State of the Union Speech tomorrow

Posted on February, 27 2017, 15:09


One of the nice aspects of having a new GOP-lead Executive Branch is that some friends are taking positions of responsibility in the new Administration.  One of my old friends who is in the White House sent me a summary of what is expected to be discussed in tomorrow's State of the Union speech by President Trump. 
 
The President will appropriately take credit for already doing a number of things that he promised during the campaign.  Good for him.
 
He will also stress the importance of the "repeal and replace" effort to provide a remedy for the failures of Obamacare. 
 
I am deeply concerned about the tax reform which would include repeal of the Death Tax and in other ways change the Code to provide for economic growth, but there is a reason to address health care first.  Part of the replacement for Obamacare will be significant reductions in various outlays, and that will provide some budgetary room for tax reductions.  In other words, a new health-care system will mean reduced spending.
 
But on the tax front, we are looking again at the dilemma of scoring the cost of various changes in the Tax Code.  President Kennedy's tax reforms and President Reagan's tax reforms generated economic growth which boosted economic growth and with it, federal revenues.  So too, President Trump's expected tax reforms will boost growth and federal tax revenues.  Like Presidents Kennedy and Reagan did, President Trump will also face economists that doubt that his tax plan would generate promised growth and thus generate added federal revenues.  The Joint Committee on Taxation (JCT) which is tasked by law with scoring tax bills, has made progress in its methodology -- it is more realistic that it was in the past.  But, it still has a model that does not take into account all the salutary effects of pro-growth tax bills. 
 
As they say, it is not "rocket science" to understand that if the government lowers the tax penalties against work, risk and investment, you're going to get more of those things -- and that will result in more economic growth. 
 
So it seems that economic growth will sadly have to take a back seat for a few months until Congress enacts legislation to "repeal and replace" Obamacare. 
 
Tomorrow night the President will also talk about regulatory reform to reduce the burden of over-regulation in our economy.  He'll cite the goal of education reform to end the tragedy of so many public schools that fail the children. 
 
And, in my reading of the points the President is expected to make, he will follow the precedents of many State of the Union speeches in talking about helping Americans living in the "poorest and most vulnerable communities" and he'll also speak to the daily challenges of the middle class.  He'll talk about rebuilding the military, and of reforming the Veterans Administration.
 
He'll also stress the importance of Congress acting as speedily as possible on his agenda.  And he might directly address the Democrats in the Senate which have been "slow-walking" his appointments through the confirmation process.  He needs his men and women considered and confirmed promptly. 
 
I'm looking forward to listening to the speech.  Of course, President Trump being President Trump, my guess is that he may also go off the Teleprompter once or twice to make some points that he wants to make.  I'm very sure of one thing:  he won't be intimidated by the assembled 535 Representatives and Senators, the assembled Joint Chiefs of Staff, the Supreme Court and the Diplomatic Corps that will fill the House Chamber. 
 
It should be good television. Pop some popcorn and open an adult beverage.