Wall Street on G.O.P.

On CNBC this week Jack Welch, GE’s chief executive officer from that firm’s salad days in the 1980s and 1990s, pointed out the dangers of a three-house Democratic sweep. He says it’s dangerous for both the stock market and the economy. And he wants to know why the St. Paul Republicans aren’t running against Harry Reid, Nancy Pelosi, and Barack Obama.

Mr. Welch made the point that the last time the Democrats had control of all three houses in Washington the Jimmy Carter administration was in charge. That was a time of economic and stock market malaise. However, when Washington was divided — as was the case when Ronald Reagan and Bill Clinton were in the White House — the economy and the stock market took off.

“With Pelosi and Reid pushing him,” Mr. Welch said, “there’s no limit to the taxes [Obama will] raise.” Mitch McConnell, who joined Mr. Welch on our show, was in full agreement: “You’ve got a prescription for turning America into France,” the Senate minority leader said, “which is exactly what the Democrats want to do if they get all three [houses.]”

I agree completely. A three-house Democratic sweep is a vital issue and Senator McCain and Governor Palin should be raising it. A three-house sweep is bad for the economy and the stock market. And will someone tell me exactly why the St. Paul Republican’s aren’t mentioning the economy?

As of the time that I write this, there has so far been no reference to the weak economy. There has been no economic-recovery message and no growth message. There has been no reference to the populist revolt against high gas prices at the pump, which is the main cause of the economic slump.

There has been no reference to the 70% of Americans who are tired of high gas prices and want to drill for more oil as at least a short-run solution over the next five to 10 years.

There is no one connecting with the economic woes of blue-collar type working folks who are getting creamed, who worry about falling jobs and rising unemployment, and who want someone to help with the oil shock. What’s going on here? What ever happened to the prosperity part of peace and prosperity?

I made many of these same points Wednesday night on the Corner, National Review Online’s political Web log. To digest, Sarah Palin delivered a brilliant speech in St. Paul. So many good lines. She showed us all that she’s a superb communicator — that she’s even Reagan-like. I personally loved her line about the difference between a hockey mom and a pit bull: lipstick.

With a smile and a great quip, she signaled to her opponents that she is tough, serious, and purposeful — that she has strong convictions and she’s not going to be intimidated. I asked recently if we’re not witnessing the Western frontier version of Margaret Thatcher.

Sarah Palin is just what the Republican Party needs. She connected really well with middle-class working folks, both in cultural and social terms, which is no small feat: Values matter and the Democrats are in trouble here — big-time. The more they go after Mrs. Palin culturally, as they have already, the more trouble they’ll fall into.

And Mrs. Palin did mention oil and gas drilling, and she effectively connected her Alaskan natural-gas pipeline to Tsar Putin’s global aim of energy blackmail. She proved that she knows a bit more about high-table geopolitics than her critics think, and that Alaskans know a lot about Russian territorial ambitions, with Russia right across the pond.

But again, there were misses. Foremost, I do not think Mrs. Palin connected with folks on the economic slump, nor did she present an economic-growth recovery plan. Rudy Giuliani made the first foray into that area in his speech when he talked about restoring economic growth through tax cuts and drilling. Mrs. Palin also fingered Mr. Obama as a tax-and-spend liberal. Good.

But she didn’t get to gas pump prices, or the oil-shock-driven consumer shortfall in real purchasing power, or the threat of more job losses and higher unemployment that are casting shadows over public confidence and the investor-class stock market.

That said, Mrs. Palin did lay some important groundwork. In the weeks ahead, she can expand her oil-and-gas drill, drill, drill message to include gas prices and the economy. This is only a short stone’s throw away from her Wednesday-night speech. Wouldn’t it be great if she and Mr. McCain adopted a strong, pro-growth, tax-reform plan to reduce tax rates across-the-board, get rid of the corrupt loopholes and tax earmarks defended by the old order in Washington, and combine their ethical corruption cause with prosperity tax cuts as well as currency-reform to restore King Dollar?

At least Mrs. Palin got us headed in the right direction on Wednesday night with her America First energy-reform message. Watching her phenomenal communication skill, her disciplined yet positive style, I can’t help but be optimistic. I’m optimistic in part because Mrs. Palin is clearly an optimist. I’m a sucker for optimism.

And now it’s Mr. McCain’s turn. What St. Paul needs is a good dose of economic reality. A drill, drill, drill message tied to gas prices and the economy along with supply-side tax cuts and King Dollar. And like Jack Welch said, why not make the Reid-Pelosi-Obama three-house link? A return to the Jimmy Carter 1970s is the last thing we need.

Mr. Kudlow is host of CNBC’s “Kudlow & Company.” © 2008 Creators Syndicate Inc.