Dear Mr. President:
After laboring for nearly 40 years in the vineyards of capitalism, I have learned to recognize the conditions that cause good markets, build wealth and help strengthen our society. These positive conditions originate from individuals, and are completely within our control to initiate and implement. Negative conditions originate either from external sources, which are completely out of our control, or from poor thinking and bad choices that we make. To create a positive, wealth building, strong society, one must necessarily make the right choices and take steps to put them in place. Being the President, you are the single most influential individual in this regard.
As an investment professional, I have given much thought to a list of choices that will give us a good market environment. The result is an investor’s wish list. I have a distinct feeling that your list already features most of these choices, but in case it does not, here goes:
On Income Tax Reform: Give us a tax code featuring one income tax rate for all tax-paying Americans. Exempt those American workers from having to pay any tax if they can’t afford it and stop the punishment of the most productive, risk-assuming and high-earning Americans by eliminating the highest rates exacted through our progressive tax code. A flat “one size fits all” tax rate will stimulate capital investment, which in turn will grow the economy at a faster rate, creating more tax revenues (not less as many predict). Higher revenues will help narrow the deficit. Deficit projections are already $80 billion lower than they were a year ago, confirming that you are already on the right path with your last tax cuts.
On Other Taxes: Eliminate the double and triple taxation found in our capital gains tax, corporate dividend tax, and death tax. By eliminating these duplicate taxes, we will increase the compounding after-tax rates of return in our country, truly making us an attractive investment for all, including foreigners. If we do this, the dollar rate of exchange will go up. A strong dollar will give us the highest living standard in the world, but will also help insure against inflation, as import prices will certainly fall.
On Social Programs: By creating a “private option” for Social Security and Medicare, we will allow Americans to become masters of their own destiny. Rather than a FICA tax or Medicare premium, allow individuals to deposit a portion of these payments in a tax-exempt savings account of some kind. These most regressive forms of taxation can then become a savings pool to help alleviate an insurmountable “pay as you go” burden that faces us in future years.
On Fiscal Policy: Spending discipline must be part of your economic program. The rate of spending growth must be kept lower than the overall economic growth rate. As this wish list will likely create a high economic growth rate, there shall be some spending flexibility available for “one-time” emergency measures.
I realize that the trick to putting all this in place is to figure a way to find the support of 60% of the U. S. Senate, as you will need more than a simple majority under present Senate rules. The recent election has brought you closer to that magic number, but you’re still not there. Maybe there’s a way to convince a handful of Senators from the other party to support this wish list. If you can do this, we’re headed for a time when economic growth is high, incomes are high, unemployment is low, deficits are low and investment markets go through the roof! Pension plan problems will disappear in America and we’ll be in a virtuous cycle again–a bull market as far as the eye can see.
Your serious consideration of this list is greatly appreciated.