(January 31, 2008) – You can find a summary of the policy initiatives proposed in the State of the Union message at the following White House summary page. The most interesting proposal to me was the veto threats President Bush made to trim spending earmarks, although drawing the line at half of last year’s earmarks seems like a real wimp-out. Earmarks are spending measures that members of Congress sneak into bills and committee orders that are never voted on in the light of day. There should be none of them at all–zero.
The other interesting topic was tax rates. President Bush correctly pointed out that Congress is steaming towards a huge increase in tax rates when today’s income tax, capital gains tax and dividend tax rates expire in 2 years. That tax increase would have a huge impact on growth and the value of the stock market–as much as 3000 Dow points by my estimates. (I do not believe this is yet factored into stock prices.) Unfortunately, the tax topic has been highjacked by the election process. And traditional tax cut supporters threw the tax cuts out the window when they all climbed on the stimulus package train. There will be no tax cut extension this year.
I will participate in a White House policy conference call tomorrow morning and get back to you on anything I learn there.