Who's the dope on CNBC's "Kudlow & Company" looking off camera and furiously chewing gum? Uh.... that's me, on Tuesday's show.

When you're doing one of these news shows by satellite from a remote location (I was in Palo Alto), you hear the show live in a speaker hidden in your ear (they call it an "IFB" -- I have no idea what that stands for). During commercials you hear nothing. After the long mid-show commercial break, the show resumed -- but silence continued on my IFB. So I continued to just lollygag around, rolling my head, looking wherever I wanted, and chewing my gum. I had no way of knowing we had gone live and I was on camera. I was brought to reality by a voice suddenly appearing in my ear -- the producer in the New Jersey CNBC studio saying, "Uh, Mr. Luskin, we can see you sitting there chewing your gum on live TV."

Of course when doing a show like this one should always assume one is on camera, to prevent just this kind of goof.

It made me feel so stupid, it reminded me of one of my favorite political cartoons of all time. I think it was by Conrad, the L. A. Times' cartoonist in the sixties and seventies. It was after President Gerald Ford had famously tumbled and fallen down the steps when exiting Air Force One. Evoking the idea that Ford was too dumb to walk and chew gum at the same time, the cartoon showed Air Force One's exit steps marked with a sign reading: No Gum Chewing On Stairs!

So this is my new motto: No Gum Chewing on Live TV!

Sorry, Larry...

Update... I knew this wouldn't take more than a few minutes (isn't the web wonderful?)... Reader Ron Rounds reports:

You got me curious, and I found this at the Lectrosonics website:

"IFB stands for “Interruptible Fold Back.” The name arose from broadcast applications where the audio from the program being produced was fed back to on-camera talent via an earphone of some type. The program feed was interrupted by the producer to cue the talent for scene changes, etc. as the production was in process."

Apparently it's sometimes known as Interruptible Feed Back as well, but Fold Back looks to be the original term.

I was disappointed to see your response to Bill Thomas's estate tax compromise, but even more disappointed to see that you took your "facts" from the WSJ editorial board. I'm not sure why the Journal is trying to start trouble in protecting the remaining 0.3 percent of Americans who will have to pay the death tax, or complaining about a $5 million exemption that will exempt almost every small business and family farm. How is a $5/25 million 15/30 percent (or worse case scenario 20/40) rate structure worse than current law of a $1 million exemption and 55% rate structure? That one year of death tax repeal was insane policy and was never going to remain enacted into law until the Senate grows a backbone, which isn't likely to happen. The op-ed just doesn't make sense, and it quotes some guy from an organization I've never heard of, while the NFIB and NAM support Thomas's plan.

"...the administration's extraordinary access to this vast repository of international financial data, however carefully targeted use it may be, is a matter of public interest."

Thanks to reader Dave Duval for the link.

Update... Reader Aaron Arwine says,

I know we are all furious at the LA Times and the NY Times over their report today regarding the tracking of terrorists' banking overseas...but I just came in from getting coffee and I saw the same article on the front page of the Wall Street Journal.

Our anger should be directed at them as well, no matter who writes for their editorial page.

...Mr. Thomas...has proposed a compromise that could be voted on as early as today but is hardly an improvement over current law. His proposal -- which he's offered with little consultation either outside or inside Congress -- would link the top death tax rate to twice the tax rate on capital gains.

The problem is that after 2010 the capital gains tax is scheduled to rise to 20% from its current 15%. This would mean an estate tax rate of 40%, barely better than today's rate. And it gets worse. To accommodate the Joint Committee on Taxation's wacky revenue estimates, Mr. Thomas would eliminate the repeal now scheduled for 2010 and keep in place the high estate tax rates until then. The Thomas bill also repeals the federal tax credit for filers who pay state death taxes, so people living and dying in states with high death taxes could see their estate tax liabilities rise to more than under current law.

Most economists advocate rich countries’ replacing their complex and antiquated tax codes with a simple low flat tax, and they bemoan the fact that so few countries have tried it. Putin, however, implemented such a policy a few years ago, and the results have been nothing short of miraculous.

Of course, the other G8 leaders might be less enamored of some of Russia’s other approaches to addressing budget problems. Most G8 countries seem incapable of achieving the political consensus required to take necessary steps such as raising the retirement age or significantly cutting the indexation of benefits to inflation. Russia, by contrast, has essentially abandoned its pensioners by inflating away the value of their incomes.

Indeed, many of the elderly in rural Russia are forced to sustain themselves by growing potatoes on the tiny plots of land that the government allows them to till. That is, assuming they survive at all: since the fall of the Berlin Wall, Russian male life expectancy has plummeted from 65 years to around 60 years. There is growing evidence that the stress of transition is the leading cause of death, even above big killers in postcommunist Russia such as alcohol, murder, and AIDS. Should Putin tell his colleagues that they, too, could balance their countries’ intergenerational accounts by starving the elderly?

The Wall Street Journal has led the howling journalistic wolf-pack on this scandal. So it was refreshing this morning to see the Journal's excellent op-ed writer Holman Jenkins pour a little cold water on things -- and in doing so, take a courageous stand against his own employer:

Missing...has been any cogent explanation of the possible reasons behind a practice apparently so widespread that companies must either have been sharing notes on it or have discovered it independently following some inner logic of corporate life. Also missing is any cogent explanation of why it's wrong.

CEO "greed" seems to be analysis enough for many leading journalistic minds. But even stipulating that CEOs are greedy, companies have not been short of ways to shovel large sums to their top servants. Why adopt this stratagem? And why should it automatically be assumed that backdating means CEOs were garnering more pay than their boards intended or were somehow exploiting a loophole?

Thanks for the good column today, hopefully undoing some of the damage that your reporter colleagues have done on this one.

I do think there is one detail that you gloss over at the end, though. I could have my facts wrong, but as I understand it, “fair value” options accounting rules (under which, formerly, options didn’t have to be expensed on income statements), require that the option be issued at-the-money. A back-dated option is issued in-the-money (i.e., issued when stock price is higher than strike price). Such an option would have to be expensed under the “variable” accounting rules, not not-expensed under the “fair value” accounting rules. Thus the “crime” here is failure to expense options under GAAP.

I realize that your last couple of paragraphs generally acknowledged this point. But it’s not as minor as you make it seem. Any CFO or auditor should have realized that back-dated options must be expensed. To not do so is a violation of rules that are, in fact, very clear – though you and I may disagree with them.

What’s the implication? Were the options not expensed because doing so would have drawn unwanted attention to their back-dated attribute? Were they not expensed simply to flatter the bottom line? Both? Either way it’s a non-trivial issue.

None of that justifies the witch-hunt atmosphere – and none of it has anything fundamentally to do with greed, and none of it proves that greed is a crime. But these accounting rules were actually quite straightforward, and from what I can tell they were probably violated.

...Google's Washington policy counsel Alan Davidson as saying that his firm is running "a set of what I would call public-service-announcement-type advertisements."

In the quote, Davidson goes on to say, "If you type in net neutrality at Google, you'll see advertisements for the 'Its Our Net Coalition' or other sites we may be pointing to."

...LawMedia's Doug Thornell gibed, "...Google, who, in leading the net neutrality fight, is engaging in behavior that some may question as not being 'neutral.'"

...leading tech sector firms as EBay, Google, Microsoft and Yahoo are fighting to have specific language incorporated into telecommunications legislation to codify the concept. Opponents -- including the Bells and the cable industry -- say the language is not needed, because there is no evidence of Internet providers treating content from different firms unequally.

Thanks to our ever-anonymous DC lawyer/lobbyist friend for the link.

Posted by Donald L. Luskin at 10:48 AM | link    

Tuesday, June 20, 2006

Posted by Donald L. Luskin at 10:02 AM | link