In only one year...

Larry Kudlow
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Posted: Mar 19, 2004 12:00 AM

When Commander in Chief George W. Bush issued strong, unyielding statements that made it clear he will stay the course in Iraq and in the war against terrorist networks everywhere, the U.S. stock market rallied a couple hundred points.

How fitting is that.

Most in the media do not recognize that the stock market is the most all-inclusive barometer of the health and security of the U.S. economy and the nation's body politic. In fact, ever since the U.S.-led campaign to liberate Iraq began a year ago, stock indexes have steadily gained ground. This indicates clearly that America is safer and more secure as a result of the war in Iraq -- which has become the fulcrum battleground in the war on terror.

It is tragic that the Spanish electorate appeased terrorists by voting out the pro-war conservative party and electing the antiwar socialists. The great symbol of Spain used to be the tough and daring matador, unafraid to take on the dangerous bull. Now, Neville Chamberlain's umbrella has become -- at least temporarily -- that nation's operating metaphor.

Bush will have none of this. He vowed that the terrorists will "never shake the will of the United States." He knows if America lays down before the terrorist threat, terrorism will live to destroy another day. He knows that the United States must not abandon the Iraqi people as they move toward a new system of freedom, democracy and free markets -- a shift that could reverse 700 years of Arab decline, to use the argument of Princeton professor Bernard Lewis.

A lead story in this week's New York Times asserted "Bush's campaign emphasizes role of leader in war." But the Gray Lady misses that Bush has been leading like this ever since 9-11. The U.S.-led coalition has won two tough wars. The bloodthirsty Taliban is gone. The murderous Saddam Hussein is gone. The nuclear proliferation ring in Pakistan has been smashed. Libya is disarming. Dictators in Iran and Syria are squirming. North Korea is on the chopping block. Osama's days are numbered.

Terrorist episodes regrettably continue in Iraq. But that's desperation. The tide of history has turned against the terrorists. Their management infrastructure has been badly damaged -- just as Iraq's is coming together.

Small new businesses are flourishing in Iraq. Schools are open. Electricity is on. Oil is being pumped at prewar levels. Men and women of all political stripes and religious beliefs are gaining human rights and constitutional liberties. A soon-to-be-completed free election is more than anyone dreamed possible a year ago.

At home, the Patriot Act and a strengthened security effort has so far, with God's help, prevented new terrorist attacks. Because of this, American businesses have reopened and prospered since the 9-11 massacre. Our workforce is getting home safely to their families each night. Bush took the war to the terrorists instead of waiting for them to hit us. As a result, the United States is unquestionably more safe and secure.

The stock market has charted this wartime progress. The broad-based Wilshire Index of 5,000 actively traded companies has gained 34 percent over the past year. Investor wealth has appreciated by roughly $3.5 trillion. With rising home prices, family net worth has surpassed the record reached in early 2000. The same holds for the market value of all U.S. mutual funds.

This is an impressive set of prosperity achievements.

Meanwhile, the American economy is flourishing, even while antiwar old Europe is stuck in recession. Spurred by a strong dose of supply-side tax cuts and easy interest rates, consumer spending, business investment, housing and exports are all rising rapidly.

And despite what the media says, more Americans are working than ever before, according to the Labor Department's household survey. The unemployment rate has fallen from 6.3 percent to 5.6 percent as small business start-ups, the self-employed and independent contractors are responding to lower taxes.

Pessimism and carping are for naysayers, as Sen. John Kerry reminds us each day. Kerry lacks the fortitude, patience and vision to wage an effective war against Al Qaeda and the other terrorist networks. He would place our national security in the hands of the United Nations -- or worse, he would allow leaders in old Europe to call America's security tune.

On the economy, Kerry's the true Herbert Hoover candidate. His pledges to raise taxes and tariffs are the exact Hooveresque mistakes that turned a mild recession into a deep depression in the 1930s.

George W. Bush will have none of this. He and his team understand how to exercise American power to protect the home front and spread the values of freedom and democracy abroad. Tall in the saddle, he will stay the course. For this we have much to be thankful.

In only one short year, things have improved miraculously.