also mentioned the 5.1 million jobs since August ’03.

Yesterday, Ben Bernanke reminded us that since June of ’03, real GDP has averaged 4 percent growth at an annual rate. Of course, lower tax rates on investment were put in place in mid 2003, so it’s no coincidence that GDP and jobs responded significantly to the strengthening of economic growth incentives.

The president also pushed for the extension of these very same tax rate incentives to keep the economy growing and to prolong the American economic boom, which remains the greatest story never told.

Bush repeated his veto threat for the overspending supplemental appropriations bill with its “Railroad to Nowhere” in Mississippi.

He told Congress to deregulate refining rules so we can produce more gasoline supplies. And he discouraged Congress from raising taxes on oil companies.

“Washington always wants to tax everything,” Bush said, and then went on to say what a lousy idea that is. This is exactly the kind of aggressive presidential communications strategy that needs to be made.

The economy is growing and Mr. Bush needs to keep talking about it.

Instead of blaming oil companies, Congress needs to deregulate energy markets to allow for greater investment and production of both renewable and non-renewable energy sources.

Good for Mr. Bush.

Even the Grey Lady Can't Deny We're in a Boom

I would like to personally thank the New York Times for expropriating the word I have used over and over again to describe our current economic climate:

“Boom.”

The Grey Lady ran a front-page story this morning entitled, "U.S. Economy Still Expanding at Rapid Pace," and had this to say about our booming United States economy:

"Americans seem to have noticed the boom, too. Although polling suggests that they are deeply unhappy with the war in Iraq and worried about the price of gas, they report being generally pleased with the state of the economy."

Even MSM's ringleader can't help but admit the obvious.

Of course, the Chicken Little, liberal Times couldn't help itself and tried its best to point out as much negative as it could find. But as anyone with their finger on the economic pulse can point out, Sulzberger's soldiers had their work cut out for them. Things are good.

And as the Times pointed out, in addition to our current economic boom, consumer confidence has risen to its highest level in four years, according to the Conference Board.

The Times also neglected to mention the powerful catalyst President Bush's tax cuts played in launching this U.S. boom. No surprise there.

Did I mention that free-market capitalism is the best path to prosperity?

Chirac's Triumphant Plan

It looks like Jacques Chirac wants to step into the ring and duke it out with Internet heavyweights Yahoo! and Google.

Earlier this week, the French president announced an initiative whereby France will spend well north of $2 billion on a series of technological projects; including building an Internet search engine, an unlimited mobile TV, and a French hybrid diesel vehicle.

(By any chance, was Mr. Chirac a guest of Hillary Clinton's during her Chicago Economic Club speech earlier this month? This French plan sounds startingly similar to Mrs. Clinton's "National Investment Authority" if you ask me..)

The French president added that he would like to avoid a future in which France was known only as a "museum country".

Looks like Chirac may be a day late and a Euro short.

Coburn on the Prowl

The Club for Growth's Andy Roth is paying close attention to fiscally responsible Sen. Tom Coburn's (R-OK) current mission to eliminate earmarks and save $2.6 billion of taxpayer money.

"Living up to his pledge to challenge every earmark this year" Roth writes on the Club for Growth blog, "Senator Tom Coburn is going to be offering all kinds of amendments today by using a "clay pigeon" strategy. The idea is that Coburn will offer a BIG "holding" amendment with 19 smaller amendments tucked into it. Below is a memo from his office that explains it well."

Click here to read more on Coburn's fight to knock some sense into the ballooning budget mess.

In the Works

Investor tax cuts may finally be coming.

It looks like the House-Senate tax conference committee is resolving its differences, according to this morning’s Wall Street Journal story by David Rogers.

Look for a two-year extension for dividends and capital gains at the current 15 percent marginal rate. This will be combined with a one year AMT patch.

This is very good news for the stock market and the economy. It will help sustain the bull market run and the capital-spending surge illustrated in yesterday’s fantastic business durable goods report.

Remember, cheap capital and high investment returns that stimulate business activity have been big job creators, which means higher incomes for everybody.