DUE TO THE RECENT TRAGEDY AND DAMAGE IN NEW  YORK WE ARE EXPERIENCING SOME LOCAL INTERNET CONNECTION PROBLEMS. WE APOLOGIZE  FOR ANY INCONVENIENCE THIS MAY CAUSE.
 
KUDLOW'S TAKE 
By Lawrence Kudlow 
 
THE PRICE WE MUST PAY 
We are at war.  And  war changes everything. 
 
After today's heinous crimes committed by  terrorists against the U.S. and the 
rest of civilized humanity, there must  be a sea change in American policies 
if we are to effectively play the rough  hand that God has dealt us. 
 
We are at war. And war changes everything,  including policies. We must now 
embrace war policies. 
 
Among the carnage and massive human suffering there  is an important wake-up 
call that must be heeded by Democrats and  Republicans alike: We live in a 
dangerous world, and we must never forget  how utterly important it is to 
maintain our defenses in order to preserve  freedom and democracy and our way 
of life. 
 
The terrorist invasion of the U.S. mainland  underscores the urgent need to 
rebuild the defense and national security  structure that has slowly but 
steadily eroded in recent years. Barbaric  terrorists have revealed 
significant flaws in our intelligence systems and  in our security 
arrangements at home. This will all have to be changed. The  threat of 
terrorist use of nuclear or other weapons of massive destruction  hammers home 
the urgent need for strategic defense measures and a general  technological 
rebuilding of our defense posture. 
 
In financial terms, this will cost hundreds of  billions of dollars. So be it. 
It's a drop in the bucket for the defense of  freedom. We will sell bonds to 
finance military security. Bonds will finance  investment in freedom. 
 
In economic policy terms, today's terrorist  invasion similarly changes 
everything. To backstop national security  recovery we must take aggressive 
actions to stimulate economic recovery. It  was Reagan who argued 20 years ago 
that U.S. economic decline in the 1970s  stimulated Soviet adventurism and 
expansionism. Reagan knew that economic  recovery at home would insure 
international recovery abroad. 
 
In an interesting book by Professor Gary Dean Best,  entitled Pride, 
Prejudice, and Politics, a similar point was made about the  linkage between 
domestic economic policy and international security policy.  Prof. Best noted 
that the failure of the U.S. to recover from the Depression  - where even as 
late as 1940 the unemployment rate was 14.6% - created an  image that the 
economically-plagued U.S. would be a weak player on the world  political 
scene. Quite simply, Best argued that economic weakness at home  encouraged 
Hitler and Japan abroad. 
 
In today's terms, one cannot help but wonder  whether Mideast-based terrorist 
groups do not think that their  energy-producing state government sponsors can 
simply turn the dial, tighten  oil production, and thereby weaken the American 
economy even more. Is it  entirely a coincidence that the terrorist actions 
aimed at closing down Wall  Street, closing down the Pentagon, and even 
closing down the U.S.  government, have occurred in the immediate aftermath of 
worsening economic  news and slumping stock market performance? 
 
No matter what the cost, the U.S. must be prepared  to restore its economy. 
Phony lockboxes must be thrown out the window.  Unnecessary obsessions over 
debt retirement must be driven away. Now is the  time for aggressive fiscal 
and monetary stimulus to promote growth and  finance freedom. Substantial tax 
cuts on individuals, businesses, capital  investment, and equipment 
depreciation should be immediately put into place.  Lower tax rates across the 
board will aid recovery by reducing production  and investment costs while 
stimulating an entrepreneurial economic return.  The Federal Reserve Board 
must substantially increase the volume of bank  reserves to reliquefy the 
financial system and the economy. Steps to promote  energy production must be 
taken aggressively. 
 
Here in New York, with the destruction of the World  Trade Center, those of us 
in the financial community will grieve over the  sad and tragic loss of 
husbands and wives who worked Downtown. So many of us  involved in politics 
and government will know people who lost their lives in  the plane hijackings. 
While we grieve sadly, our anger will demand immediate  U.S. retaliation to 
clean out the terrorist criminals and the states that  sponsor them. We know 
who they are. We know where they are. And we will hope  and pray that 
president Bush takes immediate and effective actions.  
 
But amidst the grieving and the anger, none of us  should lose sight of the 
long-term goal of preserving our freedom and  democracy. This is a national 
security goal, and it is also an economic  security goal. What happened today 
changes everything. Lord give us the  strength to learn from it and take the 
right actions to preserve it.