Friday Briefs Jude Wanniski and Karen Kerrigan June 2, 2000

MSFT & ‘Due Process': The latest move by government lawyers to request more time simply demonstrates their concern that Microsoft will subtly argue the lack of "due process" in this ground breaking case. It's a good strategic move, although perhaps too little, too late, if they are concerned their case may get overturned on the due process issue. Due process is as important as the law itself, particularly in these cases. If the Court of Appeals determines that due process was denied, it can either overturn the Judge's decision, or send it back for a retrial. By next Wednesday, at the earliest, Judge Jackson could issue his final ruling after Microsoft is given one day -- 24 hours of "due process" -- to respond to the government's latest breakup proposal.

Following the Judge's final ruling on the breakup, the clock starts ticking on the 30-day appeals period. The government will pursue a direct U.S. Supreme Court track while Microsoft hopes to end up at the U.S. Court of Appeals. Bill Gates is scheduled to be in Washington, D.C. next week at the annual meeting of the Business Software Alliance and will testify before the Joint Economic Committee.

We'll hear talk he's taking this "Washington presence" thing a bit too far now -- always showing up when the court ruling is imminent. This one seems a coincidence of timing. (KK)

REP. MARGE ROUKEMA: The June 6 New Jersey primary has significance for the nation because if Rep. Marge Roukema wins renomination, she almost certainly will become chairman of the House Banking Committee if the GOP holds onto the House. First elected in 1980 in the most northwestern congressional district of the state, Roukema is a "Kemp Republican" who supported the Reagan supply-side initiatives, but has had a more liberal stance on social issues.

She would definitely be more open to taking an initiative on a gold-based monetary reform than the current chairman, Rep. Jim Leach of Iowa, who thinks Alan Greenspan can do no wrong and a managed currency is just fine. If you read Thursday's lead editorial in the WSJournal casting Roukema as a mean-spirited liberal Democrat, pay no attention. The New York Political Club for Growth decided to unseat her on the say-so of its new executive director, Steve Moore, formerly CATO's chief economist. Moore, a political neophyte, is throwing a bundle of the Club's money behind Scott Garrett, a "purer" right-winger on social issues.

The WSJ editorial, almost certainly written by columnist Paul Gigot who wrote an earlier column boosting Garrett and peeing on Roukema, did not mention that Jack Kemp resigned from the Club upon hearing Roukema was targeted. It she loses, chalk it up to "friendly fire." (JW)

CAPGAINS: Senate Majority Leader Trent Lott and New Jersey Democratic Sen. Bob Torricelli will jointly introduce a bill next week to cut the capgains holding period to 3 months from 12. It is on track. (JW)

BONDS: When the 30-year was at 6.23% last month, we advised you conditions were ripe for a dip in the yield of 25-to-50 bps. We've gotten 30 bps so far and today's reported rise in the unemployment rate helps even more. The high oil price remains a troubling factor as it will continue to feed the price indices and may give the Fed an excuse to raise rates at least twice more. (JW)