November '06 is ten months away

"Analysts See Democrats Gaining in 2006 Elections" is the lead story in today's New York Sun. Well, maybe so. But it's still early in the election cycle, and lately Mr. Bush has been mounting an impressive comeback. One key question is whether the president will continue along his recent recovery path. I wouldn't bet against him.

The Washington Post reports a sharper and more aggressive Bush strategy on core issues like Iraq and the economy. Campaign style,in numerous speeches and proactive press conferences, Bush closed the year strong as he answered his critics by hammering hard on an Iraq victory strategy and the strength of the US economy. The commander-in-chief shifted to salesman-in-chief to merchandise and market his successes, even while he acknowledged some miscues in Iraqi peacekeeping , nationbuilding and reconstruction.

Polling data show this strategy to be working, as Bush's favorables have moved up about ten points to nearly 50%. A string of positive economic reports bolstered the president's case at home, while a third successful election in Iraq underscored the potential for optimism there.

Meanwhile the Democrats are helping Bush by reminding the electorate that they remain soft and untrustworthy on national security and the terror war. Turns out that the Murtha-Pelosi obsession on immediate troop withdrawal is playing poorly nationwide, even splitting the Dems internally.

Even worse, the Dems' ACLU-type response to reports of NSA eavesdropping without court warrants to intercept information between suspected foreign and domestic terrorists is a huge mistake. The latest Rasmussen poll reports that 64% of respondants believe the National Security Agency should be allowed to tap into cell-phones and e-mails. What's the key word here? National security. What's the key thought here? The carping Dems are not to be trusted. What's the key political issue here? There's a reason the US has not been attacked since 9/11. It's called tough security policies by the entire US government, at home and abroad, designed and administered by the Bush administration.

In order to build on their recent polling successes, and their successful policies, the Bushies need to articulate a few basic points and then package them into a national message. In other words, nationalize the mid-term elections as they did in 2002 (terror war security) and as the Gingrich Republicans did in 1994 (smaller government, lower taxes, no socialized healthcare).

Staying the course in Iraq, where victory on democratization and reconstruction is increasingly possible, withdrawing troops as the generals believe prudent, and maintaining tough security measures to guard the homeland (Patriot Act,etc.) is the right wartime prescription. The Dems have nothing but negativism and defeatism.

Large-scale budget cuts (including, for the first time, real cuts in porbarrel spending, including corporate welfare) and permanent tax relief to sustain economic growth should be the message at home. Here the Dems have no policy except the tiresome mantra of tax hikes for the rich. The D's have no budget-cutting policy whatsoever. Nor are they capable of developing one.

If Bush embraces the Mike Pence approach championed by the House Republican Study Committee to shift big government conservatism back to limited government conservatism, then he will rejuvenate the GOP base. Moving government out of the way of the free-enterprise capitalist economy, while strenghtening after-tax rewards for work and investment, is the best prescription for long-run growth. Clear progress on budget deficit reduction will also impress independant voters, along with lower unemployment and continued job creation.

On war and prosperity, Mr. Bush can craft a national message to win, or at least break even, in the mid-term elections. Aggessive campaigning on these themes, i.e. salesman-in-chief, will do the trick.

Fundamentally, Mr. Bush must rally the nation to his big picture attitudes of victory, optimism, growth and progress. Democrats are pessimistic, negative and defeatist. The contrast couldn't be clearer. If the president produces the policy merchandise, and then makes the national sale, 2006 could be a very surprising political year where once again the conventional wisdom is proven wrong.

Rising Sun and Nikkei

Japan's benchmark stock index climbed over the 16,000-point threshold Monday, reaching its highest level in over five years. The Nikkei 225 index rose 166.30 points, just over 1 percent, to finish the day's trading at 16,107.67 points on the Tokyo Stock Exchange.

The Nikkei has soared more than 31 percent this year on renewed optimism for a Japanese economic recovery. The index still hovers way below its all-time high of 38,915.87, set back in late December of 1989. As I wrote in my NRO column, "A Rise from the Rising Sun" back in ’02, continued monetary expansion, along with further deregulation and tax relief, could very well make Japan "the surprise growth country of the new decade."

I expect continued strong growth out of the Japanese economy and stock market.

In addition, I expect to see increased growth out of much of the countries on the world’s economic stage, notably here at home, where most signs and indicators appear rather bullish as we head into the new year.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A market discussion with Keith Wirtz, CIO of Fifth Third Asset Management and Walter Williams, George Mason University Economics Professor and syndicated columnist.

Paul Ingrassis, President of Dow Jones Newswires, and Lou Ann Hammond, CEO of Carlist.com will discuss the auto industry and the future of GM.

David Goode, Chairman of Norfolk Southern, will talk about rails and the transportation industry.

A political debate with Steve Moore, Wall Street Journal Sr. Economics Writer, and Robert Reich, Former Secretary of Labor.

Our poll question:

On the eve of Christmas eve, do you expect a bull or bear market in your stocking?

Bull Market?
Bear Market?

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

FedEx Chairman & CEO Fred Smith will discuss his company's stellar earnings as well as the transportaion sector. He will be followed by John Barnes, BB&T Capital Markets Air Freight & Service Transportation Analyst to offer additional insight.

A look into the markets with father/son duo Sam Stovall, Standard & Poor's Chief Investment Strategist and Robert Stovall, Managing Director & Global Strategist Wood Asset Management.

An economic debate between Arthur Laffer, Ph.D., Laffer Associates Founder & Chairman/Fmr. Reagan Economic Advisor and Dr. Gary Shilling of A. Gary Shilling & Co.

Also, a political debate with MSNBC political commentator Pat Buchanan and Craig Crawford, CNBC Political Analyst/Congressional Quarterly Columnist.


TONIGHT'S POLL:

Should public transportation systems be privatized?

Cast your vote at www.kudlowcnbc.com.

The Fitzgerald Precedent

"It is despicable, but not illegal, for the news media to publish vital national secrets leaked to them. But the leakers have committed a felony.

Those who have demanded severe punishment for whoever it was who told reporters Valerie Plame worked at the CIA have been remarkably forgiving about who leaked the existence of the NSA intercept program, which -- like the earlier leak of secret CIA prisons for al Qaida bigwigs and unlike the Plame kerfuffle -- has done serious harm to our national security.

But fortunately, by clapping New York Times reporter Judith Miller in irons until she talked, overzealous special prosecutor Patrick Fitzgerald has set a valuable precedent.

Attorney General Gonzalez should subpoena (New York Times reporters) Mr. Risen and Mr. Lichtblau, and have them cited for contempt of court if they do not disclose their source or sources. Maybe they could share Judy Miller's old cell."

-From Jack Kelly's article "The Valerie Plame Precedent" over at RealClearPolitics.com.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A look at markets with author and Wharton School Professor Jeremy Siegel; Stefan Abrams, from Trust Company of the West; and Michael Metz, Chief Investment Strategist at Oppenheimer & Co.

Sen. Chuck Grassley (R-IA) will address today's budget vote among other things.

Senator Grassley will be followed by Jared Bernstein, Economic Policy Institute Sr. Economist and Chris Edwards, Cato Institute Director of Tax Policy Studies, who will provide additional insight.

Also, a bank stocks discussion with Richard Bove, managing director from Punk, Ziegal & Co.


TONIGHT'S POLL:

In 2006, will you shift your investments toward dividend-yielding stocks?

Cast your vote at www.kudlowcnbc.com.

Much Ado About Nothing

This whole business about warrantless searches is nothing new. It is consistent with prior court decisions and precedent. But don’t just take my word for it. Under President Clinton, deputy Attorney General Jamie Gorelick testified that "the Department of Justice believes, and the case law supports, that the president has inherent authority to conduct warrantless physical searches for foreign intelligence purposes." And that was before 9/11. This looks like a no-brainer.

An article written in today’s Chicago Tribune by John Schmidt—former associate attorney general in the Clinton administration—spells all of this out quite clearly. Mr. Schmidt maintains that President Bush clearly had legal authority to do exactly what he did. In no way shape or form did the president do anything wrong here. Moreover, Bush informed certain members of Congress twelve times according to news reports.

The bottom line is that these accusations against the Bush administration are much ado about nothing. In fact, the Democrats could be digging quite a whole for themselves. It looks they fell for the bait yet again and continue to paint themselves into the soft-on-defense corner.

So long as Bush keeps fighting back, this latest empty attack could wind up being an enormous mistake for Democrats, costing them bigtime in next year’s midterm elections.

Never Forget

The latest Democratic bid aimed at undermining the Bush team’s fight against terrorism is further evidence that Democrats prize partisan politics over the safety of America’s men, women and children and are soft on national defense. This is not hyperbole. This is fact.

This wiretapping “scandal” is anything but.

I’m not going to delve into the myriad reasons why the Bush administration was legally justified for conducting wiretaps, nor am I going to explain why the Bush administration ought to be applauded for conducting wiretaps. You can read Byron York over at NRO for more on that. You might also check out the Wall Street Journal’s editorial on this subject. Or Dick Morris’ piece in the New York Post.

What I want to talk about is how soon some people forget. What are these people thinking?

It wasn’t so long ago that hijackers used our planes as missiles and flew them into our buildings. It wasn’t so long ago that militant Islamists stole the lives of countless innocent American civilians. Lest we forget, mothers and fathers, sons and daughters didn’t make it home from work that day. They died nightmarish deaths. They jumped out of windows, burned and died of asphyxiation. And we are not talking about ten, twenty, thirty people here. We’re not even talking a few hundred. We’re talking about thousands of lives. Take a trip down to Ground Zero. The World Trade Center is still gone. Yet the scars of September the 11th remain.

This unspeakable threat has not magically disappeared. It lingers. Our enemies, the sick, twisted brutal souls who seek to destroy us, remain. They have not changed their plans. On the contrary, they continue in their resolute hatred for us. They continue to despise our way of life. They continue in their unwavering commitment to seeing us die.

The threat remains.

So pardon me if I ask some folks what exactly they’re thinking when they attack the president as he protects American lives.

We must never forget.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A politcal debate with Rep. David Dreier (R-CA), Rep. Sheila Jackson Lee (D-TX), syndicated columnist Joel Mowbray, and Washington Post columnist E.J. Dionne.

Joe LaVorgna, Deutsche Bank Chief Fixed Income Economist & Managing Director and Marc Pado, Cantor Fitzgerald U.S. Market Strategist to address the economy and financial markets.

And, Nicole Gelinas, Manhattan Institute's "City Journal" Contributing Editor to discuss New York City's transit strike.


TONIGHT'S POLL:

President Bush's phone and e-mail surveillance to acquire foreign intelligence is:

Legal

Illegal

Cast your vote at www.kudlowcnbc.com.

Strong Housing Starts Number

Add today’s strong housing starts number to the steady stream of positive economic signals of a robust U.S. economy. Despite continued doom and gloom from certain camps, the housing picture looks rather healthy. New construction of homes was up 5.3 percent for the month of November, and up 17.5 percent over the last year. Building permits—leading indicators of future starts—was up 2.5 percent as well.

There is a good deal of confusion about the housing market. While there is some evidence that the housing boom is cooling a bit, based on rising inventories of unsold homes, the reality is that job creation, low unemployment, and job growth is what fuels the housing market. These numbers are all very strong. And while interest rates are slowly creeping higher, the fact is they are still at historic lows. The biggest barrier to the housing market is local regulations that prevent builders from building new homes.

A healthy economy—like the one we find ourselves in right now—will continue to support a healthy expansion in housing inventories. Despite the prognostications of some, there is no housing crash on the horizon.

Bears beware.

Bush Rebound

The winds are changing direction.

After suffering through broad based erosion of public support amidst relentless criticism from barking Democrats and a liberal mainstream media, President Bush’s latest poll numbers plowed ahead an impressive 8 percentage points according to the latest Washington Post/ABC News Poll.

This surge in approval coincides with Mr. Bush finally stepping up to the plate in recent weeks, appearing before the American people, and trumpeting the news his vocal opposition in the media and Capitol Hill attempts to bury underneath their Tommy Gun attacks. Bush’s message has been twofold: First, our historic and vitally important mission in Iraq is showing clear signs of success. Second, the American economic engine is strong and firing away on all pistons.

I’ve been saying for quite some time that the president needed to get out in front of the people and defend himself. For a while there, Bush allowed himself to become a political punching bag as the Reid-Murtha-Pelosi-Kerry wolf pack—aided by their loyal, liberal media cohorts—landed one low blow after another. Like clockwork, this Democratic and media tag team has pulled everything they could from their woodshed of smear and tried to pin the president to the canvass by painting him in their lies. They heralded the fruitless hullabaloo of Valerie Plame being “outed,” then engaged in clear deception by accusing Bush of lying to the country in order to get into Iraq.

On matters of the strong and growing U.S. economy, substantiated by virtually all reliable indicators including historically low unemployment, record household net wealth, low inflation and sky-high productivity, the opposition was at best, blinded by a case of Chicken Little Blues—at worst, they engaged in active misinformation.

It was no surprise that Bush’s poll numbers tanked. The public was being fed a strict daily diet of anti-Bush fast food without a peep from 1600 Pennsylvania Avenue. But that all changed a few weeks ago when the commander-in-chief put up his dukes and fought back. And what’s also rather interesting is that just as Bush’s approval numbers climbed higher, Congressional Democrats numbers suffered. According to the ABC/Washington Post poll, Democrats lost seven points on the issue of which party is best able to handle the country’s biggest issues.

We can be certain of two things:

First, the Democratic attack dogs will continue nipping at the president’s heels, aided and abetted by the mainstream media who never saw an anti-Bush story they didn’t like—no matter its truthfulness.

And second, Bush must stay in front of the American people, fight back against his deceitful and defeatist naysayers, and continue getting the true story out on his administration’s success.

A Friend at the Fed?

Unlike a lot of economists, I’ve never truly believed that the Federal Reserve is really my friend, or a friend of financial markets and the economy. True enough, I started at the New York Fed over thirty years ago, and got a good education there. But frankly, I’d rather bet on America’s free economy, and the men and women who do the real heavy economic lifting by exercising their God-given talents to invent, produce, take risks, and work hard at their jobs, than bank on the Fed.

To read the rest of my column on the Fed, please visit www.nationalreview.com.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A political debate between Doris Kearns Goodwin, author of "Team of Rivals: The Political Genius of Abraham Lincoln" and John Fund, WSJ OpinionJournal.com Columnist.

A markets discussion with John Augustine, Fifth Third Asset Management Chief Investment Strategist and Elaine Garzarelli, Garzarelli Research President.

Catherine Arnold, CSFB Sr. Pharmaceutical Analyst to discuss the pharma industry and the Pfizer news.

TONIGHT'S POLL:

Does President Bush's new message make you more or less optimistic about the stock market in 2006?

Cast your vote at www.kudlowcnbc.com.

More Good News From Iraq

On the heels of last week's successful, landmark Iraqi elections comes word of a growing thaw among the Sunni minority.

The Washington Times is reporting that Sunni Muslim leaders in Iraq's violent Anbar province say they are ready to cooperate with the United States.

They are seeking to extend a temporary truce honored by most insurgent groups for last week's elections but say they want the United States to reduce military raids and increase development projects for their vast desert province.

A powerful Sunni leader leader said insurgent groups had prevented violence from interfering with Thursday's elections - the result of weeks of negotiations between U.S. officials and insurgents.

Sunni religious leader Sheik Abed al-Latif Hemaiym told The Times in an interview in Amman that Sunnis were prepared to work with the United States.

"We now believe we must get on good terms with the Americans," Hemaiym said. "As Arab Sunnis, we believe that within this hot area of Iraq, facing challenges from neighboring nations who want to swallow us, especially the Iranians, we feel we have no alternative."

Snow's Statement

(Treasury Secretary John Snow released this statement last Friday. It deserves a read.)

Today's announcement of robust tax receipts is yet another sign of the strength of our growing economy. The Treasury took in $61.4 billion in revenue from yesterday's fourth quarter corporate estimated tax payments -- a record for the fourth quarter - and a 33 percent increase over last year's fourth quarter payments.

As Congress considers whether to increase taxes on dividends and capital gains, the continued surge in federal government revenues reminds us that lower tax rates that spur economic growth are consistent with strong federal receipts. Raising taxes on investment by failing to extend lower tax rates on dividends and capital gains would hurt economic growth and is the wrong prescription for an economy in recovery.

President Bush's economic policies of lower tax rates, combined with wise monetary policy from the Federal Reserve, have given American workers and entrepreneurs the tools they need to innovate, grow businesses and create jobs. Since the President signed the Jobs and Growth Act into law in May of 2003, 4.5 million new jobs have been created, GDP has grown at a rate of more than 4 percent per year, household wealth has reached an all-time high and rising inflation-adjusted hourly wages means workers are today earning more in real terms than they did at the height of the 1990s expansion.

No Surprise Here..

A UCLA study of media bias—believed to be the first of its kind using quantifiable measures—revealed what everyone knew all along: that mainstream media is biased.

According to the study, which covered ten years worth of news stories, eighteen of the twenty major news outlets scored left of center. That’s a solid 90 percent for those of you keeping score.

Believe it or not, despite its conservative editorial page, The Wall Street Journal garnered top honors as the most liberal (The study was quick to point out that it excluded editorial and op/ed pieces from its tallies, focusing exclusively upon news stories). And, in a surprise to no one, CBS' "Evening News," The New York Times and the Los Angeles Times ranked second, third and fourth most liberal in the bias lineup. Shocking…

Only Fox News' "Special Report With Brit Hume" and The Washington Times scored right of the average U.S. voter.

For more on the study click here.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

Live from Washington...

A political debate with Robert Reich, former Labor Secretary and Steve Moore, WSJ Editorial Board Sr. Economics Writer.

A stock market and economic discussion with Diane Swonk, Mesirow Financial Chief Economist/"The Passionate Economist" Author and Barry James, James Advantage Funds Portfolio Manager.

Rep. Mike Pence (R-IN) and Rep. Harold Ford (D-TN) will address - among other things - taxes, spending and immigration.


Tonight's Poll Question:

Will the 2006 U.S. elections produce a "functioning" government?

Cast your vote at www.kudlowcnbc.com.

Half Full, Half Empty or Just Broken?

Democratic disunity over Iraq is spreading like a disease. The daze and confusion reared its head shortly after Murtha’s cut and run call, when a sizable number of Democrats—most notably House Minority Whip Steny Hoyer (D-MD) and Senator Joe Lieberman (D-CT)—broke party ranks and voiced their strong support for victory in Iraq.

Yesterday’s remarkable election success guarantees further dissension in the ranks. It was the third, and arguably the most successful and significant, election in Iraq this year. Iraqis hit the polls in record numbers. Violence was contained. And best of all, the Sunnis, who boycotted the elections in January, voted heavily in yesterday’s election. This is as clear an indication as any that the Sunnis recognize the way to advance their interests in the new Iraq is through democracy.

While we still have more work to do, things are looking very, very good.

House Minority Leader Nancy Pelosi looks like a deer caught in headlights. She’s running around Washington with an empty fire extinguisher doing her best to avoid a complete meltdown. The Washington Post is reporting that Pelosi, despite her previous statements indicating a majority of House Democrats wanted to withdraw US troops immediately from Iraq, said Democrats “should be free to take individual positions.” Pelosi also said that, "There is no one Democratic voice and there is no one Democratic position." Sounds like a retreat to me. Rep. Pelosi is struggling to make lemonade out of a growing number of Democratic defections.

Meanwhile, House Republicans may pass a resolution today saying that an "artificial timetable" for the withdrawal of troops is "fundamentally inconsistent with achieving victory in Iraq." It also says U.S. forces would be required in Iraq "only until Iraqi forces can stand up so our forces can stand down, and no longer than is required for that purpose." This resolution is right on the money.

It appears the only thing standing in the way of our victory in Iraq is the never-ending stream of politically motivated bloviating by malcontents who seek to misconstrue the public’s understanding of our massively important mission. As David Tell recently wrote in the Weekly Standard, “If the war is to be lost, it will be a collapse of stateside civilian morale that loses it. Everything else is secondary.” And, “When American soldiers start getting shot at overseas, the kind of partisan misrepresentation and outright falsehood to which we routinely subject our chief executive when we are at peace should simply stop.”

The bigger theme in all of this is the relentless pessismism regurgitated on a daily basis from much of the Democratic leadership. Never mind whether the sun is shining brightly in a picture-perfect blue sky, it’s always raining with a chance of category five hurricanes for the majority of these Democrats. While these “glass is broken” types are certainly entitled to their own opinions, it becomes a problem when their misguided political games stand in the way of American victory.

Just look at the economy. Only paranoid cave dwellers could fail to be optimistic with all the positive numbers pouring out. Facts don’t lie. And the facts unequivocally reveal this to be one strong, healthy, robust economy. Yet despite the steady stream of bullish reports day after day (strong retail sales, dynamite productivity, low inflation, low unemployment, record household net worth, etc, etc.) these people still insist on pulling out their storm gear. And they continue in their stubborn refusal to acknowledge that Bush's tax cuts are spurring this powerful economic growth.

It makes you wonder sometimes why they even bother to get out of bed in the morning.

Tonight's Lineup

On CNBC'S "Kudlow & Company" tonight:

Larry will be hosting the show live from Washington D.C.

Our guests include:

Kellyanne Conway, Republican Pollster from The Polling Company and Cornell Belcher, DNC Pollster/Brilliant Corners Research & Strategy in a discussion on Bush, Iraq's elections and immigration among other topics.

A look at at international markets like China and Japan, in addition to a discussion of the dollar and the Fed with David Malpass, Bear Stearns Chief Economist; Noah Blackstein of Dynamic Mutual Funds; and finally, Jeff Harte, Sandler O'Neill Managing Director & Brokerage Analyst.


TONIGHT'S POLL:

Managers of funds with a focus on companies that sell weapons, alcohol, violent videogames and the like say vice is recession-proof.

Would you invest in sin stocks?

Cast your vote at www.kudlowcnbc.com.

An Historic Moment

Things are looking rather grim right now in Iraq—mighty bleak if you ask me. But not for President Bush, not for his team, and certainly not for the Iraqi people who flocked to the polls in an historic, watershed moment in the Arab world.

Things are looking rather gloomy if your first name happens to be John and your last name is Kerry or Murtha. Ditto that if you’re a certain bespectacled senator from Nevada with a penchant for frowns or your last name is Pelosi.

Because today in Iraq, democracy took a gigantic step forward.

Let’s be perfectly clear. This wasn’t any ordinary step, not by a long shot. What the world witnessed today was a historic moment. A moment where fifteen million Iraqis—the very same people who suffered for years under the tyrannical dictatorship of Saddam Hussein since Jimmy Carter was in office—boldly walked to the polls with their children and cast their ballots for a first full-term parliament.

The news out of Iraq is full of promise. Men and women—many of them wrapped in their country’s flag—walked out of the polls with purple fingers, one decisive step closer towards running their own show without the help of American troops. Even the salty Sunnis got in on the action. In an apparent departure from previous elections which they boycotted, the Sunnis crossed the line in the sand and made their voices heard. And, perhaps most notably, today’s landmark vote was marked by an absence of violence across the country. Rather bullish signs wouldn’t you say?

"One of the most memorable things I saw were families, mothers and fathers taking their children to the polling stations. It was clear everyone knew what was at stake here and I think it was quite successful," USAID Mission Director Dawn Liberi told FOX News from Baghdad. "All the polls show Iraqis think democracy is the No. 1 priority for them … they want to get on with their lives, they don't want to be bombed, they don't want to be hostages to an insurgency."

My guess is that President Bush is wearing a big old smile right about now. And he ought to be. He’s had one tough ride these past few months. President Bush ought to be commended, and delighted in this wonderful news out of Iraq. He has not wavered as his opposition cast their stones. He has stayed the course. He is living proof that good things come to those who wait, who are patient, who stand tall in the face of adversity and relentless pessimism.

Sooner rather than later, our brave troops will be returning home to America’s shores. They will have participated in one of the grandest campaigns in all of history. Much like the courageous, battle hardened GIs returning from World War II, these young men and women will one day be able to tell their grandchildren that they helped change history for the better. Duty called and they not only answered, they delivered.

Good for our soldiers. Good for the Iraqi people. May God bless them all and may God bless America.

Tax Cuts Are Not Dead in the House

House Speaker Dennis Hastert’s people are telling me that they want a tax cut reconciliation bill that will include investor dividends and capital gains before the Christmas recess. The AMT patch will probably be voted on as a stand alone bill under “calendar suspension,” which means a simple majority is sufficient.

The Speaker is putting pressure on Senate Majority Leader Bill Frist to get this important pro-growth tax legislation completed in the next few days.

Hastert believes a late January or early February vote is too late and he wants to signal investors now that the tax cut extender can and will get done.

More to be revealed.

Race Card Fails

Shortly after Katrina unleashed its devastation upon New Orleans, a number of liberals and other assorted ne’er-do-wells lobbed nonsensical accusations that President Bush and his administration delayed its response to the catastrophe because most of the victims in New Orleans were black.

Perhaps you recall Damu Smith, founder of the National Black Environmental Justice Network saying that the federal government "ignored us, they forgot about us ... because we look like we look."

Or maybe you remember the always reliable Nation of Islam leader Louis Farrakhan saying that FEMA wasn't fit to help the storm's victims because "there are not enough blacks high up in FEMA," adding that, "certainly the Red Cross is the same."

You almost certainly heard unhinged rapper Kanye West on NBC's hurricane victim telethon. He launched the most spurious accusation of all. Against all common sense and reason, Mr. West turned his brain off and declared, "George Bush doesn't care about black people."

Newly released statistics paint a far different picture.

Data from the Louisiana Department of Health and Hospitals is revealing that whites died at the highest rate of all races in New Orleans. Despite making up only 28 percent of the population, whites constitute almost 37 percent of the storm's fatalities in the city.

The race card failed this time.

Bigtime New York Times Mistake?

Well, well, well…

It looks like someone has some explaining to do.

On the eve of tomorrow’s historic Iraqi vote—one in which voters will cast ballots for 275 new parliamentarians for Iraq's first full-term, post-Saddam government—the beleaguered New York Times ran a prominent story saying that Iraqi border police seized a tanker on Tuesday that had just crossed from Iran filled with thousands of forged ballots. Such a charge, if true, would appear to raise serious concerns about the validity of the election. It is worth noting that the Gray Lady relied upon a single, unnamed source.

Along comes Reuters. They’re calling the Times’ bluff. And, not only that, they have two named sources.

According to the head of Iraq's border guards, Lieutenant General Ahmed al-Khafaji, the Times is flat out wrong. "This is all a lie,” Khafaji told Reuters. “I heard this yesterday and I checked all the border crossings right away. The borders are all closed anyway. I contacted all the border crossing points and there was no report of any such incident,"

Interior Minister Bayan Jabor also denied the reports and said it was an attempt to discredit the election process.

Let’s pause for a second here. If Reuters—who relied upon two named sources—is right, and the Times dropped the ball on this one, then they owe one heckuva an apology and correction.

Iraq is on the cusp of becoming a self-sufficient democracy. The last thing anyone needs right now is false information casting doubt on Iraq’s historic elections.

Tonight's Lineup

On CNBC'S "Kudlow & Company" tonight:

A political debate with Rep. JD Hayworth (R-AZ) and Rep. Sheila Jackson Lee (D-TX) on the subjects of free trade, immigration, taxes and Iraq.

Robert Zoellick, Deputy Secretary of State and former U.S. trade representative to discuss free trade.

Gregory Boyce, incoming Peabody Energy CEO on coal conversion.

And a panel addressing markets and the economy consisting of: Barry Ritholtz, Maxim Group Chief Market Strategist; Don Luskin,Trend Macro Chief Investment Officer; and, Paul McCulley, PIMCO Portfolio Manager.

TONIGHT'S POLL:

Is coal the answer to the nation's energy problems?
Cast your vote at www.kudlowcnbc.com.

Iran's Nuclear Ambitions

The mind-boggling lunacy of Iranian President Mahmoud Ahmadinejad strikes again.

In a speech broadcast live on state television Wednesday, Ahmadinejad claimed that the Holocaust was nothing more than a myth. His asinine statements come right on the heels of his October remarks when he called Israel a "tumor" which must be "wiped off the map."

And Iran wants a nuclear program? They actually expect the international community to believe their nuclear program is only for generating electricity? Really?

Let’s be clear here: Iran and nuclear bombs do not mix well together. It is a recipe for disaster.

The following timeline offers a peak into recent developments on Iran’s nuclear ambitions:

June 26, 2005: President Mahmoud Ahmadinejad comes into power. Before the office paint has dried, he says Iran will continue moving ahead with its nuclear program.

August 1, 2005: Officials in Tehran said they delivered a letter to the International Atomic Energy Agency (IAEA) explaining plans to restart uranium conversion that day. Iran's Supreme National Security Council spokesman said, "This process will take time, but in our view the uranium conversion facility has been restarted."

September 5, 2005: The London based think-tank International Institute for Strategic Studies assesses Iran's nuclear, chemical, biological and long-range missile activities. Its report says a diplomatic showdown with the European Union and the United States could be inevitable. Iranian nuclear weapons years away.

September 15, 2005: At a United Nations high-level summit, Mahmoud Ahmadinejad states Iran has the right to develop a civil nuclear-power program within the terms of the 1970 treaty on the non-proliferation of nuclear weapons. He also says his Iran is ready and willing to give nuclear technology to Islamic states.

September 19, 2005: The EU pressures the IAEA to bring Iran's nuclear program before the United Nations Security Council.

November 16, 2005: Iran begins processing a new batch of uranium to convert to a gas that can be enriched into the material for nuclear bombs. "Conversion has resumed," a diplomat close to the International Atomic Energy Agency in Vienna said.

November 18, 2005: A leaked IAEA report says Iran obtained detailed instructions on how to set up the complicated process of enriching uranium—which can used to make nuclear arms—from the black market network run by a Pakistani scientist.

-The report also says Iran was blocking inspectors from a sensitive site that could be used to store equipment indicating whether the military is running a secret nuclear program.

-IAEA Director-General Mohamed El-Baradei says in the report, "Iran's full transparency is indispensable and overdue." Separately, Iran confirmed that it had resumed the conversion of new quantities of uranium, despite an IAEA resolution to stop such work.

November 20, 2005: Iran's Parliament approves a bill requiring the government to block international inspections of its atomic facilities if the U.N. nuclear monitoring agency refers Iran to the Security Council for possible sanctions.

The last thing this world needs is an Iran with nuclear bombs.

And Israel’s response looms.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

An in-depth look at markets and today's thirteenth straight Fed rate hike with Mike Holland, Chairman of Holland & Company; Doug Kass, Seabreeze Partners Management General Partner; and John Ryding, Bear Stearns Chief Market Strategist.

Fadel Gheit, Oppenheimer Sr. Energy Analyst to discuss oil/energy.

A political debate on the Bush agenda between Terry Jeffrey, Human Events Editor and Joe Conason, author of "The Raw Deal" and The New York Observer Columnist.


TONIGHT'S POLL:

Will the Iraqi election produce a functioning government?

Cast your vote at www.kudlowcnbc.com.

Wealth of Nations

Time for a few choice words from Adam Smith's magnum opus, "The Wealth of Nations."

"The natural effort of every individual to better his own condition ... is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations."

"The uniform, constant and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principle of animal life, it frequently restores health and vigour to the constitution, in spite, not only of the disease, but of the absurd prescriptions of the doctor."

As I mentioned in a previous blog entitled Confidence, the Fed recently reported that family net wealth hit an all time record high of $51 trillion dollars in the third quarter.

This fantastic news heralds robust health and strength in our nation's economy. And while mainstream media may not report it this way, the central bank has established this as a fact.

All this comes in spite of the “extravagance” of government “easy taxes;” lower tax rates which have strengthened our capitalist system’s incentives and rewards “of carrying on the society to wealth and prosperity.”

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

Dr. Glenn Hubbard, former Council of Economic Advisors Chairman/Dean of Columbia Business School to discuss Bush, spending and other topics.

A markets discussion with Andy Kessler, former Hedge Fund Manager and author of "Running Money," along with Barbara Marcin of Gabelli Blue Chip Value Fund.

SEC Commissioner Cynthia Glassman to discuss Sarbanes-Oxley and other issues.


TONIGHT'S POLL:

Will the outcome of tomorrow's FOMC meeting get in the way of the year-end rally?

Cast your vote at www.kudlowcnbc.com.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

The Wall Street Journal's Steve Moore and former Labor Secretary Robert Reich to discuss rising consumer confidence, the Fed, taxes and other topics.

A market discussion focusing on tech and housing with Stefan Abrams, Trust Company of the West Managing Director; Diane Swonk, Mesirow Financial Chief Economist; and Apjit Walia, RBC Capital Markets Sr. Semiconductor Analyst.


TONIGHT'S POLL:

Concerned that the nation is making a slow transition from analog to digital television, Congress is weighing legislation to provide vouchers to help households pay for a converter box to put on top of old analog sets.

Should Uncle Sam pay for your new digital cable box?

Cast your vote at www.kudlowcnbc.com.

Fissures in the Ranks

Apparently Howard Dean bit off a little more than he could chew with his "We Can't Win in Iraq" nonsense.

The often unhinged DNC boss has been backtracking ever since the national media picked up his defeatist diatribe delivered to a San Antonio radio station earlier this week. As retired U.S. Army officer Ralph Peters pointed out in today's NY Post, "Dean doesn't even have the spine to stand behind his own recorded words, waffling that he didn't mean exactly what he meant the way he meant it when he said it." Sure Howard, sure...

Now it appears members of Dean's own party are distancing themselves from him. Rep. Earl Pomeroy (D-ND), who has visited our forces in Iraq on three separate occasions, delivered the following message to his party boss: "My words to Howard Dean are simple - shut up."

As Peters wrote in his editorial today, "I spend a lot of time with our troops (who are always inspiring). Let me risk paraphrasing what they might say to Dean & Co.: 'If you don't have the courage to fight for freedom, shut up and get out of the way.'"

Are you listening Howard?

Confidence

Folks here at home are feeling increasingly optimistic about the economy and their own financial state of affairs.

According to the latest numbers in two separate polls, U.S. consumer sentiment showed marked improvement yet again in early December. This upward trend comes directly on the heels of November’s rebound. It's the highest since August; just before the hurricane sisters slammed our coastline.

More good news. Yesterday’s Fed release showed $51 trillion dollars of family net wealth. This is an historical high. This positive number reflects the market value of stocks, bonds, homes and small businesses minus the debt. While debt has risen, assets have gone up even more. The real family balance sheet continues to flourish.

Since the end of 2002, family net wealth has increased 31 percent or $12 trillion dollars. The value of homes rose 39 percent or $5.8 trillion. The value of stocks increased 36 percent or $2.7 trillion, while family owned businesses rose 32 percent or $1.6 trillion.

These numbers don’t lie. They show the fantastic growth of our nation’s health and wealth.

Part of this story is the normal cycle of long run American prosperity. That’s what free-market capitalism produces, especially over the last twenty-five years, where the economy has been deregulated and disinflated. Throw greatly reduced tax rates and tax penalties into the mix and you get wealth creation. This of course includes the 15 percent tax rate on investor dividends and everyone’s capital gains initiated in mid-2003, at the urging of President Bush.

With lower tax penalties, more people are unlocking more capital gains and reinvesting proceeds into new and existing businesses. This is what grows the economy and creates new jobs. This unlocked capital is vital to support the robust Google-Internet economy that is sweeping the nation and continuing the productivity revolution. Remember, the unlocking of old capital leverages up the creation of new capital; that is why the wealth totals keep rising.

Of course, our most valuable economic resource is the men and women who put their God-given talents to work. But these very same people require capital to finance new risky investments that produce the next new Google, or the new Apple, or the next great biotech company.

These wealth numbers published by the Federal Reserve are incredibly important. The mainstream media never give them their due. The sky always seems to be falling in their world. But just ask any entrepreneur. They’ll tell you just how important new capital and wealth truly are.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A markets discussion with former Reagan economic advisor John Rutledge, Chairman of Rutledge Capital and Janna Sampson, Director of Portfolio Management at OakBrook Investments.

Emanuel Balarie, Sr. Market Strategist at Wisdom Financial, to address the continuing rise in gold prices.

A political debate featuring John Fund, WSJ's OpinionJournal.com columnist, Katrina vanden Heuvel, editor & publisher of "The Nation," and Craig Crawford, Congressional Quarterly columnist.


TONIGHT'S POLL:

Will GM ever truly recover?
Cast your vote at www.kudlowcnbc.com.

Rumsfeld Expected to Retire in Early 2006

The word out is that Don Rumsfeld is expected to retire in early 2006. There is some speculation that Sen. Joe Lieberman (D-CT) may get the nod as his replacement. That’s an interesting thought. Lieberman has certainly been helpful of late. But my question is whether Mr. Lieberman is tough enough to run the Defense Department?

Thanks, Howard

Bush’s message repetition as “salesman-in-chief” is paying dividends. The front page of today’s New York Times shows a headline: “Economy Lifts Bush’s Support in Latest Poll--Slide Halts After Months.”

Well then, even the old Gray Lady can admit the obvious.

Rasmussen, Fox and RealClearPolitcs show the same 5-percentage point jump in Bush’s approval ratings. All this comes on the heels of a strong, growing economy and the administration’s Iraq war defense. Throw in Howard Dean’s unbelievable stupidity in his interview with a San Antonio radio station (Lots of military bases around there) that victory in Iraq is unattainable. Brilliant.

War Against Investors

Investor tax cut extensions for capital gains and dividends is expected to pass the House early this afternoon—probably without a single Democratic vote, which shows you how wide the political divide on pro-growth policies is in Washington.

The Tax Foundation has data showing roughly 20 percent of individuals between ages 45 and 64 claim capital gains, while about 30 percent of seniors over 65 claim them. Roughly half of seniors rely on dividend income, with about one-third of the 45 to 64 crowd. Also, over 80 percent of taxpayers claiming dividend income, and 76 percent claiming capital gains, earned less than $100,000 dollars in 2004. And, of course with 57 million households owning stock these days, the younger cohorts that have 15-20 percent of their incomes from capital gains and dividends will only rise as they get older.

I will bet that investors will continue to be the most likely voters in future elections, just as they have in the recent past. As a result, the Democratic war against the investor class is both politically and economically stupid.

The GOP has long been a proponent of the investor class. This alliance will be greatly weakened if the Republican Senate fails to come up with a positive vote on investor tax cut extensions. Since it is possible the Senate won’t vote until next year, today’s stock market response to the House vote may be muted.

As Martin Feldstein writes in today’s Wall Street Journal, the multiple taxation of saving is deleterious to economic growth.

A Gift

This morning at 8:30 AM I had the great pleasure of going to midtown in order to appear before the CIBC investment bank and make a pitch for a very worthy charity, Big Brothers Big Sisters of New York City. Each year CIBC World Markets donates all of its commissions for one day to children's charities. It's a truly wonderful event.

After doing Batchelor radio on ABC's nationwide hook-up till midnight the prior night, and not getting to bed till the usual 2:00 AM, an 8:30 AM assignment is a tough one for me. But you know what? It was an honor.

Big Brothers Big Sisters is a mentoring and social services group that helps keep kids from single parent homes in school, off the streets, away from violence and drugs. Every social science study nowadays shows that children from broken homes have by far the toughest battle to stay on the straight and narrow path of responsibility as they move toward adulthood. So many never make it.

Over ten years ago I had my own bout with drugs and alcohol, and it destroyed my life, my work, and the life of my bride Judy. Friends and co-workers were badly affected. I was very fortunate to spend six months in a first-rate treatment facility that taught me a new way of living devoted to faith and responsibility. Fortunately, things are much better today. I feel blessed.

So anything I can ever do to help young kids avoid my fate, I do.

Among the kids in the Big Brother Big Sister program, it turns out that 69% improve their academic record,73% who had been in trouble with the law stay out of trouble, and 75% say their training has made them more responsible. In other words, it's a successful privately run operation that is doing a lot of good.

When you give away money to a worthy charity like this, you actually get much more in return. When you put in the extra effort to help kids stay clean and sober and schooled, you are that much closer to God and His love for all of us. That is one of a thousand reasons why I help raise money for good charities like this one. Why I help fundraise for my church and for the treament center that taught me a new way of living. I give what I can in time and money because when I give it away I am advancing along the spiritual path, doing God's will.

The generous people at CIBC are a blessing.

For me, the whole experience was a blessing.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

An in-depth look at markets and the economy with the following guests: Barry Ritholtz, Maxim Group Chief Market Strategist; Brian Wesbury, Claymore Advisors Chief Investment Strategist; and Noah Blackstein, Dynamic Mutual Funds Portfolio Manager.

Also, a political discussion focusing upon taxes, budget and Iraq. Our guests include: Tony Blankley from the editorial page The Washington Times; Rep. Xavier Becerra (D-CA); and Lawrence O'Donnell, Jr., "The West Wing" Executive Producer.

TONIGHT'S POLL:

Should President Bush set a timetable for withdrawal from Iraq?

Cast your vote at www.kudlowcnbc.com.

Saboteurs Beware

"Congressmen who willfully take actions during wartime that damage morale and undermine the military are saboteurs and should be arrested, exiled or hanged."

- President Abraham Lincoln

The Left, Taxes and the Laffer Curve

A few weeks ago, the IRS released data from 2003 that showed the top 1 percent of taxpayers—ranked by adjusted gross income—paid 34.3 percent of all federal income taxes that year. The top 5 percent paid 54.4 percent, the top 10 percent paid 65.8 percent, and the top quarter of taxpayers paid 83.9 percent.

In his recent article, “The Left Plays Games With Taxes on Rich,” Bruce Bartlett points out that “Not only are these data interesting on their own, but looking at them over time shows that the share of total income taxes paid by the wealthy has risen even as statutory tax rates have fallen sharply. A growing body of international data shows the same trend.” Mr. Bartlett demonstrates his point with statistics from Britain, Canada and Australia.

As Bartlett points out, when Ronald Reagan entered the White House in 1980 and the top statutory income tax rate was up at 70 percent, the share of income taxes paid by the top 1 percent of taxpayers was just 19.3 percent. After Reagan's 1981 tax cut which reduced the top rate to 50 percent -- a massive give-away to the wealthy according to those on the left -- the percentage of income taxes paid by the top 1 percent rose steadily.

Furthermore, by 1986, the top 1 percent's share of all federal income taxes rose to 25.7 percent. That year, the top statutory tax rate was further cut to 28 percent -- another huge-give-away, the left would have you believe. Yet the share of income taxes paid by the top 1 percent continued to rise. By 1992, it was up to 27.5 percent. These are serious numbers.

Bartlett also addresses the common liberal retort to these data that they exclude payroll taxes, which are assumed to be largely paid by the poor:

“However, it turns out that when one includes payroll taxes in the calculations, it has far less impact on the distribution of the tax burden than most people would assume, because the wealthy also pay a lot of those taxes, too. In a 2004 paper presented to the American Statistical Association, IRS economists Michael Strudler and Tom Petska calculated percentiles data that included both income taxes and Social Security taxes. In 1999, the top 1 percent paid 23.3 percent of combined payroll and income taxes, the top 10 percent paid 52.2 percent, and the top 20 percent paid 68.2 percent."

“At some point,” Bartlett writes, “those on the left must decide what really matters to them -- the appearance of soaking the rich by imposing high statutory tax rates that may cause actual tax payments by the wealthy to fall, or lower rates that may bring in more revenue that can pay for government programs to aid the poor? Sadly, the left nearly always votes for appearances over reality, favoring high rates that bring in little revenue even when lower rates would bring in more.”

It all goes back to Arthur Laffer and his famous cocktail napkin illustration. As you may recall, one night over dinner, Mr. Laffer grabbed a napkin and pen and sketched a curve on the napkin illustrating the trade-off between tax rates and tax revenues in what is now known as the “Laffer Curve.” The illustration showed exactly what the recent IRS data showed: A decrease in tax rates results in an increase in tax revenues.

This is what I’ve been saying all along.

Lieberman's Call for Unity

There was little question that when President Bush launched a renewed call for victory in Iraq—one that included a detailed strategic plan—that a horde of defeatist naysayers would rear their heads and ratchet their pessimistic rhetoric up several notches.

Just this week alone, we witnessed DNC head-honcho/Chief “Chicken Little” Howard Dean throw his hands high into the air and declare defeat in Iraq. “It is just plain wrong to think we’re going to win the war in Iraq,” Mr. Dean yelped. It is the nadir of irresponsibility to mouth such nonsense during wartime while 160,000 American young men and women fight their hearts out. What was Mr. Dean thinking? Does he have any idea that our terrorist enemies are listening? Dean may as well have stopped off at the post office after raising his flag of surrender and mailed a couple thousand care packages to America’s foes. Talk about aiding and abetting the enemy. These are the same people who board planes and fly them into our buildings. The same people whose only reason for living is to completely destroy our way of life.

We were also forced to listen as Sen. John Kerry hopped onto the karaoke stage—yet again—and reprised his familiar troop-smearing song, a track he first recorded upon his return from Viet Nam when he smeared our troops during his unfortunate 1971 Senate testimony. In a garbled attack against the young men and women who are fighting on our behalf, Mr. Kerry accused American troops of “terrorizing kids and children, you know, women, breaking sort of the customs of the – of – the historical customs, religious customs.” It’s worth remembering that Kerry's 1971 speech caught the ear of the Vietcong who played his stinging rebuke to American soldiers in POW camps in an effort to break their will. One can only imagine how the terrorists will respond when they hear individuals like Dean and Kerry declaring defeat and lashing out at our own soldiers.

Fortunately, a much-needed breath of fresh air arrived through the window—once again—courtesy of Democratic Senator Joe Lieberman. This is a man who has visited Iraq four times over the last year and a half. He has been there, he has spoken with the troops, and he has witnessed with his own eyes the steady progress our soldiers are making. Despite catching flak for his staunch support of the Iraqi campaign from many of his colleagues, Mr. Lieberman has let such criticism roll off his back and pressed forward with his call for victory.

Mr. Lieberman delivered another dynamite speech yesterday. It was right on the money. He quoted Winston Churchill's 1941 Rochester speech that "When great causes are on the move in the world . . . we learn that we are spirits, not animals, and that something is going on in space and time which, whether we like it or not, spells duty." He reiterated the incredibly high stakes in Iraq and called for bi-partisan support. He impugned his fellow members of Congress who use Iraq for partisan political advantage and said, “It is time for us to set aside for now the arguments about why we got into Iraq so that we can work together on how we can get out best in victory and honor.”

“It's time for Democrats to acknowledge that President Bush will be commander-in-chief for three more critical years,” Sen. Lieberman said. “And that in matters of war we undermine presidential credibility at our nation's peril.”

He suggested that Bush and Congressional leaders establish a bipartisan “Victory in Iraq Working Group” composed of members of both parties in Congress and high-ranking administration national-security officials. This group would meet on a weekly basis to discuss conditions and progress on the ground in Iraq and ways to alter or improve our strategy for victory.

As I already mentioned, the speech was truly remarkable. It deserves a read. You can read excerpts here.

Tonight's Lineup

On CNBC's "Kudlow & Company" tonight:

A Washington to Wall Street discussion with Liz Ann Sonders, Charles Schwab Chief Investment Strategist/President's Tax Reform Panel member, and Rich Karlgaard, Publisher of Forbes magazine.

Howard Davidowitz, of Davidowitz & Associates to discuss the retail sector with Ivan Feinseth, Matrix USA Director of Research.

A commodities discussion with Mike Churchill, President of Churchill Research.

And finally, Ernie Sapieha, Compton Petroleum CEO, in a corner office interview.


TONIGHT'S POLL:

Where are you more likely to shop?

Sears or Neiman Marcus?

Cast your vote at www.kudlowcnbc.com.

Priorities for Policymakers

December is marching to an end. As 2006 comes ever closer, I have assembled a list of policies I believe policymakers ought to place at the top of their "To-Do" list. Here they are...

*** Make the tax cuts permanent for investor dividends and capital gains.

*** Broad-based intensive across-the-board Federal budget cutting. There should be a 5 percent across-the-board budget reduction for non-security discretionary spending department and agencies.

*** Broad-based tax reform to flatten tax-rates, reduce the number of tax brackets, and terminate as many credits and deductions as is politically possible. Go after all forms of tax subsidy pork. Full cash expensing for large and small businesses. A 15 percent tax-rate on capital -- meaning dividends, capital gains, and estate taxes. The top personal tax-rate for individuals and companies should be no higher than 25 percent. Corporate profits should be taxed territorially, not globally.

*** Tort reform including medical malpractice and asbestos.

*** Free trade expansion.

*** Simplification and deregulation of Sarbanes-Oxley.

*** Immigration reform that stresses border security, but does not damage legitimate business demands for immigrant labor. Send criminals back home, but not those who are working. Assimilation through English teaching as the only language in school, as well as proper teaching of American history.

*** Keep up the drumbeat for personal savings accounts as a key part of Social Security reform.

*** Keep up the freedom and democracy mission in Iraq and the global war against terrorism.

*** Reform the UN – promote John Bolton as the next Secretary General; failing that, promote Australian Minister John Howard as the next Secretary General.

*** Make China a key strategic economic ally.

*** Promote capitalism in Western Europe.

*** Continue to strengthen relations with India and Japan.

More Good News...

Chalk up yet another terrific economic number to the recent barrage of signs our strong American economy is growing ever stronger.

Following the recent upward revision to GDP, as well as Friday’s impressive jobs number, news out today from the Labor Department reveals the fastest increase in productivity in more than two years. This is fantastic news.

Productivity in the business sector surged at a robust 4.7 percent clip in the third quarter, a substantial upward revision from the 4.1 percent initial estimate made a month ago, and one that surpassed many economists’ forecasts. Furthermore, productivity has increased 3.1 percent in 2005, about double the 1.6 percent pace that held court starting in the mid-1970s through the mid-1990s, resulting in the best year-on-year growth in productivity since early 2004.

All of these strong numbers provide further evidence that inflationary worries are overblown. We know the Fed is watching all these numbers closely. Maybe now the Fed decision makers can begin considering removing their feet from the brakes.