Subject: KUDLOW'S TAKE -- National Review Online - September 11, 2001

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.