Give Credit Where It Is Due
It has been widely reported that President Bush simply refuses to turn against the surge in Iraq, or even compromise on it. At the same time he admonishes Congress to toss out troop-withdrawal timetables and to give General Petraeus's new counterinsurgency plan time to work. And you know what? While the Democrats stand against near all of the president's wartime policies — and in the process court defeat — the stock market is standing with Mr. Bush, and the chance for victory.
Early last week, when the Democratic leadership of Harry Reid and Nancy Pelosi launched their latest anti-war offensive, stocks dropped about 150 points. Then, in a press conference a few days later, after Mr. Bush discussed clear successes in Iraq's Anbar province, the Dow Jones soared nearly 300 points, marching ever closer to the 14,000-point plateau.
Of course, shares trade on the profit and interest-rate fundamentals of the economy. But if you ask folks on Wall Street what their biggest worry is, most will say another 9/11. They rank another attack far ahead of passing sub-prime mortgage problems or wiggles in consumer spending.
The stock market, in fact, is voting for the president to stay on offense. Here's a case in point. The highest-ranking Iraqi leader of Al Qaeda in Iraq was just arrested, after which he told interrogators that Osama bin Laden's inner circle enjoys considerable influence over the Iraqi Al Qaeda branch. "Communication between the senior al-Qaeda leadership and al-Masri frequently went through al-Mashhadani," said Brigadier General Kevin Bergner. "There is a clear connection between al-Qaeda in Iraq and al-Qaeda senior leadership outside Iraq."
And Wall Street connected the dots, too: That day the Dow had been down 150 points. But it rallied back 100 points after the Iraqi capture came across the tape. This brings me to a larger point. Despite the criticism Mr. Bush has received over his Iraq war policies, isn't it interesting that stock markets have been booming since early 2003, when Saddam Hussein was overthrown and the president signed his supply-side tax cuts into law? Mr. Bush, of course, never gets any credit on either of these points.
In just the past year alone, the Dow has gained a remarkable 30%. Meanwhile, Europe and Asia are up about 30%, Japan 23%, and emerging markets more than 60%. Clearly, the world is voting — with real money — for the American system of free-market capitalism. And it's my strong suspicion that the majority of the global investing community supports the Iraq war and a steadfast American commitment to stop terrorism. They seem to know that if America doesn't do it, no one else will.
I have long believed that stock markets are the best barometer of the health, wealth, and security of a nation. And today's stock market message is an unmistakable vote of confidence for the president. Even the best low-tax, limited-government economic policies can be thwarted if the men and women going to work in the morning can't get safely back to their homes and families at night. And the fact that the world economy is experiencing the greatest economic boom in history is a direct rebuke to jihadists everywhere. Al Qaeda despises our country and its capitalist freedoms. And unless stopped cold in their tracks they will strive to destroy the American financial system and free-market development around the world.
The spread of free trade, the free movement of capital, low taxes, and the breathtaking rise of the Internet — these are generating more jobs, wealth, and prosperity than ever before. And this amounts to a collective thumbing of the nose at the terrorists. It's as though world markets are saying that history is on our side, and that the crazed self-proclaimed terrorist clerics will ultimately be defeated.
Free-market capitalism, 10. Al Qaeda, zero.
And just as Mr. Bush won't give up on the surge, he's not about to default to the Democrats on the supply-side investment tax cuts that helped deliver a near six-year economic boom.
"I'm not going to raise taxes," he told me in a recent White House meeting of conservative columnists, and he pledges to veto non-defense appropriation bills that exceed a $933 billion line in the sand. He also vows to work overtime to get a free-trade deal with the pro-American countries of Columbia and Peru, not only to expand economic activity, but also to counter the anti-American and socialist policies of Venezuela's Hugo Chavez.
The press likes to paint Mr. Bush into a bunker, making him the victim of a torrent of criticism from which they say he can't recover. But here are the plain facts: The president's tax cuts helped reinvigorate investors and businesses. The nation has been safe from attack for nearly six years. And Mr. Petraeus's counterinsurgency strategy in Iraq just may be working.
In other words, Mr. Bush deserves a lot more credit than most are willing to give him.
Mr. Kudlow is host of CNBC's "Kudlow & Company."
