BE OUR GUEST

Michael A. Session resides in Cape Girardeau with his family. He is a native of Stoddard County and is currently a graduate student at Southeast Missouri State University.

In anticipation of the President's State of the Union address, I would like to share my thoughts on what his message should be and make some recommendations.

It is my hope that the President put forth a forward-looking, optimistic vision that stresses long-term economic growth instead of a politically correct quick fix. I believe we as a nation have a promising future ahead of us. Currently the stock market (a leading economic indicator) is reaching record heights as individual investors abandon short-term cash positions and pour money into stocks at a spectacular rate. The implications of such a shift could see America eventually cure its debt problem and become a giant capital-creation machine. As capital formation (saving) increases, conversely the price of capital decreases, giving American entrepreneurs access to cheap long-term money with which to start new businesses and spur job growth.

Although the above portends well for the future, it does not address the current economic malaise. It's here that the President must define the proper role of the government in getting the economy moving again. The President should advocate governmental restraint. Government must resist the temptation to intervene given its innate inefficiencies and excesses. Good intentions bolstered by compassion and exaggerated claims are no substitute for good policy. Alternatively, the President should emphasize that the proper role for government in stimulating economic activity is to provide the incentive to work, save and invest. In other words, the economy works best when in the hands of free individuals exercising the power of choice, not when government decides what is best for them.

It will be crucial for the President to point out that all recessions are unique, and it is precisely the banking, real estate and insurance sectors that are mired in painful difficulties today. Furthermore, future growth will be constrained by tightening labor markets and stagnating productivity growth. In light of these facts, the President should make the following proposals:

1. Total elimination of capital gains taxes to boost investment and create jobs.

2. Propose accelerated depreciation and Investment Tax Credits (ITC) in order to spur business acquisition of new plants and equipment as a substitute for labor, thus increasing productivity in the face of a shrinking labor force in the future.

3. Savings from substantial defense and domestic program cuts (especially in entitlements) would be used to reduce the budget deficit and nothing else.

4. Overhaul of the tax code: Put into place an optimal consumption tax rate. (An optimal tax rate may be defined as a rate high enough to maximize revenue without reducing the tax base.) Cut business and personal income taxes and employee payroll taxes along with sweetening Individual Retirement Accounts (IRAs).

5. Revenues from the consumption tax which should be substantial, given that 65 percent of our GNP is consumption will be invested in education, job retraining, rebuilding infrastructure and low-interest loans to small businesses.

6. Forcefully demand a line-item veto, congressional term limitations, and a balanced budget amendment.

Aware as I am of political restraints, I understand my message/recommendations for the President may seem radical and idealistic. But I also believe that if the President takes such a "radical" case directly to the people, they will respond favorably because it will serve as a stimulus for renewed faith in the fundamental values this nation holds most dear: individual liberty and its corollary, less government.