Kudlow's Money Politic$

$20 Oil in the Cards?

2009-07-09T16:37:00.003-04:00

Debating future oil prices on last night's Kudlow Report were Philip Verleger, professor of business at the University of Calgary and David Pursell, managing director at Tudor, Pickering, & Holt Securities.

Tonight on The Kudlow Report

2009-07-09T16:25:00.003-04:00

On tonight's show at 7pm ET on CNBC:

FEAR VS. GREED:
INSIDE THE MARKET

Panel:

*Neil Weinberg, Forbes executive editor
*Zachary Karabell, River Twice Research president
*Michael Cuggino, Permanent Portfolio Family of Funds president & Portfolio Manager

RETAIL REPORT

Dana Telsey, founder of the Telsey Advisory Group, will offer her insight.

GM EMERGING FROM BANKRUPTCY
As China breaths down their neck…

CNBC’s Phil LeBeau reports from GM headquarters in Auburn Hills.

IS AMERICA FALLING BEHIND?

*Jimmy Pethokoukis, Reuters Money & Politics columnist
*Dan Clifton, Strategas Research Partners Director, Head of Policy Research
*David Malpass, President of Encima Global; Deputy Asst Secy of Treasury Under Reagan

Please join us. The Kudlow Report. 7pm ET. CNBC.

Let Oil Markets Work

2009-07-09T11:54:00.001-04:00

Placing regulatory limits on oil trading is a terrible idea. This is the latest example of the government sticking its nose where it doesn’t belong. We ought to allow oil markets to trade unencumbered, without government meddling, or limits, or controls on both large and small investors. This creates the broadest possible base and the largest possible volume. This approach — unsurprisingly — creates an efficient market.

Oil prices are continuing to fall as economic fears linger among investors. What’s so hard to grasp about this story? Look, if President Obama, Vice President Biden, and the White House advisers managed to misjudge the economy, why can’t we cut some slack for the oil traders who decided oil demand won’t be so strong?

By the way, if we would stabilize the value of the dollar, oil prices would probably be less volatile. And speaking of volatility, have you taken a look at the VIX index for stocks? It has been incredibly volatile of late. And yet I don’t hear tinhorn, flatfooted politicians calling for a limit to stocks. Do you?

England’s Gordon Brown and France’s Nicholas Sarkozy wrote a Wall Street Journal op-ed yesterday saying oil prices need government supervision. Nonsense. Oil prices need market supervision, and Brown and Sarkozy need adult supervision. They need to stop meddling in markets and attempting to control prices.

Here’s the key: If Team Obama would deregulate energy, drill, drill, drill, and make it easier for our Canadian cousins to send us oil from the oil sands in Alberta, oil prices would be a whole lot lower with greater inventory supplies. And our enemies in the Middle East would be a whole lot poorer.

Yes, I believe oil trading and any other market trading should be totally transparent. But various forms of market meddling and price controls would be an unmitigated disaster.

Finally, the markets will move offshore if we mess with them. So let market freedom rule. Drill, drill, drill. Work with Canada. Stabilize the dollar. And accept the fact that markets always work better than government planners do.

Why is this so difficult for Washington to grasp?

Washington Needs to Help Businesses for a Change

2009-07-08T12:19:00.001-04:00

Are the stock market and economy taking turns for the worse? Do we really need a new stimulus plan from Washington?

Let’s begin by rolling back the clock to last Thursday’s June jobs report. It was not a good report. Stocks have fallen over 4 percent since then. And here’s one reason why: plunging wages.

Private hours worked continue to free-fall. Hourly wages have flattened. It was a nasty report. Job losses are still substantial. It’s a powerful and nasty combination. While I am an optimist by nature, this does worry me. It suggests a later, and weaker, economic recovery.

So here’s a novel thought for all the geniuses down in Washington. Help businesses for a change.

You can begin by stopping the taxing of overseas corporate profits. Do not hike the minimum wage. Back off cap-and-trade. Do not nationalize health care. Stop the anti-trust assault on phone companies, pharmas, Google, airlines, and multi-nationals.

And how about a six-to-twelve-month payroll-tax holiday? That would make it cheaper to hire new workers. What about a corporate tax cut? And immediate cash expensing for business-investment write-offs? In other words, cut the tax cost of hiring, investing, and doing business. Because it’s businesses that create the jobs and the incomes for families all throughout America.

And if you are still worried about the housing story or bank toxic assets, how about a capital-gains tax holiday?

Does anyone in Washington understand the way the world really works? It’s called incentives. That’s what this is all about. And we’re going to need many more of them if businesses, investors, and families are to start prospering once again.

Tonight on The Kudlow Report

2009-07-07T17:12:00.000-04:00

On tonight's show at 7pm ET on CNBC:

THE MARKETS & ECONOMY

*Steve Forbes, former Presidential Candidate; Forbes Inc. Pres. & CEO; Forbes Magazine Editor-in-Chief
*Jim LaCamp, portfolio manager at RBC Wealth Management
*Jim Paulsen, Wells Capital Management Chief Investment Strategist

Also…Is there manipulation in the oil futures markets?
Sen. Bernie Sanders (I-VT) will join us with his take.

SARAH PALIN PERSPECTIVE
Veteran political strategist Roger Stone joins us.

THE COST OF MICHAEL JACKSON'S FUNERAL
CNBC’s Jane Wells reports.

OBAMA'S TRIP TO RUSSIA
CNBC chief Washington correspondent John Harwood reports.

SAVING FREEDOM
Stimulus/Sarah Palin/PPIP

Sen. Jim DeMint (R-SC) will be aboard.

AN ANTITRUST HOLY JIHAD AGAINST BUSINESS?

*Jim Glassman, president of World Growth and former under secretary of state for public diplomacy and public affairs
*Donald Baker, former DOJ head of antitrust

Please join us. The Kudlow Report. 7pm ET. CNBC.

Bigger and Better Things for Sarah America

2009-07-07T11:34:00.002-04:00

I’m all for Governor Sarah Palin’s move over the weekend. It’s time for her to get out of Alaska’s small town, ankle-biting politics. Now she can take her show on the road. This is a woman brimming with charisma and raw political appeal. That’s why everyone’s afraid of her, and attacking her. In other words, Sarah Palin has the power to reinvigorate conservatism and republicanism.

Here's my debate last night with nationally syndicated columnist Deroy Murdock.

Minimum Wage Debate

2009-07-07T11:07:00.002-04:00

With jobs falling and recession lingering, is now the time to cut taxes and stop the minimum wage hike scheduled for July 24th? Debating this question on last night's Kudlow Report were former Clinton White House aide Keith Boykin and the WSJ's Steve Moore.

Tonight on The Kudlow Report

2009-07-06T16:52:00.001-04:00

On tonight's show at 7pm ET on CNBC:

JOBS, MARKETS AND RECOVERY

Panel:

*Mario Gabelli, chairman of Gabelli Funds
*Rich Clarida, PIMCO strategic advisor
*Phil Orlando, chief equity market strategist at Federated Global Investment Management

OBAMA IN RUSSIA

*Steve Cohn, professor of Russian History at New York University
*Frank Gaffney, president of the Center for Security Policy

EYE ON OIL & GASOLINE PRICES

*Dan Yergin, chairman of Cambridge Energy Research
*John Kilduff, MF Global Sr. VP & Energy Analyst

MINIMUM WAGE DEBATE

The Wall Street Journal’s Steve Moore will square off against Keith Boykin, author, editor of The Daily Voice & former assistant to President Clinton.

WHAT’S NEXT FOR SARAH PALIN?

Syndicated columnist Deroy Murdock will offer his perspective.

HOT HANDS…

Fund manager Mark Travis of Intrepid Capital Funds will join us with his stock market insight.

Please join us. The Kudlow Report. 7pm ET. CNBC.

A Grim Jobs Report

2009-07-02T15:16:00.000-04:00

After nine months of explosive monetary and fiscal stimulus, you’d think economic recovery would be upon us. But the June jobs report tells a much different story.

Non-farm payrolls fell by 467,000 as the unemployment rate edged up to 9.5 percent. This isn’t nearly as bad as the 700,000 monthly job losses of last winter, but it’s still a rough number. Equally disappointing is the household survey -- often a key turning-point signal since it captures the health of small businesses -- which has dropped 811,000 in the past two months.

Donald Marron, a former senior economist with the Council of Economic Advisors and the CBO, calls it “a grim jobs report.” Marron, digging deep into the Labor Department Statistics, says the continued decline in hours worked by private-sector employees, now 7 percent over the past year, is especially troublesome. He writes, “The economy is thus losing jobs and, for the jobs that remain, is losing hours worked. That double-whammy is bad news for the economy.”

I would add that along with manufacturing and construction, the service sector continues to shed jobs, with a 244,000 drop in June. Inside that category, the important professional-and-business-services sector lost 118,000 jobs. The wage data is equally disconcerting. Over the past three months, average hourly earnings barely rose at 0.7 percent annually.

There are still some bright spots that strongly suggest the recession has bottomed. The ISM manufacturing report for June held a number of positives. Auto sales, retail sales, and home sales look to be bottoming. And May factory orders climbed as inventories crashed. So businesses, including automakers, may be increasing production in the months ahead.

In fact, even while second-quarter real GDP is expected to fall by 1 to 2 percent annually -- much better than the 6 percent declines of recent quarters -- the third quarter could show a small positive GDP score. Much smaller GDP subtraction from inventories, housing, and business cap-ex bodes statistically well for growth.

But there won’t be a real recovery until jobs start rising. The unemployment rate is a lagging indicator. But jobs are the most important coincident indicator of the economy. Until they turn around, nobody should expect anything resembling real economic growth.

Leading indicators -- especially monetary, financial, and credit-market signals -- are flashing “go” for future growth. The Fed has pumped roughly $1 trillion into the economy since last August. Key money-supply measures are growing at 10 to 15 percent annually. Short-term rates are near zero. The Treasury curve is steeply upward-sloping. Corporate-bond-market spreads have declined significantly. And commodity prices are off their lows. This is all good.

But for all the Fed’s stimulus, which has had a salutary effect on the banking crisis, the lags are long and variable. And as former Dallas Fed head Robert McTeer has written, much of the central bank’s balance-sheet expansion is being hoarded by commercial banks, with banks holding about $800 billion more than what they’re required to hold. Until these excess reserves come way down, the impact of the Fed’s monetary stimulus will be more muted than has traditionally been the case in Milton Freidman’s monetarist model.

And as Washington economist Bruce Bartlett has written, Obama’s $800 billion fiscal-stimulus package has yet to stimulate. Bartlett notes that 60 percent of the stimulus package goes to transfer payments and tax credits with no incentive effects. Meanwhile, the rest of the package, aimed at public works that might produce growth, is spending out at a snail’s pace.

As an old-fashioned supply-side guy who is out of date with contemporary Washington policies, I would add that Obama’s biggest mistake was not cutting marginal tax rates for individuals, businesses, and investors. Instead of the fiscal profligacy that is driving spending and borrowing sky-high, lower tax rates with true incentive-reward effects would have reignited the animal spirits that are sagging so badly.

But Obama’s temporary tax credits and social spending offer no growth effects. At the same time, the government’s fiscal nymphomania has scared everyone into thinking the U.S. is going bankrupt. The president himself has said there’s no money left. It’s scary enough to keep your savings under the mattress.

And if you add all the talk of nationalizing health care and energy (cap-and-trade) to the rest of Bailout Nation, it’s not hard to understand why people are shying from risk.

Stocks are the single-best barometer of our nation’s future economic health, and the stock market began to rise in early March. But over the past month, with all these new big-government tax-and-regulatory threats, the stock rally has stalled. And the June jobs report caused an immediate 2 percent sell-off for equities.

I do the best I can to be optimistic about our nation’s future. But realistically, the current picture is not particularly good.

Governor Jenny Sanford? It's Got a Nice Ring to It

2009-07-01T14:09:00.009-04:00

The Business & Media Institute picked up my conversation with the WSJ's Steve Moore last night about Jenny Sanford, South Carolina Gov. Mark Sanford's wife, being a possible replacement for her husband in the governor’s mansion. Both Steve and I agreed that Jenny Sanford has the credentials and would make an excellent governor.

Here's the video of our exchange:

Tonight on The Kudlow Report

2009-06-30T16:27:00.001-04:00

On tonight's show at 7pm ET on CNBC:

IS CALIFORNIA GOING BANKRUPT?
Are Municipal Bonds Safe?

CNBC’s Jane Wells reports.

STATES IN CRISIS: AMERICA'S BIG BET ON BONDS

The Wall Street Journal’s Steve Moore and CNBC’s Jane Wells will discuss.

WASHINGTON TO WALL STREET
-VAT tax cometh?
-The Al Franken factor: A filibuster-proof senate
-Is Gov. Sanford toast?

On to debate:

*Julian Epstein, LMG CEO Fmr. Democratic Chief Counsel
*Steve Moore, WSJ senior economics writer

DRILL! DRILL! DRILL!
Winners & Losers in the Climate Bill

Devon Energy CEO Larry Nichols will join us.

THE MARKET

-How to survive & thrive
-Fortune's 10 Best Stocks For 2009
-Consumer confidence
-Fiscal nymphomania: winners & losers
-AIG is Amtrak

Panel:

*Randy Bateman, Huntington Asset Advisors President & Chief Investment Officer
*Peter Boovkvar, Miller Tabak Market Strategist
*Sean Tully, Fortune Sr. Editor-at-Large

Please join us. The Kudlow Report. 7pm ET. CNBC.

Madoff Sentenced, But He Didn’t Sing

2009-06-29T16:38:00.002-04:00

So Bernie Madoff was sentenced to 150 years in the slammer today. He also delivered one of his now-patented non-repentant repentance speeches in the courtroom. Oh, by the way, his wife Ruth also issued a statement, and she threw him under the bus.

Yet while everyone can now cheer that the greatest crook in financial history will die in jail, Madoff also may die keeping his secrets with him. So far, prosecutors have come up with very little about this case. And under the tutelage of the clever lawyer Ike Sorkin, Madoff has given almost nothing up. No singing in jail. (Maybe he should have been waterboarded.) We don’t know if his wife or two sons were part of the scam. Nor do we know where most of the money -- estimated up to $65 billion -- has gone. There’s a number being used that bankruptcy trustee Irving Picard has recovered $1.2 billion of the $13.2 billion in estimated net losses. But the strength of those numbers is somewhat in doubt.

Where’s the money? Who are the accomplices? And what about some of these big-time fat cats who invested with Madoff, people we thought were victims but may turn out to be the real winners in the story?

There are several reports about Jeffry Picower and Stanley Chais, two rich businessmen who may have taken $6.1 billion in returns from the Madoff fraudulent funds -- more than they put in. There’s also businessman Carl Shapiro, a close Madoff pal. And while there is yet no number as to what he took out of the funds, years ago the guy sold his garment business for $20 million and grew that sum to nearly $1 billion -- most of it from investing with Madoff.

I’m using reports from the Wall Street Journal and the liberal investigative group ProPublica. I’m also using first-hand accounts from friends of mine who are circulating these rumors down in Palm Beach, Fla. They’re very close to the Madoffs, their funds, and their investors.

The point is, it’s been six months since Madoff was first arrested, and the actual case against him has progressed very little from his own self-confession right at the start. Neither his wife nor his two sons have been deposed. Nor have these other characters who probable looted the funds.

The thing about a Ponzi scheme is others besides Ponzi can get rich. And there are names in circulation of people who may also have gotten rich. But where’s the money? When will these people be brought in to testify under oath? The thousands of other smaller investors and charities who were totally ripped off by Madoff could recover a lot more if these big shots are finally hammered.

Madoff will die in jail. And he deserves it. But the justice system has much more work to do following today’s sentencing.

*Madoff Special Tonight on The Kudlow Report

2009-06-29T16:35:00.003-04:00

On tonight's show at 7pm ET on CNBC:

MADOFF GETS 150 YEARS…

Our stable of CNBC reporters will report all of the latest Madoff news and developments.

Panel:

*Joe diGenova, former US Attorney
*Paul Callan, former NY prosecutor
*Tom Curran, criminal defense Attorney
*Pat Brosnin, Brosnan Risk Consultants

Also...Madoff victim Sharon Lissauer will join us with her story.

Dow 10,000?
Robert Prechter, founder & CEO of Elliot Wave International will offer his take.

Please join us. The Kudlow Report. 7pm ET. CNBC.

A Heavyweight Inflation Debate

2009-06-26T16:40:00.000-04:00

Last night we welcomed two highly distinguished economists to debate their opposing outlooks on inflation on The Kudlow Report. Joining me were former Federal Reserve vice chairman & Princeton economics professor Alan Blinder, along with my mentor, former Reagan advisor Arthur Laffer.

Tonight on The Kudlow Report

2009-06-26T16:38:00.003-04:00

On tonight's show at 7pm ET on CNBC:

MADOFF SENTENCING

On to debate:

*Ann Coulter, conservative author & syndicated columnist
*Anthony Salerno, criminal defense attorney

BULL V. BEAR MARKET DEBATE

(BEAR) Joe Battipaglia, Stifel Nicolaus Market Strategist
(BULL) Ned Riley, Investment Strategist, Riley Asset Management

THE MICHAEL JACKSON MONEY TRAIL
MSNBC’s Miguel Almageur will report.

HOUSE CLIMATE BILL VOTE
CNBC’s Hampton Pearson reports.

WHO ARE THE WINNERS & LOSERS OF THE CLIMATE BILL?

ENERGY CEOs:

*Robert Murray, Murray Energy Corp. CEO
*Joe Petrowski, Gulf Oil President & CEO
*Kevin Book, Clearview Energy Partners Energy Analyst

Also… Rochdale Securities analyst Dick Bove will join us with his investment ideas.

Please join us. The Kudlow Report. 7pm ET. CNBC.

Tonight on The Kudlow Report

2009-06-25T17:14:00.002-04:00

On tonight's show at 7pm ET on CNBC:

ISSA TALKS BERNANKE...

Rep. Darrell Issa (R-CA) of the House Oversight and Government Reform Committee will join us once again this evening to discuss today's heated congressional hearing with Fed chair Ben Bernanke over the Bank of America-Merrill Lynch controversy.

THE STOCK MARKET & ECONOMY

*Bill Fleckenstein, president of Fleckenstein Capital
*Jeremy Siegel, Wharton finance professor & author of "Stocks for the Long Run"
*Quentin Hardy, Forbes National Editor

INFLATION DEBATE

*Alan Blinder, Princeton University Professor of Economics & former Federal Reserve Vice Chairman
*Art Laffer, chief investment officer at Laffer Investments, author & former Reagan Economic Advisor

Please join us. The Kudlow Report. 7pm ET. CNBC.

King Dollar Liked the FOMC Statement

2009-06-25T12:11:00.004-04:00

The Federal Reserve’s policy statement yesterday elicited a strong King Dollar reaction with its mild dose of hawkishness, which I applaud. I’m reading the Fed positively here. There was no announcement of any new debt monetization via Treasury purchases, a slightly more positive economic view, and an end to deflation worries. This all to the good.

The result was a stronger dollar in world currency markets. King Dollar. This is very good.

I was encouraged that the Fed cited rising commodity and energy prices. It is another nod to a market-price rule. That is clearly the best way to conduct policy, rather than the goofy Philips Curve tradeoff between inflation and unemployment.

Now, the Fed is going to keep the target rate near zero for the foreseeable future. But remember, the Fed’s balance sheet has flat-lined over the last six months as it has slowed down the overworked printing presses. So, while the Fed didn’t mention an exit strategy, it may already be building one.

The markets basically voted in favor of the Fed. While the Dow was off slightly on the news, the S&P gained almost 1 percent, with the NASDAQ finishing up a solid 27 points. As you know, markets conduct an up-or-down election vote every single day on the economy, Washington, and policy. It remains the most important opinion poll there is.

Finally, I think this sideways market correction we’re in is nearing an end. As a result, I think this could be a strong buying opportunity for investors, who can put some of their sidelined cash back into stocks.

Tonight on The Kudlow Report

2009-06-24T17:29:00.002-04:00

On tonight's show at 7pm ET on CNBC:

DID THE FED ENGAGE IN A COVER-UP IN THE BANK OF AMERICA-MERRILL DEAL?

Rep. Darrell Issa of the House Oversight and Government Reform Committee will join us to discuss.

According to a statement released by Rep. Issa: "The committee has already learned that Ben Bernanke and the Federal Reserve made inappropriate threats to fire Bank of America management unless they went ahead with the 'shotgun wedding' that was the Merrill Lynch acquisition. The Federal Reserve also engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies."

Please join us. The Kudlow Report. 7pm ET. CNBC.

Biden’s Snares and Delusions

2009-06-24T11:00:00.002-04:00

President Obama said at his press conference yesterday that no second stimulus package is being contemplated right now. Well, I sincerely hope that’s the case, because the current package is a disaster. It spends far too much for far too little in return. All of this frenzied fiscal nymphomania is placing a tremendous burden on Treasury-bond rates and the U.S. dollar. It is undermining the confidence of key foreign investors like China, Brazil, Russia, and others who have to buy our bonds.

But the worst thing I heard yesterday was the snare-and-delusion proposal announced by Vice President Biden. Apparently, Joe Biden wants to create a new government council to help laid-off autoworkers who are supposed to transition to solar, wind, and biotech industries. Huh? Are you kidding me?

Look, if you really want to help manufacturing workers everywhere, then cut that ridiculously high business-tax rate by 15 to 20 percentage points. Then allow full cash expensing for immediate tax write-offs for new business investment. Heavy industries will soar. This is FedEx CEO Fred Smith’s idea, and I totally agree with it. It would boost the manufacturing, auto, and transportation sectors.

And by the way, let’s move forward and deregulate the energy industry so we can drill, drill, drill and nuke, nuke, nuke. We’re talking about an enormous potential job-creator here. The fact of the matter is that alternative energy will be a tiny part of the energy calculus for many years to come. That’s just the reality. So let’s get real and eliminate all these ridiculous regulatory roadblocks standing in the way of American job-creation and energy independence.

And what’s this about a sub-czar for cars? Talk about a sub-par idea. I’m sorry Mr. Biden. Personally, you’re a good man. But economically, this is a terrible idea. Tax incentives are what will help the blue-collar middle class rise out of the doldrums.

Tonight on The Kudlow Report

2009-06-23T16:22:00.003-04:00

On tonight's show at 7pm ET on CNBC:

OBAMA’S PRESS CONFERENCE

CNBC chief Washington correspondent John Harwood will report.

EXCLUSIVE: ONE-ON-ONE WITH ELIZABETH WARREN

-Getting Out From Under TARP
-Is Barofsky Being Stymied?
-Consumer Financial Protection Agency in Sight?
-Blowing Up A New Bubble?

Elizabeth Warren, Harvard University Law Professor and Congressional Oversight Panel chairman will join us in an exclusive interview.

Reaction:

*CNBC's Rick Santelli
*Charlie Gasparino, CNBC on-air editor
*Andrew Ross Sorkin, New York Times

KNOCKING ON RECOVERY’S DOOR?

David Kotok, Chief Investment Officer at Cumberland Advisors will offer his investment insight.

EYE ON THE FED

-Is there a Fed exit strategy?
-A Fed Dictatorship?
-Are they fighting or listening to the bond market?

*Brian Wesbury, chief economist at First Trust Advisors
*Bob McTeer, former Dallas Federal Reserve Bank President

Please join us. The Kudlow Report. 7pm ET. CNBC.

We Don’t Need Big-Bang Health-Care Reform

2009-06-23T09:20:00.001-04:00

A small-ball, targeted plan would do the trick.

Why do we need President Obama’s big-bang health-care reform at all? What’s the real agenda here? If it’s really to cover the truly uninsured, a much cheaper, targeted, small-ball approach would do the trick. But on the other hand, maybe the real goal is a government takeover of the U.S. health system.

In a recent column, Larry Elder points to an ABC News/USA Today/Kaiser Family Foundation survey that shows 89 percent of Americans are satisfied with their health care. That means up to 250 million people could be happy with their plans. So why is it we need Obama’s big-bang health-care overhaul in the first place?

In a new Pew Research Center poll, only 41 percent of those surveyed believe the U.S. health-care system needs to be completely rebuilt. In early 1993, when Mr. and Mrs. Clinton started on health-care reform, 55 percent said the system needs a complete overhaul. So something has changed.

In a new CBS/New York Times poll, 38 percent say the economy is the most important problem facing the country, 19 percent say jobs, and only 7 percent say health care. In an NBC/Wall Street Journal poll, 24 percent say the budget deficit is today’s most worrisome problem while only 11 percent say health care.

There’s more. According to the U.S. Census Bureau we don’t have 47 million folks who are truly uninsured. When you take college kids and those earning $75,000 or more who choose not to sign up for a health-care plan, roughly 20 million people are removed from the list of uninsured. After that you can extract the 10 million who are not U.S. citizens and the 11 million who are eligible for SCHIP and Medicaid but for some reason have not signed up for those programs.

So that leaves only 10 million to 15 million people among the long-term uninsured.

Yes, they need help. And yes, they should get it. But not with mandatory universal coverage, or new government-backed insurance plans, or massive tax increases. And certainly not with the Canadian-European-style nationalization that has always been the true goal of the Obama administration and congressional Democrats.

Instead, we can give the truly uninsured vouchers or debit cards that will allow for choice and coverage, and even health savings accounts for retirement wealth. According to expert Betsy McCaughey, rather than several trillion dollars and socialized medicine, this voucher approach would cost only $25 billion a year — with no socialized medicine.

Columnist Peter Robinson, writing for Forbes.com, relates an interview with the late free-market Nobelist Milton Friedman about the inefficiencies of the health-care system. Friedman stated simply and clearly that the cost problems in our system can be traced to the fact that most payments for medical care are made not by the patients who receive the care, but by third parties — typically employers or the government.

“Nobody spends somebody else’s money as wisely as he spends his own,” said Friedman. He also fingered the tax code, which allows for an exemption from the income tax only if health care is employer-provided. This is a free-lunch syndrome, one that removes incentives for competition and cost-control because we’re all playing with somebody else’s money. And in the case of Medicare and Medicaid, caregivers have become employees of insurance companies and the government.

A new government-backed insurance system will intensify this free-lunch syndrome. It also will surely lead to a government takeover of what’s left of our private-enterprise system.

But the Democratic agenda has never really been just about the uninsured, has it? And according to the Congressional Budget Office, with a price tag of $1.6 trillion in new spending, it certainly hasn’t been about real cost-cutting or budget restraint. Nor has it been even remotely about true market choice and competition. Nor has it been about tort/trial-lawyer reform, which itself would be a major cost cap.

And let’s not forget a spate of new tax-hike proposals that would sink economic recovery: employer benefit taxes, higher payroll taxes, taxes on soft drinks and alcohol, a value-added tax (VAT), or another income-tax hike for successful earners. And remember, existing health-care entitlements are estimated to be roughly $80 trillion in the hole over the decades to come. Wouldn’t it make sense to solve these bankrupt entitlements before we layer on new ones?

So there is a strong suspicion that the Democratic agenda has always been a class-warfare, anti-business attack on private-sector doctors, hospitals, insurance firms, and drug companies. In the name of cost-cutting, what’s really going on is a major knockdown of profits. Liberals have always railed against the “excess profits” of insurance firms, drug companies, and physicians.

Knocking down profits and telling people what to do because government planners know best, right? Wrong. Absolutely wrong.

Tonight on The Kudlow Report

2009-06-22T16:36:00.001-04:00

On tonight's show at 7pm ET on CNBC:

GOLDMAN BONU$ BACKLASH BREWING?

CNBC on-air editor Charlie Gasparino is on the story.

THE STOCK MARKET & ECONOMY

CNBC’s Matt Nesto will join us with today’s top market news and developments.

Panel:

*Rich Karlgaard, Forbes Publisher; "Life 2.0" Author
*Doug Cliggott, Dover Management Chief Investment Officer
*Ron Shah, Jina Ventures Managing Partner

INFLATION DEBATE

*Sean Tully, Fortune Senior Editor At-Large
*Peter Coy, BusinessWeek Economics Editor

ARE THE BIG FISH REPOSITIONING TO MORE PASSIVE PORTFOLIOS?

*Bill Atwood, Executive Director of Illinois State Board of Investment
*Rob Kaimowitz, Bull Path Capital Management

Please join us. The Kudlow Report. 7pm ET. CNBC.

An Imperial Fed?

2009-06-22T12:21:00.000-04:00

Does the Obama administration really want to grant a virtual dictatorship to the Federal Reserve on monetary policy and banking oversight and regulation? The Fed already has enough trouble figuring out monetary policy. So this business about the central bank engaging in systemic-risk regulation and all the accompanying regulatory bells and whistles makes no sense.

A host of factors contributed to the credit crisis. But it was ultimately the Federal Reserve — with its bubblehead policy of ultra-cheap rates, monetary explosion, and a sinking dollar — that created it. The Fed was the chief culprit, just as it was ten years ago when it unleashed the tech bubble. It not only created this current crisis, it totally missed it as well. So why would anyone think it has the right stuff to fix it?

I say put Sheila Bair and the FDIC in charge of systemic-risk regulation. Make them totally independent from the Treasury. And while we’re at it, let’s get the Fed to return to a market-price rule for money, including gold, the dollar, bond rates, and commodities. This would mark a sorely needed return to the stable-money period that stretched from the early 1980s to the late 1990s. That was before the central bank embarked on this crazy pillar-to-post stop-go-stop-go monetary-meddling insanity that completely destabilized the economy and undermined the stock market.

On a related note, Washington is spending far too much time focusing on regulations right now. They’re not devoting nearly enough time to figuring out ways to truly grow our economy. It is a statist governmental approach. This great country of ours is thirsting for free-enterprise incentives and solutions. And as the latest polls show, Americans are becoming fed up with the out-of-control spending, borrowing, debt-creation, and tax increases.

What we need is serious economic growth. That is priority number one. What we need is risk-taking and entrepreneurship. Of course, we need transparent markets. But it is the growth message that is being overlooked.

And by the way, speaking of limits to reckless borrowing and debt, the Treasury is going to auction $104 billion in debt this week. That’s yet another record. The previous record was set a few weeks ago, which came a week after another record. Talk about the need for limits. This is total fiscal insanity. It needs to stop now.

But this Fed-dictatorship proposal is a terrible idea. The Fed needs to stick to its knitting and focus on stable money. That’s what’s been missing for ten years under Alan Greenspan and Ben Bernanke. That’s why we experienced two nasty recessions. And that’s why the stock market has gone nowhere.

We Don’t Need Obama’s Big-Bang Health-Care Plan

2009-06-22T12:19:00.000-04:00

It looks like President Obama’s big-bang health-care reform is going down to defeat. This is good. But my question is why do we need it at all? According to a recent ABC News/USA Today/Kaiser Family Foundation survey, 89 percent of Americans are satisfied with their health care. That could mean up to 250 million people are happy. So why is it that we need Obama’s big-bang health-care overhaul in the first place?

There’s more. According the U.S. Census Bureau, we don’t have 47 million folks who are truly uninsured. When you take college kids plus those earning $75,000 or more who chose not to sign up, that removes roughly 20 million people. Then take out about 10 million more who are not U.S. citizens, and 11 million who are eligible for SCHIP and Medicaid but have not signed up for some reason.

So that really leaves only 10 million to 15 million people who are truly long-term uninsured.

Yes, they need help. And yes, I would like to give it to them. But not with mandatory coverage, or new government-backed insurance plans, or massive tax increases. And certainly not with the Canadian-European-style nationalization that has always been the true goal of the Obama administration and congressional Democrats.

Instead, we can give the truly uninsured vouchers or debit cards that will allow for choice and coverage, and even health savings accounts for retirement wealth. According to expert Betsy McCaughey, instead of several trillion dollars and socialized medicine, this voucher approach would cost only about $25 billion a year.

But the Democratic agenda has never really been about just the uninsured. And it certainly hasn’t been about real cost-cutting or true market choice and competition. Nor has it been about tort/trial-lawyer reform. Instead, the Democratic agenda has always been a class-warfare, anti-business attack on private-sector doctors, hospitals, insurance firms, and drug companies. It’s all about control, knocking down their profits, and telling them what to do.

Because government planners know best, right? Wrong. Absolutely wrong.

Tonight on The Kudlow Report

2009-06-18T16:51:00.002-04:00

On tonight's show at 7pm ET on CNBC:

GEITHNER'S TESTIMONY
CNBC’s Hampton Pearson reports.

A FED DICTATORSHIP?
An Historic Regulatory Proposal & Its Market Implications

On to debate:

*CNBC’s Rick Santelli
*Mike Ozanian, Forbes National Editor
*Mark Walsh, Fmr. Sr. Vice President at America Online; Fmr. Vertical Net CEO; Founding CEO at Air America; Fmr. DNC Advisor

REVOLUTION IN IRAN?

NBC News Chief Foreign Correspondent Richard Engel reports.

On to discuss...Vanity Fair columnist and author Christopher Hitchens.

INTERVIEW WITH OMB DIRECTOR PETER ORSZAG
CNBC chief Washington correspondent John Harwood will join us from the White House.

OBAMA & THE PULSE OF AMERICA
Is The Public Growing Weary Of Intervention?

On to debate:

*Steve Moore, Wall Street Journal senior economics writer & author of "The End of Prosperity"
*Robert Reich, “Supercapitalism” author, public policy professor & former Clinton labor secretary

Please join us. The Kudlow Report. 7pm ET. CNBC.