Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Jim Glassman, of TechCentralStation, and Gene Henssler, CIO of GW Henssler and Associates

-- Fed Watch, with Nell Henderson of the Washington Post

-- a discussion with Ohio Secretary of State and gubernatorial candidate Ken Blackwell, and New Jersey gubernatorial candidate Doug Forrester

Call For Support

One of the best moments in President Bush's speech Tuesday night was this one:

"In this time of testing, our troops can know: The American people are behind you," Mr. Bush said. "Next week, our nation has an opportunity to make sure that support is felt by every soldier, sailor, airman, Coast Guardsman, and Marine at every outpost across the world. This Fourth of July, I ask you to find a way to thank the men and women defending our freedom - by flying the flag, sending a letter to our troops in the field, or helping the military family down the street. The Department of Defense has set up a website - AmericaSupportsYou.mil. You can go there to learn about private efforts in your own community."

The New York Sun published an excellent editorial about this, which you can read here. This is obviously a good idea. A necessary idea. Our troops deserve all of our support. And now that the DoD has gone out of its way to make it easier for you to contrbiute, there's no excuse for holding back.

Enough Already

The Fed will undoubtedly announce another rate hike to 3.25 percent this afternoon at 2:15 p.m. I hope it’s their last.

Over the past twelve months during the Fed tightening period the S&P 500 stock market has increased 5 percent, while the 10-year Treasury bond yield has fallen to 4 percent from 4.6 percent. So the Treasury curve has flattened from 330 basis points to 100 basis points.

Both the monetary base and M2 have slowed to roughly 3 percent from around 6.5 percent. Commodities and gold have flattened.

The U.S./China/India global recovery may be showing signs of a slowdown. Freight loadings by rail, truck, and air have all slowed substantially. The Baltic Dry Index has also slowed significantly.

Meanwhile the core consumer spending deflator just registered another 1.6 percent annual increase, its ninth consecutive month at this pace, showing that the Fed’s tightening has prevented rising energy prices from spreading to the rest of the non-energy economy.

The economic outlook appears to be a bit slower now after a year of Fed restraint. Fortunately, lower tax-rates will keep the economy aloft with work and investment incentives. Since the supply-side tax cuts of June 2003, the economy has grown at a 4.4 percent annual rate. But after a year of monetary restraint and oil price drag it looks like growth is shifting downward to 3 percent or even possibly a bit less.

Besides the ongoing threat of trade protectionism, additional monetary restraint in the months ahead could be an obstacle to trend economic growth. Productivity and profits are still solid, but additional Fed rate hikes that could invert the yield curve could complicate the outlook if the central bank overshoots.

Enough already.

Freedom Tower

Nicolai Ouroussoff has this to say regarding the newly-proposed design for Freedom Tower:

Somber, oppressive and clumsily conceived, the project is a monument to a society that has turned its back on any notion of cultural openness. It is exactly the kind of nightmare that government officials repeatedly asserted would never happen here: an impregnable tower braced against the outside world

Now, the new design may be deeply aesthetically flawed. But why ascribe these flaws to some ominous, Fortress Amerika mindset rather than what more probably lies at their root: the bad judgement of committees? Personally, I think the best way to honor the memory of 9/11 would be to rebuild the towers, exactly the same -- except that they would be 100 feet taller. A way, really, of extending our collective third finger to the monsters who knocked the first two towers down.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- Senator Charles Schumer, on China and trade

-- a market segment with Noah Blackstein, of Dynamic Mutual Funds, and Robert Gensler, of T. Rowe Price

-- a Fed preview with Wayne Angell, of Angell Economics, and Diane Swonk, of Mesirow Financial

-- renowned musician Judy Collins, on her new book and the music industry

Bush's Speech

I would have preferred to hear more roll-up-the-sleeves, hands-on engagement messages – like Truman: the buck stops here. I would have preferred more details. For example: Bush mentioned 1600,00 Iraqi troops. I would have liked to see him walk us through where they started, where they are now (as well as how skilled they are), and where they want to go, as far as numerical strength.

Also, I would have liked to see him give a date certain for the final print of the new constitution, and a date certain for the next election. There is talk of slippage in both areas, and I think that talk is not good. Discussing concrete goals for troop buildup and dates certain for the constitution and the election would keep the pressure on the Iraqis themselves, who are ultimately responsible for the new democracy, and let them know that they are going have to take the training wheels off the bicycle at some point before too long.

Making these deadlines and sticking to them also opens the door to some small troop withdrawals next year. Lt. Gen. John Vines has told the Pentagon that four or five brigades, amounting to roughly 16,000 troops, could be withdrawn by March 2006. That would be a good beginning, and would create more pressure on the Iraqis to get their job done militarily and politically. It would also be good news to the US voters and, frankly, I think it would be well received by the stock market.

Another point the President could have dwelled on is the commendable discussions with Sunni Ba’athists, a process Rumsfeld confirmed on television Sunday. Bringing them into the constitutional process would further isolate Zarqawi and the band of terrorist thugs allied with him. This would also stomp out so-called civil war scenarios. Likelihood of such negotiations, though not mentioned by the President, is still very high.

In terms of the basic framework of the President’s speech, I fully agree that we must defend our freedom at home by taking the fight to the enemy. This is essentially the Natan Sharansky argument: that democracy is linked to national security. Finishing the mission of securely democratizing Iraq not only makes the Middle East a better place, it also makes the US safer.

Numerous Democrats who refuse to see a link between 9/11 and Iraq are dead wrong. And Bush is right that Iraq has become the center of the terror war and armed resistance to democratic principles and institutions. His call for patience and steadfastness in completing the mission is a good one. Reiterating this call and the logic behind it is also good, and in that sense the speech was constructive. But again, I wish there were some new thoughts, clearer benchmarks, and a stringer sense of Presidential engagement.

Mickey Kaus has put his finger on it by saying that the President was ‘too Presidential.’ A scrappier Bush telling us the buck stops here would have made for a stronger speech and a more effective rallying cry.

The End of Privilege

Glenn Reynolds has an excellent, contrarian take on the extent-of-journalistic-privilege debate in USA Today. Check it out.

Blogger Roundup

Café Hayek sees the Kilo-New London ruling from the Supremes as government theft.

They are also labeling Paul Krugman a mercantilist protectionist.

And they called me Larry “Smith” Kudlow for my hard line opposition to China protectionism as worthy of Adam Smith. Thank you.

The Center for Freedom and Prosperity criticizes Democratic opposition to CAFTA as abandoning poor people in Central America.

The CAFTA vote in the Senate Finance Committee expected today was postponed at least until tomorrow.

The Club for Growth has a spate of articles endorsing CAFTA, opposing Smoot Schumer and Hawley Graham, as well as former Congressman Pat Toomey’s endorsement of marketable Treasuries for Social Security reform.

Mickey Kaus believes that a stiff judicial confirmation battle for the Supremes is just what President Bush needs.

That, courtesy of Instapundit.

Powerline reports a rumor that Osama Bin Laden is in Afghanistan.

Hugh Hewitt finds that several 5 to 4 decisions by the Supremes show stagnation and the need for new blood.

And the Tax Foundation Policy blog says the clean energy bill threatens to pollute the tax code.

CAFTA Delay

According to the Washington Post, the vote on CAFTA, supposed to be held today, has been postponed "at least one day," although debate began in committee. Looks like Big Sugar is flexing its muscles.

Cafe Hayek

The always-excellent Don Boudreau, of GMU and Cafe Hayek, posts this. While it's flattering to be mentioned in the same breath as Adam Smith, the important thing is that Smith's economic principles are just as true and necessary now as they were when The Wealth of Nations first appeared.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Michael Chren, a portfolio manager with Allegiant

-- Applied Materials CEO Hector Ruiz

-- Greg Mankiw, chairman of the Council of Economic Advisors, on the Fed, inflation, and the economy

-- a preview of Bush's Iraq speech, with the Washington Times' Rowan Scarborough, blogger and columnist Austin Bay, and Vaughn Ververs, of the Hotline/National Journal

Bibi Netanyahu

Finance Minister Bibi Netanyahu gave an excellent accounting of his supply-side economic reforms in Israel on Kudlow & Company last night: lower tax rates, lower government spending and welfare entitlements, a decentralized banking system, and virtually no inflation. Stock prices are up, bond rates are down. Economic growth is up, unemployment is down. At a dinner at the St. Regis hotel, Netanyahu gave a brilliant off the cuff talk without notes explaining his sweeping policy reforms on the economy.

Incidentally, I spoke with Weekly Standard editor Bill Kristol during the dinner, who agrees with me that President Bush tonight should lay out key benchmarks for evaluating Iraq and the length of our troop stay in that country. Particular care should be taken by the President to review the overall mission of democracy and self-defense and honestly discuss the pros and cons of mission progress.

Immediate troop withdrawal must not be an option, but nor should an open-ended troop commitment be an option either. We were both puzzled by Defense Secretary Rumsfeld’s suggestion that the war could take another 12 years.

Dan Senor

Dan Senor, former chief spokesman and senior advisor of the Coalition Provisional Authority, has an excellent piece in today's WSJ. Fascinating quote:

With no coverage of pre-election politics, it is not surprising that Americans were caught completely off-guard when some eight million Iraqis risked their lives to vote. Since the election, coverage of the violence, as valid as it is, has once again obscured major developments. In political terms, Iraq followed the timeline we envisioned, achieving a string of concrete and unprecedented political successes: the drafting of an interim constitution in February 2004; the formation of a multi-ethnic interim government in June that year; followed by the early hand over of sovereignty the same month; culminating in the dramatic election in January this year.

Check it out.

Lazy Congressman

It appears that Ted Kennedy, who has repeatedly called Iraq a quagmire and demanded Rumsfeld's resignation, has absolutely no idea what he is talking about. Acoording to Brit Hume,

The office of Senator Ted Kennedy...has now confirmed that the Massachusetts Democrat has never been to Iraq.

Hmm. Interesting.

Political Marketplace

You know I think the trade and currency war with China is bad for growth and worse for the stock market. My drumbeat of criticism for Senators Smoot-Schumer and Hawley-Graham will not diminish. But I also want you to know that we have repeatedly invited Chuck Schumer and Lindsay Graham on “Kudlow & Company”. Their people say they want to come on, but they never show. They can come on alone or together and square off with me.

If you want to see this debate, please e-mail or call their offices.


Now for some headlines from the political marketplace.



Here’s some good news, at least from my standpoint: an AOL/Discovery Channel poll of
2.4 million voters named Ronald Reagan as the greatest American of all time..

Had I known, I would have voted for the Gipper myself.



And more good news: a group of Democrats are backing Central America – CAFTA free trade, including Warren Christopher, William J. Perry and Richard Holbrooke, also including Bill Daley, who we hope to have on the show.

Democrats for CAFTA. I like that.



And still more good news: Senators could be near a bi-partisan tax cut on the estate tax – aka the death tax. Republican Senator Jon Kyl and Democratic Senator Max Baucus are getting close, according to reports for a 15 percent tax-rate and a personal exemption between $3 and $5 million.

I would take that deal in a New York second..

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Rob Morgan, a portfolio strategist at Janney Montgomery Scott, and Stefan Abrams, CIO of Trust Company of the West

-- Finance Minister Benjamin Netnyahu, on Israel

-- senior Newsweek writer Charles Gasparino, and the New York Times' Aaron Ross Sorkin, on tort reform

-- Patti Waldmeir, of the Financial Times, and Michael Powell, former head of the FCC, on the recent Supreme Court decisions, and file-sharing software

Regulatory Reign of Terror, II

For Eliot Spitzer, too, harder days might be ahead. William Holstein's excellent op-ed in today's WSJ makes this excellent point:

Mr. Spitzer, a Democrat, in effect pardoned Mr. Buffett, a large Democratic donor, while targeting AIG's Maurice R. "Hank" Greenberg, a Republican and a major adversary of trial lawyers. Under Mr. Cox, the SEC is more likely to insist that Mr. Spitzer conduct himself as precisely what he is -- a state attorney general, not a national watchdog.

Holstein sees this as part of a shift in response to the conviction of Dennis Kozlowski. Read the piece in its entirety here.

Regulatory Reign of Terror, I

It looks like the regulatory reign of terror of the trial lawyers might be showing the first signs of weakening. From the WSJ:

Federal prosecutors are investigating one of the nation's most aggressive class-action law firms, Milberg Weiss Bershad & Schulman, for alleged fraud, conspiracy and kickbacks in scores of securities lawsuits, and could seek criminal charges against the firm itself and its principals.

Perhaps the anti-business climate in legal and regulatory circles might be shifting. And with upcoming Supreme Court Vacancies, maybe we will get some nominees who value property rights and believe that business has a right to exist, too.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- Rhett Dawson, chairman of the Information Technology Industry Council, on China

-- Mike Holland, of Holland and Co., and Jeremy Siegel, of the Wharton School of Business, on China

-- a market segment with Ben Stein

-- Gen. Wayne Downing on Iraq, Bin Laden, Syria, and the War on Terror

Stop the Raid, Start the Accounts

The new Social Security reform plan from Senator Jim DeMint and Congressman Paul Ryan et al would swap Social Security surpluses for marketable Treasuries. These marketable Treasuries would then go into personal savings accounts for those Social Security recipients who choose them.

The accounts would create ownership and much higher retirement investment returns than the current system will provide. Over the very long run Jeremy Siegel's work shows about a 5 percent annual return for Treasury bonds. Interestingly, since 1977 that return has climbed to nearly 9 percent yearly. Of course these are risk-free bonds backed by the full faith and credit of the U.S. government.

It's a great way to start personal savings accounts. Under current law Social Security surpluses are exchanged for non-marketable Treasuries placed in the Social Security Administration account. The Supreme Court has ruled that we don't own them. However, by placing marketable Treasuries in a personal IRA we will own them and we will get a better yield for retirement.

Why this is so objectionable to Democrats is hard to understand.

Kelo Roundup

I can't overstate the vast potential the Court's decision in Kelo has for bad economic results. And neither can anyone else, apparently. Here's a Kelo roundup: George Will, Glenn Reynolds, Stephen Bainbridge, Charles Fried, and check out this post from Reynolds (this time at Instapundit) as well as the rest of his excellent coverage.

Chinese Food For Thought

Today’s triple-digit Dow decline was caused by an unusual Senatorial display of trade and currency protectionism aimed at China.

Any efforts to destabilize China are misguided and harmful in economic and national security terms. The freedom to trade has enormously benefited China, the U.S., and the rest of the world’s growth. China economic demands have promoted U.S. business across-the-board from industrials, metals, energy, tech, and elsewhere.

The freedom to trade is an essential pre-condition for prosperity. So is sound and stable money, as well as minimal tax-rates, government spending, and regulations.

I deplore China’s communist political system, as well as their continued persecution of Christian and other religious order, and of course the lack of free speech. Also problematic is their piracy of music and software and their abuse of American intellectual property rights.

But China has made a lot of economic progress and Senators like Smoot Schumer will unwind this progress with their xenophobic, nationalistic, and economically illiterate statements.

Art Laffer will lead the show off tonight and try to set everyone straight on the merits of free trade and stable money.

Political Marketplace

In a 5 to 4 decision the Supreme Court issued a terrible ruling that allows local governments to seize people’s homes and businesses against their will. A terrible decision that undermines economic freedom.

Let me also remind everyone that the battle over judges is not just about social issues. It is also about key economic issues that will affect the stock market as well.

Russia abolishes death tax. Whoa!!!

And the Swedes did it earlier this year. Whoa!!!

So when will the U.S. do it?

President Bush is stumping for nuclear power. And he’s totally right. He said the energy bill would help nuke builders against lawsuits and bureaucratic obstacles. Right on, Mr. President.

And while we’re on the topic of President Bush, he told a group in support of CAFTA free trade that, “American workers can compete with anybody, anywhere, anytime.”
Amen, Mr. President

Tonight's Lineup

Tonight, on Kudlow & Company:

-- economist Art Laffer, on China

-- a market segment with Frank Gannon, of AIG SunAmerica, and Bob Froehlich, of Scudder Investments

-- Rep. Paul Ryan and Rep. Richard Neal, on social security reform

-- Connie Mack, chair of Bush's tax reform committee, on tax reform

Ohio Votes

Well, it looks like the Kerry camp's lingering charges of voter fraud and intimidation in Ohio are slowly being put to rest. According to the New York Times, a DNC study concluded that, while young voters and black voters experienced "problems" while voting, there was not enough evidence to call Bush's close win there into question. How generous of them to say so. I seem to recall that it was the Democrats, not the Republicans, who were responsible for a series of attacks on local RNC headquarters, as well as a tire-slashing incident in Wisconsin...How's that for intimidation?

Political Landscape

Federal regulators will have the authority to override state objections to liqui natural gas production and terminal building.

This is very positive for the creation of more energy.


Also, by the way, it looks like CAFE fuel standards will be defeated.

Markets are better regulators than Uncle Sam.



Stop the surplus raid and start the personal savings accounts. A new Social Security reform proposal we heard about last night from Senator Jim DeMint of South Carolina will be co-sponsored in the House, probably by Sam Johnson of Texas, Clay Shaw of Florida, and Paul Ryan of Wisconsin.

Keep hope alive for Social Security reform.



The Senate has voted to allow the US government to sue OPEC on anti-trust grounds.

With respect, this is really dumb.

OPEC controls part of the oil supply. But they have no control over global oil demand. And rising world demand has driven energy prices up.

Again, I’ll take markets over government anytime.



There’s a brutal battle brewing in Congress between bankers who want to provide across-the-board real estate services, including brokering, and realtors who want to stop the banks from walking into their briar patch.

But it’s really everyone’s briar patch. And all homebuyers would benefit from greater real estate services.

It’s called competition.



A new Rasmussen poll finds that 70% say Gitmo prisoners treated about right, or better than they deserve.

And that is surely right.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segement with Princeton University economics professor Burt Malkiel, Janna Sampson of Oakbrook Investments, and Jeff Schappe, CIO of BB&T Asset Management

-- Dan Yergin, chairman of Cambridge Energy Research, on oil and energy

-- Sen. Jon Corzine, on his gubernatorial race

Amazing Australian

The amazing story of Douglas Wood, an Australian held hostage by insurgents in Iraq, is well worth reading in full -- check it out at the Washington Times. But this statement of his cries out to be excerpted:

"I actually believe that I am proof positive that the current policy of training the Iraqi army ... works because it was Iraqis that got me out," he said.

Durbin Apologizes

Yesterday, Sen. Durbin apologized for his outrageous remarks. Good.

Political Marketplace

Lt. Gen. John Vines says the US military will begin withdrawing some forces from Iraq by next March, provided ground conditions permit.

I say – good.


Boone Pickens sees $60-$70 oil and $3.00 gasoline in the next year.

I say – not good. But the economy will still weather it.


The American Medical Association denounced Bo-Taxes, or higher taxes on plastic surgery.

I say – good! Hope they don’t tax hip replacements.


Senator Bill First tells Senator Durbin to apologize for outrageous remarks on Gitmo. So does the Anti-Defamation League. So does John McCain, who also asks Durbin to read Aleksandr Solzhenitsyn’s “The Gulag Archipelago.”

Good on all counts!


The National Conference of State Legislatures report that property tax relief is the mantra of the day.

I say good! Higher home prices have skyrocketed property taxes. We need a national Proposition 13.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Don Hodges, of the Hodges Fund, and Don Luskin, CIO of Trend Macrolytics

-- Sen. Jim DeMint, on the Kudlow-Moore social security surplus plan

-- Luke Popovich, of the National Mining Association, on Sen. Jeff Bingaman's carbon-emissions tax

-- Former Secretary of State Dr. Henry Kissinger, on China, the spread of freedom, and other topics

Death of the Death Tax, II

An interesting tidbit from our flat-tax reform friend Alvin Rabushka, courtesy of Bruce Bartlett.

Fraudulent Iran

PubliusPundit has some startling images from the Iranian election. His key point: that the issue here is not the rigged elections themselves, but the fact that the Iranian government had to fake high turnout numbers to claim any legitimacy. The problem is, according to him and others, is that only about 8% of the population voted. Which sounds like a massive vote of no confidence to me. Check it out.

And check out Michael Ledeen's NRO piece, as well.

Political Marketplace

The White House is not giving up on social security and is not looking for an exit strategy, says Bush economic czar Al Hubbard, according to the Financial Times.

Nor will the President give up on personal savings accounts.

Right on, Mr. Bush, but please emphasize the positives of ownership and investment return, a real investor lockbox.



Also on the security front, a group of house Republicans will submit legislation to stop the raid and start the personal accounts. Meaning the $2 trillion surplus estimated over the next decade should be used to start new savings accounts with some form of marketable Treasury securities.

They hope to persuade Bill Thomas to include this in his upcoming retirement bill.



President Bush is kicking off a nationwide campaign to get seniors to enroll in new prescription drug coverage under Medicare.

I’m fine with that, but I wish Mr. Bush would also campaign for the continued use of expanded health savings accounts, where choice and competition will solve the healthcare cost and delivery problem.



White House supports limited UN expansion, favoring Japan for a permanent Security Council seat. This is an excellent idea for a steadfast ally in the terror war. And let me add: I think India would make a much better permanent member than Germany.

Outrageous Durbin

Former House Speaker Newt Gingrich has called for the Senate to censor Senator Richard Durbin. I agree.

The idea of moral equivalence between the U.S. military at Gitmo and the 15 to 30 million who died in the Soviet gulags or the 9 million who died in Nazi concentration camps or the 2 million dead in the Cambodia killing fields is utterly outrageous.

Did anyone see yesterday’s front page New York Times story on Iraqi terrorist prisoner brutality in the torture houses? Congrats to the Old Gray Lady for printing this. Floggings, electro-shock torture, strangulation, starvation, dehydration, beatings, and constant murder threats.

Compare this to Gitmo where the average detainee gains 13 pounds during his stay earning mustard baked dill fish and tandoori chicken breast, is frequently permitted to watch TV, play soccer, spend half days outdoors, receives Korans delivered by gloved military personnel and worships four or five times daily.

Does this sound like moral equivalence?

Senator Durbin and the looney left supporting him are slandering our military, our President, and our nation. It is a total outrage.

Durbin Afterthought

By the way -- Newt Gingrich is calling for Durbin's censure by the Senate.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- Rich Greenfield, of Fulcrum Global Partners, on Cablevsion

-- Jim Lucier, of Prudential Equity, and Chris Edmonds, of Pritchard Capital Partners, on oil, the energy bill, and global warming

-- a market segment with Barbara Marcin, of Gabelli Asset Management, and David Goerz, of HighMark Capital Management

-- WSJ OpinionJournal's John Fund on a possible Social Security bill

Gitmo Perspective

With all the loony left charges of US military mistreatment of Gitmo prisoners, where is the outrage over the Sunday NY Times story by Sabrina Tavernise about Iraqi terrorist insurgent acts of prisoner brutality in numerous torture houses found in that country: floggings, electroshock torture, strangulation, starving, dehydration, beatings, and outright murders. Evidence of all of these was uncovered last Friday by Marines in the town of Karabila.

Contrast this with Mark Steyn’s column today in the New York Sun, which should provide some necessary and important perspective on Gitmo. As should the recent remarks of Rep. Duncan Hunter, head of the Armed Services Committee. Obviously, there have been problems. After all, it’s a prison operated during wartime. But that does not justify the rhetoric used by Amnesty International and Sen. Dick Durbin. Gitmo is not a gulag; our soldiers are not Nazis or Khmer Rouge. As Steyn points out, 15-30 million died in the gulags, 9 million died in the concentration camps, and 2 million died at the hands of Pol Pot. This is to say nothing of the massive death toll the prisons of Mao Tse Tung took. But no-one has died in Gitmo.

Steyn points out that camp guards handle copies of the Koran only when wearing gloves. That the average detainee gains 13 pounds during his stay. That ‘"mustard-baked dill fish", "baked Tandoori chicken breast" and other delicacies’ make up the menu. Add this to the fact that a many of the non-high-security prisoners are permitted to watch TV, play soccer, and spend as much as half their day outside. Gitmo sounds, at times, more like a summer camp than a prison.

In light of these facts, it’s impossible to see Amnesty’s or Durbin’s rhetoric as anything other than the worst, most morally suspect kind of opportunism and Anti-American posturing. It’s hard to say which is worse, in fact – that Dick Durbin is slandering the military of his own country, or that Amnesty International is betraying its legacy of real work to help liberate and improve conditions for prisoners of conscience everywhere. (It’s important to remember, by the way, that a prisoner of conscience does NOT use violence – he is a prisoner solely for his beliefs and nothing more. Terrorists or guerillas who have participated in attempts to bring about the violent destruction of the United States do not fall into this category.)

Allegations of abuse must always be taken seriously. America must hold itself to a higher standard than other countries. Even though we treat our prisoners better than the Iraqi insurgents treat theirs – they maim, starve, and kill them, and certainly do not provide them with copies of the Bible-- we can’t become complacent. And we certainly can’t justify any breakdowns in discipline which led to possible mistreatment of prisoners. But to compare our military to Hitler’s, and to compare Guantanamo, which holds fewer than 1000 prisoners (1000!) with Stalin’s gulags, which held 2 million at any one time, is inexcusable. We’re fighting a war to spread democracy and freedom. And our military deserves much better than that. As does our President. And our nation.

Hariri Wins

21 of 28 seats in northern Lebanon. A majority in the 128-seat parliament. A political coalition that bridges religious and cultural divides. And it's all thanks to Saad Hariri, the son of assassinated Lebanese politician Rafik. This is a great day for democracy and for Lebanon -- and no small vindication of Bush's tireless committment to spreading freedom.

Political Marketplace

The White House is not giving up on Social Security and is not looking for an exit strategy, according to Bush economic czar Al Hubbard (in the Financial Times).

Nor will the President give up on personal savings accounts.

Right on, Mr. Bush, but please emphasize the positives of ownership and investment return, a real investor lockbox.

Also on the Social Security front, a group of House Republicans will submit legislation to stop the raid and start the personal accounts. Meaning the $2 trillion surplus estimated over the next decade should be used to start new savings accounts with some form of marketable Treasury securities.

They hope to persuade Bill Thomas to include this in his upcoming retirement bill.

President Bush is kicking off a nationwide campaign to get seniors to enroll in new prescription drug coverage under Medicare.

I'm fine with that, but I wish Mr. Bush would also campaign for the continued expanded use of health savings accounts, where choice and competition will solve the healthcare cost and delivery problem.

The White House supports limited UN expansion, favoring Japan for a permanent security council seat. This is an excellent idea for a steadfast ally in the terror war. And let me add, I think India would make a much better permanent member than Germany.

RadioBlogger

To see a transcript of our blogger segment, check out RadioBlogger.

Tonight's Lineup -- "Kudlow & Company"

MARKETS with Elaine Garzarelli (Garzarelli Research) and Dan Genter, CEO of RNC Genter Capital Management

BLOGGERS James Taranto from the Wall Street Journal and Mickey Kass from Slate. For a transcript, please go to www.radioblogger.com

Conservative radio host and film critic Michael Medved

Charlie Gasparino (Newsweek) to talk about philanthropist Alberto Vilar's indictment and the Kozlowski verdict.

A HOT Idea

Deroy Murdock has a brilliant idea for giving tax-hikers what they want: the HOT, or Higher-rate Optional Tax. His piece is full of great quotes from men of the people like Paul Newman and ADP founder Frank Lautenberg. Check it out.

Deeper Sickness

On the heels of Robert Samuelson's excellent article , the polymath Paul Johnson has a fascinating piece in the WSJ. He confront not just the demographic and economic ills of Europe -- but its philosophical ills as well:

The fundamental weaknesses of the EU that must be remedied if it is to survive are threefold. First, it has tried to do too much, too quickly and in too much detail. Jean Monnet, architect of the Coal-Steel Pool, the original blueprint for the EU, always said: "Avoid bureaucracy. Guide, do not dictate. Minimal rules." He had been brought up in, and learned to loathe, the Europe of totalitarianism, in which communism, fascism and Nazism competed to impose regulations on every aspect of human existence. He recognized that the totalitarian instinct lies deep in European philosophy and mentality -- in Rousseau and Hegel as well as Marx and Nietzsche -- and must be fought against with all the strength of liberalism, which he felt was rooted in Anglo-Saxon individualism.

Read the whole thing (subscription-only) here.

Smoot-Hawley R.I.P.

Many thanks to Tom Sowell for reminding us that tomorrow, June 17, marks the 75th anniversary of the Smoot-Hawley Tariff that helped trigger the 1930's depression.

Barriers to trade, coupled with retaliatory measures around the world, raised the unemployment rate from 9 percent in 1930 to 16 percent in 1931 and 25 percent in 1932. Farmers who supported the tariff saw their exports cut by two-thirds.

Today Senators Smoot-Schumer and Hawley-Graham, who have proposed a 27.5 percent tariff on Chinese imports, may be celebrating this anniversary. But if I were they, I'd keep the cork in the champagne bottle.

Economic history shows clearly that rising world trade promotes economic freedom and prosperity and job creation. Our current 5.1 percent unemployment rate follows 25 years of free trade agreements under Ronald Reagan, George Bush senior, Bill Clinton, and George W. Bush.

Low tax rates, stable money and free trade will create long lasting prosperity.

May Smoot-Hawley rest in peace, never to be resurrrected again.

Political Marketplace

Oh my gosh: Bush aides report millions in assets, according to this morning’s Washington Post. Several high-ranking White House assistants actually own mutual funds, stocks, real estate, CDs.

Think of it – capitalists and investor class members in senior policy jobs. I say great!

The Washington Post also reports that Congressional leaders are looking for an exit strategy out of social security. My sources tell me it’s basically true, except in the Senate.

Bill Thomas may still report out a House bill with personal savings accounts, but passage is highly unlikely.

This is most regrettable because I believe defined contributions for Social Security IRAs are the only long-lasting solution to this problem.

Democratic Senator Richard Durbin has likened the US military in Gitmo to Nazis, Soviet gulags, and Pol Pot’s Khmer Rouge.

To me this is unbelievable. Incredible disrespect. And disloyalty to our troops. And factually completely untrue.

With respect, Mr. Durbin – you should be ashamed of these remarks.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Mike Holland, president of Holland and Co., and Noah Blackstein, a portfolio manager Dynamic Mutual funds

-- Craig Russell, senior foreign exchange dealer at Alaron, and Mike Churchill, president of Churchill Research, on commodities and the dollar

-- Congressman Curt Weldon on his new book, Countdown to Terror, and the shortcomings of the CIA

-- a political discussion with Mike Rosen, host of the radio show Pulse of America

Union Upheaval

Josh Gerstein, in the New York Sun, reports that five unions, with five million members, have begun to create a labor federation that would compete with the AFL-CIO. These include the Teamsters and the Laborers.

We believe that this labor movement needs to be born again," said Bruce Raynor, president of the hotel, restaurant, and laundry-workers union, Unite-Here. "The labor movement as personified by the current AFL-CIO structure has been one that has been unsuccessful in standing up for working families," he said.

"Without a radical change, we cannot continue to survive as a significant force," the president of the Laborers, Terence O'Sullivan, said. "This is not a fight among unions. It is a fight for justice for working people. In that fight, we cannot be content with continued failure."

John Sweeney, head of the AFL-CIO, has ruffled feathers by failing to counteract the precipitous decline in union membership and with his outspoken commitment to Democratic politics at the expense of union interests.

Read the whole thing here.

India's Markets

According to the Wall Street Journal's Amit Varma, India is not the emerging free-market superpower it's cracked up to be:

One would have expected India's growth to be driven by labor-intensive manufacturing but, almost by default, it instead came in the poorly licensed area of services exports. The manufacturing sector, ideally placed in terms of labor and raw material to compete with China, never took off. India's restrictive labor laws, a remnant of the socialist infrastructure that India's first prime minister, Jawaharlal Nehru, put in place in the 1950s and 1960s, were politically impossible to reform. It remains excruciatingly difficult for most Indians to start a business or set up shop in India's cities.

This is painstakingly illustrated in "Law, Liberty and Livelihood," a new book edited by Parth Shah and Naveen Mandava of the Center for Civil Society in New Delhi, which documents the obstacles in the way of any Indian who wishes to start a business in one of India's big cities. Messrs. Shah and Mandava write: "Entrepreneurs can expect to go through 11 steps to launch a business over 89 days on average, at a cost equal to 49.5% of gross national income per capita." Contrast the figure of 89 days with two days for Australia, eight for Singapore and 24 for neighboring Pakistan.

India could be a powerful force in the coming century -- its population is huge, technologcally sophisticated, and contains a large number of English speakers. If the government can manage to make private enterprise more affordable and less suffocated by regulations, it will be able to take advantage of those facts. Here's hoping that India's free markets become more than legends.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with Brad Hintz, of Sanford Bernstein, and Brian Wesbury, chief investment strategist of Claymore Securities

-- Wayne Angell, of Angell Economics, and Liz Ann Sonders, of Charles Schwab, on the newest economic data

-- Stephen Moore, of the WSJ editorial board, and GMU economist Walter Williams, on social security reform and the Laffer curve

-- Newsweek senior writer Charles Gasparino and WSJ columnist Kimberley Strassel, on Grasso, Spitzer, and the Webb Report

Iraq Strategy

For all the huffing and puffing about Iraq, there are very few actual tactical/strategic rundowns made available (for obvious reasons) in the press. That's why Mackubin Owens's column in the New York post is so fascinating and valuable. He advocates cautious optimism, and notes the increase in anti-insurgency sentiment among Sunni muslims. Quite a read.

Out of Business

Robert Samuelson looks at Old Europe in today's Washington Post. His conclusion? It's slowly dying, economically and in terms of population growth. Read the whole thing here.

An arresting paragraph:

It's hard to be a great power if your population is shriveling. Europe's birthrates have dropped well below the replacement rate of 2.1 children for each woman of childbearing age. For Western Europe as a whole, the rate is 1.5. It's 1.4 in Germany and 1.3 in Italy. In a century -- if these rates continue -- there won't be many Germans in Germany or Italians in Italy. Even assuming some increase in birthrates and continued immigration, Western Europe's population grows dramatically grayer, projects the U.S. Census Bureau. Now about one-sixth of the population is 65 and older. By 2030 that would be one-fourth, and by 2050 almost one-third.

Samuelson's points about negative or stagnant population growth are well-taken. But the US is not without problems. One of the most controversial is abortion -- which brings with it a whole host of moral and legal issues. But setting these aside for the moment, what is the harm done purely in terms of population growth by abortion? More than 40 million abortions have been performed since 1973. More than 40 million potential workers and citizens have not come into existence. Now, obviously, some of these would have been criminals or other social drains. But even if criminals, etc., were present in much higher proportions than normal, the vast majority of the potential citizens would have contributed -- to the workforce, to social security, to army recruitment. This is a point made by Zell Miller in his latest book. And it’s a good point.

40 million abortions. 40, 565, 151, to be exact. That is more than the combined US dead of all the wars the US has fought in.

It's hard to estimate the economic impact of numbers like that.

Let The Blue Dogs In

Last night, I discovered that the White House has made NO efforts to work with the Blue Dog Coalition, which has a membership of 35 centrist Democrats in both houses.

I was shocked.

25 years ago, Ronald Reagan assiduously courted the Boll Weevil Democrats for legislative support on getting crucial tax and budget measures passed.

If Bill Thomas or Chuck Grassley reports out a Social Security bill this summer, the White House will need help from the Democrats to ensure that it passes.

What’s more, the Blue Dogs are budget cutters – working with them would help allay criticism that the Republicans have become big-government spenders.

My advice to the White House and the Republican Congress: please start doing business with the Blue Dogs.

Political Marketplace

Some thoughts from the political marketplace:

A new poll by the “Third Way Democrats” from 2004 exit data shows that George Bush beat John Kerry by 22 points among middle class whites earning between $30,000 and $75,000

You know what, Democrats? Class warfare doesn’t work. Give it up.

Here’s a shocker: Microsoft is collaborating with the Chinese government in removing words like ‘freedom’ and ‘democracy’ and ‘human rights’ from their MSN bases in their new China-based web portal.

American business should be pushing China toward freedom, not collaborating with totalitarianism. Give it up, Microsoft.

Today Senator John McCain joined Senator Bill Frist in calling for a vote on UN nominee John Bolton in the next few days.

The US needs Bolton in the UN.

Dems, back off.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market sgement with Brett Gallagher, of Julius Baer Investment Management

-- Hank McKinnell, CEO of Pfizer

-- Pharma analyst Barbara Ryan, of Deutsche Bank, and healthcare analyst Sheryl Skolnick, of Fulcrum Global Partners, on health care stocks and pharmaceuticals

-- Bob Toll, CEO of Toll Brothers, on the housing market

Class Warfare Doesn't Work

Gary Andres had a fascinating piece in NRO yesterday. Apparently, a recent poll by Third Way has determined, based on exit polls of the 2004 presidential election, that Bush beat Kerry by 22-points among middle-class whites making between $30,000 and $75,000. In addition, they have discovered that the "tipping point" salary at which people become more likely to vote Republican is much lower than previously guessed --$23,700.

This is why the Democrats' class-warfare argument is such a consistent loser. People are trying to climb the ladder of prosperity, they don’t hate successful earners, and they are optimistic about their economic and financial future. And optimism is a value associated with the Republican party, especially George W. Bush in 2004, drawing from Ronald Reagan in 1980 and 1984.

Tonight's Lineup

Tonight, on Kudlow & Company:

-- a market segment with John Myers, president and CEO of GE Investments

-- independent conservative Democrat (and Bush supporter) Zell Miller, on his new best-seller, A Deficit of Decency

-- three members of the centrist, allegedly fiscally conservative Blue Dog Coalition, Rep. Ed Case, Re