Kudlow: ‘Let’s Give Bernanke a Little Credit’

Larry Kudlow, the former Reagan advisor and now host of CNBC’s "Kudlow & Company,” figures Federal Reserve Chairman Ben Bernanke has things just about right.

At least, much, much more right than the federal government’s too-little, too-late tax rebate.

By Kudlow’s calculations, "Gentle Ben” has saved top-tier taxpayers like him and his wife $2,000 a month — $24,000 a year, every year — simply by cutting interest rates to 2.25 percent, down 3 percent from autumn.

"I have really learned to like Ben Bernanke. He's the man. And his interest-rate cuts are vastly more effective than the so-called economic-stimulus rebate plan coming out of Congress and the White House,” Kudlow wrote on RealClearPolitics.com.

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The reason is that Kudlow and his spouse have an adjustable-rate mortgage. His original rate of 5.25 percent was on the way up in recent months, to a high as 8.25 percent.

Then the rate cuts set in.

"Guess what? Through February it has round-tripped all the way back to 6 percent,” Kudlow wrote.

The Bernanke "rebate” is not just for the wealthy, Kudlow says. In fact, he calculates that median-price homeowners can now get into a $196,000 home with 10 percent down and, if they had chosen an adjustable-rate mortgage, would be saving $300 a month — $3,600 a year.

"That's a big rebate from the Fed. It's about three-times bigger than what Uncle Sam is promising,” Kudlow wrote.

Kudlow laments that he and his wife will not see any of the official tax rebate money. They make too much and got phased out, he says.

"Those of us whose rebates will be reduced or phased-out completely comprise the top 5 percent of taxpayers and pay 60 percent of all personal income taxes,” he wrote.

"In total, three-fifths of hard-working Americans will get little or nothing from the famous rebate. Doesn't hardly seem fair, does it?”

But the rebate is already old news, Kudlow says.

In fact, Bernanke’s moves have put much of the fear in the market to rest, he wrote. Backstopping the banking system and providing short-term loans is working.

"This, in turn, has caused a big rally in stocks. On top of that, the value of the dollar on foreign-exchange markets is beginning to go up, and the price of gold has plunged nearly $100,” Kudlow pointed out.

Various forces put into play by Bernanke, he argued, have managed to tamp down both market uncertainty and could also keep inflation in line, no small feat.

"So you know what? Let's give this guy Bernanke a little credit. I think I may make him my new best friend,” he wrote.

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