Larry Kudlow

Against the backdrop of high unemployment and a public revolt against a Democratic health-care bill — which would significantly increase taxes, slash Medicare spending, and massively raise health-care spending elsewhere in a government takeover of our leading growth sector — the Republicans swept the Virginia and New Jersey gubernatorial races.

Dow Jones 10,000 arrived on Wall Street Wednesday for the first time in a year. It's a milestone of sorts, and it certainly represents a vote for investor confidence in economic recovery. Blowout profit reports from Intel and JPMorgan helped fuel the day's 145-point gain. So did a retail sales report that excluding Cash for Clunkers was actually quite strong. But storm clouds are gathering.

There's a simple policy mix the White House could adopt to fix the economy. It could enact the Mundell-Laffer supply-side approach of a steady King Dollar for price stability and low marginal tax rates to spur jobs and economic growth.