Tonight's Lineup

On CNBC’s “Kudlow & Company” tonight:

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

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

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

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

TONIGHT’S POLL QUESTION:

Should the government mandate CAFÉ fuel standards?

Cast your vote at www.kudlowcnbc.com.

Good for Mr. Bush

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

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

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

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

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

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

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

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

Good for Mr. Bush.

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

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

“Boom.”

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

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

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

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

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

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

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

Chirac's Triumphant Plan

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

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

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

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

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

Coburn on the Prowl

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

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

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

In the Works

Investor tax cuts may finally be coming.

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

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

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

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

Free Markets Work

The greatest story never told? It’s still the booming American economy—spurred by lower tax rates, accommodative money, huge profits, big productivity, plentiful jobs and a general free-market capitalist resiliency.

Some folks are bellyaching and gnashing their teeth about oil and housing; but you know what? Housing is softer but is holding up just fine. Today’s Wall Street Journal says its time to buy a home in Houston, Dallas and Atlanta, rather than the east and west coast. Good point. As for gas at the pump, it averaged about $2.40 in March and about $64 for crude oil. But this was not an economic impediment. Production, retail sales, and employment were all very strong in March. Very strong indeed.

Today’s durable goods report was off the charts strong. Airplanes, transportation, metals, industrial machinery, computers, even motor vehicles and car parts. But wait. The key point: business investment in capital goods was unbelievable. New orders for core cap-ex, (ex defense and aircraft) have grown 9 percent at an annual rate and 12 percent over the past year. That is a leading indicator of future business spending.

And there’s more. Backlogs of unfilled orders increased over 12 percent at an annual rate in the first quarter—the best in two years. This key measure is a leading indicator of the new orders leading indicator, a very important forecasting tool for business economists. With this kind of real world corporate activity in the pipeline, it shows that highly profitable businesses will be doing a lot of hiring in the months ahead in order to expand plant and equipment capacity. Just what the doctor ordered.

At these lower tax rates, capital is still relatively inexpensive and investment returns are unusually high. What’s more, President Bush’s mid course correction on energy policy is going to stabilize, or even reduce, upwards pressures on the price of oil and retail gasoline.

Regrettably, Mr. Bush included a lot of liberal-left greenie gobbledygook about price gouging inspections and oil company investments. But he may have included that to stop a windfall profits tax from coming out of Congress.

All this oil addiction stuff smacks of Jimmy Carter’s malaise. But, according to Washington analyst James K. Glassman, over the past decade, big oil has invested roughly equal to their profits. In fact, according to Mr. Glassman, between 1991-2005, ExxonMobil’s total investment totaled $210 billion (actually exceeding the company’s earnings). So government should stop beating up on XOM and their brethren.

Confiscating Lee Raymond’s bank account will not produce more energy. Nor will breaking up oil companies as per Sen. Chuck Schumer’s goofy idea. And a windfall profits tax will only lower energy exploration and investment.

The point is free markets work. Rising prices from the global economic boom will lead to more conservation, less consumption, and more production. That is, if government steps out of the way, deregulates sufficiently, and finally allows drilling in ANWR, the Outer Continental Shelf, sets up LNG terminals, and creates nuclear power facilities. Just look at the deregulated boom in Canadian oil sands production.

On the positive side, Mr. Bush did suspend the ethanol tax mandate forcing gasoline distributors to participate in one of the great energy policy bungles of all time. Neither ethanol refiners nor transporters were anywhere near ready to implement this misguided policy mandate. Lee Raymond and other industry leaders warned Energy Secretary Sam Bodman about this. Bodman deserves a “F” for terrible execution and management.

No one’s even sure if ethanol is worth the candle. Many believe the energy used in the production of corn based ethanol gasoline is actually greater than the energy produced by this stuff. This ethanol tax snafu is responsible for at least the last 50-cent increase in gas pump prices. Too bad Mr. Bush didn’t abolish the ethanol tax altogether, rather than just suspending it for the driving season.

However, Bush’s decision to finally stop the crude oil fill rate for the Strategic Petroleum Reserve is another good measure that will relieve upward pressure on oil prices. Missing though, is a total repeal of the 54-cent ethanol import tariff aimed largely at Brazil. This is the energy equivalent of the mistaken steel tariff a couple of years ago that protected producers at the expense of consumers. It’s bad policy and it flies in the face of Mr. Bush’s own stated principles of avoiding isolationism and protectionism. But at least some good in relieving the ethanol tax and the SPR fill rate will help economic growth.

All of which lead to some important fiscal policy decisions now confronting the White House:

First, it is essential that the tax cut extensions on job creating low tax rate dividends and cap gains be passed in the weeks ahead. This is a must. It will bolster and prolong the business capital investment boom that requires long lead times for planning purposes.

Second, the president must veto the budget busting emergency supplemental appropriations bill that is now before Congress. The Senate is overspending by $15 billion, including a $700 million Railroad to Nowhere in Mississippi. With new Bush White House staff, and a new budget director, now is the time for new toughness and resolve on spending. This kind of move will raise economic confidence and electrify a moribund Republican base.

As the Federal Reserve moves toward additional steps to remove excess money creation and bolster the dollar value relative to foreign currencies and commodities, inflation fighting money policy should be combined with lower tax rate incentives to promote long-term economic growth. This was the Reagan economic model twenty-five years ago, and it will work as well today as it did back then when it launched the long prosperity boom we continue to enjoy today.

To simplify matters, why not just repeal the ethanol tax, repeal the ethanol tariff, repeal the multiple taxation of dividends and cap gains, and get rid of the death tax while you’re at it? Now there’s a program of long run economic growth.

Tony Snow Given the Reins

Well, it's official.

President Bush has offically handed the White House press secretary job to Tony Snow.

As I recently wrote here, Snow's appointment is a good thing. He is a strong, principled and intelligent man who is clearly up to the task. I wish Mr. Snow all the very best in his new position.

Oil Update

President Bush did himself some good by suspending the ethanol tax—at least for the duration of the driving season. He also did some good by stopping the fill rate for the Strategic Petroleum Reserve. Gas prices slipped lower today, as did crude oil.

The biggest factor in rising energy prices is still the world economic boom. And of course, various political saber rattling from inside nuclear ambitious/anti-Israel Iran and leftist President Hugo Chavez’s Venezuela. But around the edges, the president’s mid-course correction for energy policy will at least stabilize the situation as everyone then waits for the upcoming hurricane season.

One action President Bush should have taken (and could still take) is to end the 54-cent-a-gallon tariff on imported ethanol (which basically means Brazilian ethanol.) Why the U.S. government should protect the already heavily subsidized ethanol industry at the expense of American consumers is hard to fathom.

Energy Secretary Sam Bodman actually defended the tariff earlier this month saying it was necessary so that foreign producers "can have no advantage over American companies." Holy smokes, this is the energy version of steel tariffs and it’s just as bad an idea.

But all this talk of price gouging is nothing more than the usual political pabulum.

Tonight's Lineup

On CNBC’s “Kudlow & Company” tonight:

Rep. John Shadegg (R-AZ) and Rep. Sheila Jackson Lee (D-TX) will discuss allegations of gas price gouging and President Bush’s Four-Part energy initiative.

Diane Swonk, chief economist for Mesirow Financial and Brian Wesbury, Chief Economist at First Trust Advisors will talk about the price of oil, the Fed and the overall economic picture.

Chris Edmonds, Head of Research at Pritchard Capital Partners and Kevin Kerr, Editor of the Resource Trader Alert will offer insight on energy stocks.

Connecticut Attorney General Richard Blumenthal and Kim Strassel of the Wall Street Journal will debate price-gouging, windfall profits tax and industry consolidation.

Cody Willard, columnist and hedge-fund manager and Thomas Egan cable/satellite analyst at Oppenheimer will discuss tech and cable.

TONIGHT’S POLL QUESTION:

Do you believe your Blackberry is having a negative effect on your vision?

Cast your vote later this evening at www.kudlowcnbc.com.

Opportunity Seekers vs. Problem Solvers

Check out my old friend and Forbes publisher Rich Karlgaard's terrific take on the difference between "opportunity seekers" and "problem solvers" ("The Problem With Problem Solvers").

Here's an excerpt:

"[O]pportunity seekers," love charging into the unknown future. They trust that things will work out if people are free to work and create, using capital that is free to seek a return. Opportunity seekers, in fact, are bored by static problem solving. This does not mean they are shirkers. It's just that they'd rather invent word processors than fix typewriters.

Problem solvers, on the other hand, see failure everywhere. They will grind away at a problem, even subsidizing past efforts that have never worked well and probably never will. Problem solvers tend to resist forward motion until all present-day problems are gone. Problem solvers get irritated--a stern bunch they are--when they see others frivolously seeking opportunity. Ronald Reagan and Bill Clinton were opportunity seekers by nature. Al Gore and Hillary Clinton are problem solvers. George W. Bush is an opportunity seeker who has surrounded himself with problem solvers.

Starting with Ronald Reagan's election in 1980, Republicans have presented themselves as opportunity seekers. Theirs has been the party that favors lower taxes and less regulation, school choice and business without speed bumps. Even in the social arena, a sphere in which Democrats are supposed to be the innovators and Republicans the blockers, a more careful look shows the opposite to be true. Republican-tinged evangelical churches saw the opportunity to save souls. As a by-product of soul-saving, they have fed and clothed more of the world's poor than have most government-backed aid agencies."

More Personnel Changes in the Works

CNN is reporting that Tony Snow will likely take the job as White House press secretary. This is a good thing. Snow is a strong, smart, savvy and principled person. He is also a remarkable human being.

CNN is also reporting that Josh Bolten is in discussions with current India ambassador and former Treasury undersecretary (under Papa Bush) David Mulford, to replace John Snow as Treasury Secretary.

This is an interesting idea. Mulford is what I would call a kind of blended 70% supply-sider, who in recent years has been moving away from IMF currency meddling. Mr. Mulford is a former Wall Streeter who held big jobs at the old First Boston, which has since become Credit Suisse.

I still prefer Steve Forbes or Phil Gramm, but Mulford could make a good choice.

Deportation Won't Work

Bush is dead right that massive deportation of immigrants won’t work, as he said yesterday in California. The U.S. Immigration and Customs Enforcement (ICE) is being enlarged to a grand total of 525 agents assigned to track down more than 11 million undocumented workers who are theoretically employed at some of our nation’s roughly 5 million businesses. So Lou Dobbs, Tom Tancredo, and Pat Buchanan eat your heart out.

Bush Pile-On

Democrats are piling on Bush over oil and gas prices. Well, how about opening up ANWR ladies and gents? What about the Outer Continental Shelf and offshore drilling? Is anyone asking why Cuba and Venezuela are exploring off the coast of Florida but America cannot? There’s a good questions for Dems.

Gloom and Doom

It looks like open season now for the doom and gloom crowd.

The New York Sun ran a not-so-rosy front page story (“$5 Gas By Summer Is Seen as Iranian Situation Festers”) talking about the prospects of $5 buck gas and how such a move could lead the Fed to hit the brakes (6 percent??) harder than markets are now forecasting. There’s no shortage of gloomy scenarios floating around out there right now.

I also noticed Japan’s stock market sold off nearly 3 percent today. The G7 wants the yen to appreciate which could throw them back into deflation, hence the sell-off in the Nikkei.

While I am getting a little worried about a big oil spike, I don’t put much stock into these doom and gloom scenarios. Sure, crude could throw a mean curve ball into the stock market and economy in the short term. Yet the rising economic global tide continues to show that the U.S. and the rest of the world remain in an economic boom.

Investors many have to ride through some tricky times; though long term the overall picture still looks very positive.


Militant Islam in the Big Apple

Adding to all this doom and gloom, check out this unbelievable nonsense Drudge dug up on Islamic protestors outside the Israeli consulate here in New York (“Islamist protest in N.Y. –
'Mushroom cloud on way'”).

A group of lunatics calling itself the “Islamic Thinkers Society” chanted, “The mushroom cloud is on its way! The real Holocaust is on its way!" and held assorted signs saying things like “Islam will dominate.” Another sign was spotted with an Islamic flag flying above the White House.

“According to the Investigative Project on Terrorism, the Islamic Thinkers Society is an offshoot of London's Al-Muhajiroun, a group that celebrated the 9/11 attacks, referring to the hijackers as "the Magnificent 19," and posting a burning picture of the Capitol on its website.”

On Tax Cuts

“The 2003 tax cut on marginal income and investment continues to provide incentives for risk taking and entrepreneurial activity – the lifeblood of any economy. Nowhere is the power of these incentives more evident than business investment, which had declined for nine consecutive quarters prior to the tax cut – the longest decline on record – only to snap back and rise for 11 consecutive quarters at an average real rate of 8.4% once the tax cuts were passed.

Unfortunately, the tax cut on dividends and capital gains is set to expire at the end of 2008 because a permanent tax cut was scored (estimated) to be too expensive. “Static” scoring models, such as those used by Congress, which assume tax cuts create no benefit for the economy or asset values, consistently overestimate the “cost” of tax cuts.

In 2003, before the tax cut, CBO estimated that capital gains tax revenues would total $408 billion between 2003 and 2008. The 2004 forecast for the same 6-year period estimated revenues of $335 billion – the tax cut was scored to “cost” $73 billion. The latest estimates put total capital gains tax revenues for the 2003-08 period at $464 billion, $129 billion higher than estimated. This is a huge forecasting error.

As Congress attempts to extend the successful dividend and capital gains tax relief past 2008, these estimators are at it again. Because the 2006 budget only allows for $70 billion in tax relief, Congress is forced to use accounting gimmicks to bring the inaccurate “static” cost below this artificial line. This needless tinkering threatens the outlook for the extension of the lower tax rates past 2008.” –Senior Economists Brian Wesbury & Bill Mulvihill of First Trust Advisors.

Ethanol, Irate Motorists and Bush

The Fox poll shows Bush at an all-time low. $3 dollar gas prices (and much higher in some places) are a huge reason for Bush’s cellar-dwelling poll numbers. Sky-high pump prices have Americans peeved (in a repeat of last summer) and loom larger in many people’s minds now than the Iraq war.

The Bushies have no one to blame for this but themselves. It is a self-inflicted wound and the ridiculous ethanol mess deserves much of the blame.

Why was this ethanol garbage signed into law last August? Why did we have to do this—particularly now? Why now? All it does is screw around with already tight international supply conditions from the global boom demand.

As the Wall Street Journal pointed out, “One eminently sensible short-term solution would be for the feds to drop the 54-cent-a-gallon tariff on imported ethanol, which would particularly help coastal areas. But eager to show the Bush Administration's own deference to the ethanol lobby, Energy Secretary Sam Bodman defended the tariff last week, saying it was necessary so that foreign producers "can have no advantage over American companies."

Heaven forbid foreigners should be able to compete with a heavily subsidized domestic ethanol industry that is getting rich off U.S. drivers. Politicians in Washington are blaming high gas prices in part for their low approval ratings, and as usual the voters are right.”

The administration is being hoisted on its own ethanol petard.

Tonight's Lineup

On CNBC’s “Kudlow & Company” tonight:

Our all-star market panel will plow ahead into what’s driving this big economic and stock market boom.

Our power lineup includes Mike Holland, Chairman of Holland & Company; John Augustine, chief investment strategist at Fifth Third Asset Management; and Morris Mark, President of Mark Asset Management.

Transport analyst John Barnes from BB&T Capital Markets will offer his take on the sector and whether or not it's too late to jump in.

Don Luskin, Chief Investment Officer for Trend Macrolytics will discuss his latest National Review column ("In Defense of Snow") defending Treasury Secretary John Snow.

Also, an immigration discussion with Tamar Jacoby, Senior Fellow at the Manhattan Institute and Helen Krieble, President of the Vernon K. Krieble Foundation.

Will there be a draft? Jed Babbin, Commentator and Former Deputy Undersecretary of Defense, will join Tom Barnett, author of "The Pentagon’s New Map" in this discussion.

TONIGHT’S POLL QUESTION:

Should the draft be reinstated?

Cast your vote at www.kudlowcnbc.com.

Opportunism Over Prices at the Pump

Leave it to the New York Times to shine the spotlight of truth on recent Democratic demagoguery over high gas prices (“Democrats Eager to Exploit Anger Over Gas Prices”). Conveniently tucked away in the twelfth paragraph, the Times wrote:

"While Democrats are eagerly laying blame for the situation on the Republicans, they did little to advance energy measures in eight years under President Bill Clinton. Democrats remain split to some degree over how to proceed, but in general favor greater investment in "clean fuel" technologies, more incentives for driving fuel-efficient vehicles and stronger steps toward reducing emissions of greenhouse gases. Those positions were included in a measure sponsored last year by more than 30 Democratic House members who opposed the Republican version of the energy bill. Even so, 75 Democrats in the House and 25 in the Senate voted with the Republicans to pass Mr. Bush's bill."

As the Wall Street Journal pointed out last week (“The Ethanol Tax”), even the government is now admitting that the price spike and regional shortages are not just about the high price of crude or hurricane damage, but “the result of the ethanol love-fest that Congress engaged in last summer as part of its energy bill.”

The mandated use of ethanol is wrecking the market. This stuff is incredibly difficult and expensive to produce and transport; especially to coastal areas like New York City far removed from the ethanol-producing region. The resulting tight supplies are a significant reason behind price pressure at the pump.

Another thing Congress can do is come together and eliminate all these unnecessary regulatory roadblocks, hoops and hurdles in bringing energy to market. Get rid of the needless barriers. Give the market air to breath and freedom to work.

They should stop standing in the way of exploration and development. Open up drilling in ANWR and the Outer Continental Shelf. Encourage coal to liquid production; oil sands, etc. Give the green light for new refineries. All of this can be accomplished profitably without any government subsidies.

But enough is enough already from some of these whiners on Capitol Hill. They're a big part of the problem.

B-O-O-M

The Financial Times has echoed what I’ve been saying all along and the MSM has largely ignored: We are in an American Boom right now and the rising tide of prosperity is lifting boats all across the country.

“The number of very rich people in the US grew last year at the fastest pace in at least a decade as their moves into international stock markets, real estate and alternative investments paid off.

The number of households with $5m (€4m) or more in investable assets – excluding the family home – rose by 26 per cent to a record 930,000, according to a study by Spectrem Group. That is the biggest jump since Spectrem began its survey in 1996. The number of millionaires rose by 11 per cent, to a record 8.3m – the second biggest jump in the decade since they were surveyed.

The overall affluent market – households with $500,000 or more – rose by 7 per cent to a record 14m…”

This is not just a “rich getting richer” story here. On the contrary, greater numbers of hardworking Americans are making more money than ever before in our nation’s history. These folks are fueling the continued overall growth and health of our nation’s robust economy.

You measure a nation’s economy by its most successful, not by its least successful. This is because the burgeoning numbers of wealthy men and women—the wide-eyed entrepreneurs, the risk-takers, etc—create new ideas, plant new seeds, and forge new paths to prosperity for all Americans.

Rememember, more and more capital is necessary for healthy and thriving capitalism. Let’s be thankful to successful capitalists who keep plowing new investment into our economy.

The American Boom is alive. It is well. And it is thriving.

Dorgan Attacks Raymond

Class warfare pooh-bah Byron Dorgan is nipping heels again.

The latest target of the Democratic Senator’s scourge is former ExxonMobil CEO Lee Raymond, whose recent headline grabbing retirement package has Dorgan apoplectic. He thinks it ought to be reviewed by Congress and investigated by federal regulators. He also thinks the SEC should investigate the deal since it "appears to shortchange" shareholders. (Something tells me all those XOM shareholders sitting on 50 percent gains over these past two years might beg to differ.)

The key point here is disclosure. This is a matter best left to shareholders and directors. As long as the entire pay package (which includes salary, benefits, retirement, any perks, options, the dating of options, etc) is fully and clearly disclosed, and so long as it’s all transparent and shareholders are fully aware of what’s going on, then I’m ok with it.

Of course, it’s also important to note that shareholders own the company and directors have a fiduciary obligation to represent shareholder interests. They can’t just blindly sign off on any old pay package. Pay must be based on performance—stock performance, return on shareholder capital and of course profitability.

(As a side note, I am very suspicious about backdated options which the WSJ has been shining a well-deserved light on of late. This looks pretty suspicious to me.)

With respect to Mr. Raymond, I have no problem with his payday so long as ExxonMobil fully disclosed all the relevant details.

But let’s be clear. Byron Dorgan is attempting to take advantage of consumer ire at high oil prices by waging class warfare. Nothing new there.

I Wanted a Fire Breather

As Townhall’s Tim Chapman points out in his blog, "Is Portman the best choice for conservatives?", conservatives do seem to be divided on Bush’s selection of Rob Portman to head the OMB. Mr. Chapman notes my initial skepticism over the Portman appointment; followed by a follow-up blog I wrote which was more favorably disposed to Portman.

Chapman wrote, “...a quick search reveals that when he had the opportunity, Portman voted against the last three conservative budget alternatives while other leadership members (or hopefuls at the time) did not. Blunt, Boehner, Kingston, Shadegg, and on one occasion Tom DeLay, all voted for these budgets—Portman did not. He also voted against at least five of the conservative's budget reforms that garnered support from GOP House Leaders. Portman is good on taxes, but he does not appear to be instinctively a small government guy.”

Well, the dust has settled and I am standing by my initial instinct on Portman. Sure, he’s undoubtedly capable, but he is not the sort of budget-cutting breath of fresh air the Bush administration needs right now. They need new blood. Portman is too much of an insider and does not really represent a new beginning.

I wanted a fire breather.

(Correction: An earlier blog indicated that Mr. Portman was in favor of McCain-Feingold when he actually voted against such legislation. My apologies to Mr. Portman for the error.)

Hillary Doesn't Get It

"Hasn’t Mrs. Clinton noticed the worldwide spread of free-market capitalism that has become such an enormous wealth creator across the globe — including Eastern Europe, India, China, and the rest of Asia? The economic growth principles of higher after-tax returns for work and investment, deregulation to limit government’s reach, and the privatization of government-run companies have become almost commonplace following the Reagan-Thatcher revolution of twenty-five years ago. But Mrs. Clinton would have us turn the clock back in ways that even her husband didn’t support. She defines her goals in terms of “a middle class life, education, health care, transportation, and retirement.” But all this is nothing more than a massive dose of government spending and regulating — a sure prescription for humongous taxes and a declining economy."

An excerpt from my latest column at National Review online.

Black Business Boom

According to a new U.S. Census Bureau report released today, revenues generated by the nation’s 1.2 million black-owned businesses rose a robust 25 percent between 1997 and 2002 to $88.8 billion in 2002, while the number of such firms grew an impressive 45 percent in the same five-year period.

“It’s encouraging to see not just the number but the sales and receipts of black-owned businesses are growing at such a robust rate, confirming that these firms are among the fastest growing segments of our economy,” said Census Bureau Director Louis Kincannon.

This could spell trouble for Dems...

More on Portman

I may have been too hard on Rob Portman, according to supply-side House member Paul Ryan. Paul served on the Ways and Means Committee with Portman, who favored supply-side tax cutting and was tough on spending. Though soft-spoken, Portman was always an ally of the conservative Republican Study Committee, but not a member because of his leadership position in the GOP caucus.

Mr. Portman favors personal savings accounts for Social Security reform and lower tax rates on cap gains and dividends. He also favors budget earmark reform; and in general, wants to stop the Appropriations Committee people like Chairman Jerry Lewis from running away with pork.

Portman is described as non-confrontational and never really on the front lines of conservative activism such as folks like Mike Pence, Jeff Flake, John Shadegg and other RSC members. Unlike them, Portman did vote in favor of the Medicare prescription drug bill and the No Child Left Behind education bill. However, he is a free trader (he voted for CAFTA and NAFTA) and he did vote against the big farm subsidies bill.

Essentially, it appears that Rob Portman is an establishment Republican with good tax and budget instincts who was close to the Republican Study Committee movement.

The problem in the White House, however, is that during the Andy Card regime, key policies were developed in the West Wing and then sent over to OMB on spending and to Treasury on taxes. This robbed those two important agencies of any real creativity to launch strong policy initiatives and then fight for them in the White House.

During the Reagan years, OMB under David Stockman sent over hundreds of budget cutting ideas to the White House, many of which were adopted as policy and subsequently implemented legislatively. Most of this occurred in 1981-82, but later on Jim Miller pushed for Gramm-Rudman as a spending limitation developed in OMB. That was subsequently adopted.

So the question is whether really tough budget cutting ideas can begin with Portman’s OMB and then sent over to the White House for a far more aggressive budget cutting strategy. My suspicion is that John Snow in Treasury would have pushed for full-fledged tax reform, but the White House had no interest and therefore stopped this process. Whether the Josh Bolten West Wing operation gives greater latitude to Treasury and OMB remains to be seen.

Uninspiring Choice

Rob Portman has been appointed OMB director. He’s a formerly moderate Republican House member from Ohio who is capable but uninspiring. He presently serves as special trade representative.

With all due respect to Mr. Portman, this is a really boring, blah-blah-blah appointment. No zeal, no intensity, really no reputation as a budget-cutter. (Essentially another Bush insider.) The Club for Growth's Pat Toomey or Rep. Paul Ryan (R-WI) would have been sooooo much more interesting and energizing for the Republican base, and for budget-cutters everywhere.

Bush Tax Cuts

President Bush made a strong defense of tax cuts and the resulting economic growth in his radio address on Saturday. But for some strange reason, he did not mention investor tax cuts on cap gains and dividends. He did mention income tax cuts, the family tax credit and the standard deduction and small business. He also mentioned abolishing the estate tax, which is a good idea, but is not really front and center in Congress. Senator Frist wants a Senate vote sometime this spring.

Bush correctly made the case that the economy has benefited enormously from lower tax rates; and that if the tax cuts are not extended, it will be a punitive tax hike on economic growth. But he never specifically mentioned cap gains and dividends that are scheduled for a vote (as soon as the House and Senate conference considering tax reconciliation finally overcomes some personality conflicts and reports out a bill for a House and Senate vote). But I do know with certainty that he strongly supports extension of these investor tax cuts from a recent Oval Office meeting he held with a handful financial journalists that I attended.

The American boom is still the greatest never told, so it’s a very good thing to see the president making his economic case over the heads of the MSM and directly to the American public. More of this salesmanship from 1600 Pennsylvania Avenue will be vital to Republican reelection efforts this fall.

Just recently, new government reports show higher than expected consumer spending and industrial production. Huge gains in the production of transportation equipment, primary metals and various technology components belie the usual “gloom and doom” reports suggesting that America doesn’t manufacture anything (as Hillary Clinton charged in her recent speech to the Chicago economic club).

Lower tax rates on capital have not only caused a surge of economic growth since mid 2003, they have also led to a ballooning of individual tax receipts paid to the Treasury from higher employment, more rapid economic activity and a strong stock market. The current federal budget deficit has slipped to only 2.5% of GDP and is not likely to be much of an election year issue.

However, by reducing the cost of capital, which is so vital to business and entrepreneurship, Mr. Bush’s investor tax cuts were exactly the right medicine following the stock market plunge, the war and the outbreak of corporate scandals earlier in the decade. The ability of both large and small businesses to rebuild their balance sheets and move to unprecedented profitability is directly traceable to higher after tax rewards for capital formation.

What is more, supply side tax cuts are the crucial link to steady consumer spending and personal income gains. In other words, capital formation enhances both business and consumers—a frequently ignored thought in the economic discussion.

Obviously stock markets are carefully watching this process. With all the controversy about immigration, it is very important to get the tax cut extensions completed.

"It Turns Out Bush Was Right About Iraq's Quest For Uranium"

Rather interesting article by John Leo of US News & World Report.

"In a surprising editorial, The Washington Post deviated from the conventional anti-Bush media position on two counts. It said President Bush was right to declassify parts of a National Intelligence Estimate to make clear why he thought Saddam Hussein was seeking nuclear weapons. And the editorial said ex-ambassador Joseph Wilson was wrong to think he had debunked Bush on the nuclear charge because Wilson's statements after visiting Niger actually "supported the conclusion that Iraq had sought uranium."

In the orthodox narrative line, Wilson is the truth-teller and the Bush the liar. But Wilson was not speaking truthfully when he said his wife, Victoria Plame, had nothing to do with the CIA sending him to Niger. And it obviously wasn't true, as Wilson claimed, that he had found nothing to support Bush's charge about Niger when he (Wilson) had been told that the Iraqis were poking around in that uranium-rich nation.

Testifying before the Senate intelligence committee, Wilson said that the former prime minister of Niger told him he had been asked to meet with Iraqis to talk about "expanding commercial relations" between the two countries. Everybody knew what that meant; Niger has nothing much to trade other than uranium.

Christopher Hitchens made the latter point last week in a muscular column subtitled "Sorry, everyone, but Iraq did go uranium shopping in Niger." The "Sorry, everyone" phrase indicates the strength of the reigning orthodoxy -- that Bush simply lied when he uttered the famous 16 words in his 2003 State of the Union speech: "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

Hitchens made these points: Saddam Hussein had already acquired a large amount of uranium from Niger once before, in 1981, so he knew where to go. Amid suspicions that Saddam was trying to revive his nuclear program, Iraqis made a 1999 visit to Niger. The head member of the visiting Iraqi team was Saddam's senior public envoy for nuclear matters. Hmmm..."

"One Solitary Life"

"Let us turn now to the story.

A child is born in an obscure village. He is brought up in another obscure village. He works in a carpenter shop until he is thirty, and then for three brief years is an itinerant preacher, proclaiming a message and living a life. He never writes a book. He never holds an office. He never raises an army. He never has a family of his own. He never owns a home. He never goes to college. He never travels two hundred miles from the place where he was born. He gathers a little group of friends about him and teaches them his way of life. While still a young man the tide of popular feeling turns against him. One denies him; another betrays him. He is turned over to his enemies. He goes through the mockery of a trial; he is nailed to a cross between two thieves, and when dead is laid in a borrowed grave by the kindness of a friend.

Those are the facts of his human life. He rises from the dead. Today we look back across nineteen hundred years and ask, What kind of trail has he left across the centuries? When we try to sum up his influence, all the armies that ever marched, all the parliaments that ever sat, all the kings that ever reigned are absolutely picayune in their influence on mankind compared with that of this one solitary life..." -Dr. James Allan Francis in a 1926 sermon

Blessings to you this Easter weekend.

We’ve Never Had it So Good

We’re in an American boom and I cannot understand why there is so much pessimism.

Why so much anxiety in the "Age of Prosperity" according to Rich Karlgaard of Forbes magazine? What are we so darn afraid of? Why are we afraid of immigrants? China? And why is the Fed so afraid of economic growth?

Fed Governor Donald Kohn rattled markets today by returning to the nonsensical Phillips curve. Kohn suggested too much growth causes inflation. Kohn’s totally wrong (as usual). Look at the numbers on rising retail sales, rising jobs, rising ISMs. Today import prices fell for the 2nd straight month.

When the late British Prime Mimister Harold MacMillan led the Conservatives to victory over Hugh Gaitskell in the October 1959 general election, he did so by reminding his countrymen that they had never had it so good. Well, the same thing applies here today in the greatest nation in the world almost fifty years later.

If things are so bad, then why are they so good?

A National Investment Authority?

Hillary Clinton wants more government.

In a speech delivered in Chicago earlier this week, the New York Senator went on ad nauseam about all these alleged problems plaguing our booming American economy and how to fix them. She said “we cannot go on letting our basic infrastructure decay and failing to invest in new technologies if we expect America to maintain its economic leadership.”

Mrs. Clinton’s idea? She wants to see us put into place a “national investment authority.” This brilliant idea is based on a recent report by Felix Rohatyn and Senator Warren Rudman that would create some newfangled government institution to help “finance accelerated commitment to rebuilding our national infrastructure.” Read between the lines and all this means is just more intrusive meddling and spending from Washington. We know where that gets us.

The bottom line in all of this that she wants increased government planning. She wants more involvement from Washington and wants to spend gobs of money in updating our virtual and physical infrastructure.

A fine example of this craziness is when she mentioned how we need to create more airports, and how we need to “modernize and expand the airports we have.” Airports? You want a solution to the airports? Privatize them already! And what the heck is this fuddy-duddy “national investment authority” anyway? Sounds like some central planning relic from the Soviet Union. This is wacky stuff and it is certainly not America; that’s France, Germany, Italy, EU central planning sort of stuff. (Now let’s all take a moment to genuflect at the worker’s paradise and economic miracle that is France.)

What should happen is we have to have incentives to create capital formation. Let the market driven private sector allocate these resources based on investment rates of return and market prices. After all, markets are the most efficient allocaters of national resources. Period. Not government, and certainly not Hillary’s “national investment authority.” We don’t need political decisions or Ivy League professor decisions. Just get the darn government out of the way and deregulate for goodness sake.

The financing must come from private capital markets, from courageous entrepreneurs and new business startups. Remove government obstacles like burdensome regulations and punitive taxation. For example, our corporate tax system is not competitive with rates at the top of the ladder compared to other industrial countries. Taxes should be slashed and simplified, with full cash expensing for investment. Put an end to this double taxation of domestic and international profits. Same point goes for the personal income tax system.

Since we need capital in the 21st century to be competitive in every area, let us unleash incentives and unlock capital formation by eliminating the multiple taxation of savings and investment. This too will free up markets and capital to make rational efficient decisions based on investment rates of return and market prices.

Get the government out of the way on energy development production. Whether its oil gas, nuclear production, LNG, oil sands, pipelines, the Outer Continental Shelf, all of it. Allow technology the room it needs to flourish by removing these regulatory and tax barriers. These are just some examples, but the same rule applies whether its energy, telecom, broadband, transportation or whatever component of our infrastructure.

President Bush had it right when he conveyed the pro-growth message to me and other gathered journalists in the Oval Office last week. We must emphasize ownership and investment. We must not lapse into fear, isolationism and protectionism. We must keep taxes low. We must do all that we can to unleash Schumpeterian gales of creative destruction by giving America’s entrepreneurs and small businesses room to soar. After all, this is what has made America great.

That message means a market-driven Social Security system to create long-run retirement wealth. That means reforming health care through health savings accounts. That means school choice and merit pay in education, rather than throwing incredibly wasteful sums of money at our currently ineffective education system and its unions who stubbornly refuse to accept reform. That means free market capitalism, not statism, not central planning-ism or unionism or France-ism.

The fact of the matter is for twenty-five years we have benefited from virtually uninterrupted economic prosperity and rising living standards. Since 1982, we’ve only had six quarters of recession. That means that 93.5 percent of the time the economy has been expanding. It’s a remarkable record. We have witnessed fantastic breakthroughs in technology, huge productivity advances, unbelievable wealth creation, huge advances in science and medicine—all because Ronald Reagan revived free market capitalism through lower tax rates, deregulation, price stability, free trade and national security.

If Senator Clinton wants to build upon this agenda, with clear-eyed tax reform and simplification, (borrowing from President Kennedy) that would be great. If she wants a “national investment authority” and other nonsensical industrial planning exercises, then she’s going down the wrong road.

The door remains wide open to full-fledged tax reform—budget reform; entitlement reform; free trade expansion and sensible pro-immigration reform. But the key approaches are individual initiative, risk taking, entrepreneurship competitive free market ownership, and investor class not national investment authorities.

Mrs. Clinton is trying to straddle both sides of the fence here—that’s the problem. She’s trying not to be opposed to markets, but she refuses to break away from centralized government planning. She won’t win until she finally chooses the right course.

Misguided

"Jimmy Carter has charged President Bush with many shortcomings and crimes, but he recently came up with a new one—new to us, at least. Of our efforts in Iraq, he said, “It was an unjust war.” That is a weighty charge: an unjust war. Unjust for whom? For the Americans, who have had their security enhanced by the removal of a regime determined to cause them harm? For the Iraqis, who lived under one of the most oppressive regimes in memory? Carter has always claimed to be a human rights champion. All right: Saddam specialized in children’s prisons, “rape rooms,” torture chambers. In the cutting out of tongues for dissent, the placing of men in industrial shredders, the chemical gassing of troublesome communities. You can call the war ill-advised, or unrealistic, or poorly executed; but you should blush to call it unjust. Has the ex-president—who so loves human rights—ever said a word about the positive effects of removing the Taliban and Saddam Hussein? Or does he hate George Bush and the Republican party more than he loves human rights?"

--From "The Week..." in the latest issue of National Review magazine.

The Christian Science Monitor on Job Growth

Apparently Hillary Clinton hasn’t bothered to read through the latest job numbers.

According to a Bloomberg report, the junior Senator from New York believes the economy isn’t producing good jobs. Drawing from the tired Democratic class-warfare playbook, Mrs. Clinton recently remarked, “The economy is working really well for many people. But if you look just over the horizon and below the surface there are some troubling issues… the rich are getting richer, everybody else is marching in place.”

Facts (those terribly stubborn things) suggest the opposite. The Christian Science Monitor reports that the US economy isn't just producing jobs these days, it's also producing good jobs. All across America, business are opening up their doors to workers. Look no further than the most recent batch of job numbers showing that businesses are expanding opportunities in high-wage fields.

As the CSM points out:

• In southern California, some of the latest openings involve working on the railroad, for $35,000 to $70,000 a year. Union Pacific plans to add 2,000 employees altogether.
• In Delaware, Honeywell plans to hire people at $40,000 to $100,000 to work in a data-storage center.
• In St. Louis, AFB International is enlisting both technicians, paid $30,000 to $40,000, and PhD scientists, offered $80,000 to $100,000, in its quest for the perfect pet food.

"We're creating lots of all kinds of jobs, across many industries, occupations, and pay scales," says Mark Zandi, chief economist at Moody's Economy.com. This includes gains in the manufacturing sector, construction industry and in the management/professional sector.

The present employment picture is looking very good and shows signs that it will get even better.

The Huge Ball and Chain

Americans will work for 116 days this year—almost 1/3 of the entire year—just to earn enough money to pay their tax bill to the IRS.

To put that into perspective, Americans currently spend four months out of the year working at our jobs before we get out from underneath the government’s tax stranglehold. So, socking away your dollars for your kid's college education, saving up for retirement or a new home, putting away your hard-earned money for a vacation, a new car or rainy day -- well that can all wait. Like it or not, Uncle Sam's got you by the neck for four months-what you choose to do with the other eight is up to you.

To compound matters even more, Tax Freedom Day - the day when your money finally goes into your bank account rather than the outstretched hands of politicians - comes three days later than last year and ten days later than 2004. And Democrats want to raise our taxes even higher.

Unbelievable…

This pillage and plundering of American wallets becomes an even tougher pill to swallow when we witness the extraordinary waste of our hard-earned money towards earmarked pork like the infamous $223 million Alaskan “bridge to nowhere.”

The natives are growing restless. As The New York Sun points out today (“Real Bracket Creep”) Americans are fed up with the current system and politicians better start paying attention. Citing the latest non-partisan Tax Foundation report that revealed an astonishing 80 percent of U.S. adults believe the current federal income tax is somewhat or very complex, the paper points out the following examples of voter disgust:

· Almost 60% said they thought the amount of federal income taxes they personally pay was too high.

· 40% of Americans said the federal tax system "needs major changes," while another 40% said it "should be completely overhauled."

· Just 2% described the federal tax system as "fine the way it is" and only 1% of those polled said the current federal income tax is "not complex at all," (Who are these people?)

· When asked to choose between a flat-rate income tax with no deductions, a national sales tax, or the current graduated income tax with deductions, 33% chose a flat tax, 20% favored a national sales tax, and 21% preferred the status quo.

Let’s be clear here: The tax system is a huge ball & chain tied to the feet of hardworking American entrepreneurs and ordinary workers and savers. They can barely get to work or invest because of this enormous weight. But if you remove this ball & chain, you can bet your bottom dollar that we will witness another growth explosion—one that could raise our potential to grow by 5 percent a year and would generate tax revenue at a lower flat tax rate of around 20%.

Enough already.

"Immigrants Don't Depress Wages"

Diana Furchtgott-Roth, the sharp-as-a-tack former chief economist at the U.S. Department of Labor, has some bones to pick with anti-immigration crusaders like CNN’s Lou Dobbs who argue that immigrants lower middle-class wages.

Mr. Dobbs recently remarked, "middle class and working men and women in the United States are going to continue to be assaulted by a continuing flow of cheap foreign labor into the United States," adding that "working men and women ... are watching $200 billion of wages disappear every year because of illegal immigration."

Ms. Roth begs to differ.

In her op/ed column in today’s New York Sun (“Immigrants Don’t Depress Wages”) Miss Roth cites careful research showing the opposite to be true. One study actually showed that immigration causes native-born American wages to increase and that over the past two decades, a 9 percent immigration rate resulted in an increase of 2 percent in the wages of native-born American workers. (Increases ranged from 0.2% for those without high-school diplomas to 2.5% for college graduates.)

“Immigration has widespread helpful effects on the economy and may cause wages to rise,” she writes, “because immigrant labor does not substitute for native labor, but complements it. This has been largely ignored in recent debates and marches.”

Iraq Troop Reductions

Greg Jaffe writes in today’s Wall Street Journal that “…clear signs are emerging that the U.S. is gearing up plans to reduce the number of its troops in the country.” (“As Violence Persists, U.S. Moves Toward Troop Reductions in Iraq”)

This has been coming for a while, that planners in the Joint Chiefs of Staff want to withdraw troops and then take the remainder and put them in military bases—probably on the periphery of Iraq, near the Iranian and Syrian borders. We have done what we can and we’re handing over security to the Iraqis.

However, the political situation is a disaster. There has to be a unity government. U.S. troop pullback will provide incentive for a stronger push from the Iraqis to pull together their political and security operations.

American forces will still be available for emergencies. They’ll be in striking distance. Iraqi police and armed forces are doing much better in stepping up to the plate and fighting the insurgents. But it’s a good idea to reduce U.S. troop visibility.

What’s missing in the Jaffe article however, is an economic reconstruction program that will create more investment and trade for Iraq. This is the model that Tom Barnett has been proposing: a pro-market, pro-entrepreneurial economic approach that will foster economic expansion and jobs in this beleaguered country. Iraq has a stock market that should be expanded.

On the whole, troop withdrawal plans are well considered and a positive development.

Cowboy Capitalism v. Old Europe

The French government has folded like a cheap suit. Its pathetic attempt to institute some small labor deregulation went nowhere. In Italy, socialist Romano Prodi looks to be a narrow victor in his country’s elections—but there will be no real economic reform there either. And of course, Germany under Miss Merkel’s helm has also failed to institute major reforms.

The big three in Old Europe are still wedded to statism, unionism and watered-down socialism. Growth is slow, unemployment high. While U.S. cowboy capitalism has spread to Ireland, and to a lesser extent, Eastern Europe (and even Norway and Spain), the big three Euros can’t get it right. They will fall further and further behind in the global boom that has taken the American model as its lodestar.

Speaking of the American boom, Bloomberg news reports that its latest economic survey has slightly raised 2006 GDP estimates to 3.4 percent adjusted for inflation. “Employment and wages are stronger and therefore consumer spending is stronger,” said John Silvia, chief economist at Wachovia. (He could have added that highly profitable business will be a big economic spur.) Productivity remains strong. Old legacy industries are falling but new ones in services, technology, biotech, and a restructured commodities and energy area are taking their place.

Cowboy capitalism is working.

Still Shining

Today's Washington Post offers an enlightened perspective on one facet of the the current immigration debate ("A Nation Built on Immigrant Genes"). Here's a brief excerpt:

"If you've been following the big immigration debate, you might get the impression that the primary economic advantage of liberal economic immigration policies is that they supply America with low-wage workers willing to do grueling, unskilled jobs that native-born Americans won't touch. Not true: They are the source of America's success.

...The secret to America's wealth is that we were settled by restless, driven, overconfident, risk-taking dreamers.

...America is an amazing natural experiment -- a continent populated largely by self-selected immigrants. All these people had the get-up-and-go to pull up stakes and come here, a temperament that made them different from their friends and relatives who stayed home. Immigrants are the original venture capitalists, risking their human capital -- their lives -- on a dangerous and arduous voyage into the unknown."

Despite the deeply felt opinions on both sides of this contentious issue, one thing remains clear: The promise of the American dream still beckons people from all over the world; men and women willing to leave the arid soil of their countries behind and make their way to our great, shining city on a hill...

Iranian Instability

Seymour Hersh is creating a ripple or two with his New Yorker cover story suggesting the Bush team is planning to use nuclear weapons against Iran, to prevent the reigning looney-tunes from acquiring their own atomic warheads.

If Hersh is correct (which would be a step in the right direction for Mr. Hersh), and the U.S. military is making contingency plans for possible military action, then I say good. That’s what they’re paid to do.

However, as gold moves above $600 an ounce, and oil moves back towards $70 a barrel, talk about military actions including tactical nuclear weapons (which is highly unlikely) nonetheless is probably boosting gold prices. So is the recent bad news in Iraq with the Shiite bombings, and the failure to form a unity government. In other words, international political risk and instability is playing a big role in gold and oil prices.

Think of it as a barometer for political uncertainty—unfortunate, but true.

Note on Immigration Marches

As readers know, I’m for comprehensive immigration reform that applies stronger border security but will make it easier for legal immigrants to come into the U.S. in search of jobs, economic opportunity and a better way of life for their families.

That means raising visa levels to at least 400,000 to meet the economic demands for jobs in the U.S. This combined approach will radically reduce the problem of illegal immigrants.

As per today’s marches, personally I’d rather the marchers worked or stayed in school instead of marching.

Trouble Ahead?

Will 2006 be for Republicans what 1994 was for Democrats?

That’s the question the ever informed, always insightful John Fund tackles in his OpinionJournal.com column today. (“Flirting With Disaster”) With all the anemic nonsense coming from Capitol Hill of late, it’s a question well worth asking…

“Democrats must be pinching themselves about their good fortune. Last week, the Republican Congress saw deals on budget reform, immigration reform and extending the Bush tax cuts all collapse within 24 hours.

House and Senate members went home empty-handed to face an increasingly surly electorate, nearly 70% of which now thinks the country is heading in the wrong direction. Both parties are viewed negatively by voters, but it's Republicans who are in charge and stand to lose the most in November elections. Some GOP strategists are making comparisons to how the Democrats appeared to come unglued just prior to their losing Congress in 1994.

…Republicans have appeared to the world to be as unprincipled and rudderless as the politicians they campaigned against back in 1994. Unless they change course dramatically in the seven months between now and Election Day, they may well find themselves facing the same fate as the Democratic political dinosaurs of that year that they replaced.”

Click here to read Fund’s column in its entirety.