Barry Ritholtz drops one . . .
"The Death of the PC"

State of the Union address

A little birdie has brought me an advance copy of tomorrow night's SOTU address. I'll summarize the key points and also what the reaction will be.

The theme will be that the President and his top advisors have heard the country. He'll say we seem to want less spending and smaller deficits. O.K., he'll say. But he'll say that we have to do this together. Everybody sacrifices. And he'll insist on, as he did last year, changes in medical care, environmental policy, and education. He'll say: medicine first then a little sugar:

--A phased-in increase in the age for full Medicare and Social Security benefits to 75. (Phased-in meaning that nobody collecting benefits now loses a penny and people close to retiring don't lose much. Most of the cut in benefits will be borne by people under age 45.)

--With the exceptions of national defense and internal security, a hiring and wage freeze for federal employees through the end of 2012. Immediate cancellation of all White House state dinners. Absolutely no money for trips out of the country by members of Congress. (If they can't learn about it via the phone or the Net, the heck with it.)

--Sales of a substantial part of the 500 million+ acres of land the federal government owns. Plus, sale of wasteful, poorly used,.poorly administered federal assets. (Airplanes, cars, buildings, parks, etc.) Including, as soon as practicable, General Motors.

--A big--but phased-in--tax on carbon fuels. Cap-and-trade too complicated, too subject to political gaming and infighting, too dependent on cooperation by foreign countries? Fine. A nice simple tax. For decades we've been spending blood and treasure defending our energy supply and it's about time to follow the preaching of economists to set price equal to marginal cost.

--Sharp cuts in block grants and other aid to state and local governments. Uncle Sugar has got big financial problems, folks. You're on your own now. (And this will encourage some much-needed fiscal house-cleaning in these governments.)

--A big tax on big banks. They benefited from the bailouts, they should pay. And heck, if economists at the free-market University of Chicago like it, shouldn't everybody?

--A big tax on pharmaceutical and insurance companies, and an even bigger tax on tobacco companies. They don't seem to be too popular; why not tax 'em?

--A ten percentage point increase in the federal income tax rate for households grossing over $1 million; a six point increase for households grossing between half a million and a million; and a three point increase for households between $100K and half a million. If the Almighty didn't want to rich people to fund the government, why did He invent taxes?

--A quadrupling of H1-B visas. We need more smart, ambitious, hard-working people to tax the hell out of. 

--Finally, an almost-confiscatory tax on SUVs, RVs, and other monster vehicles that clog the roads and parking lots, cause grave difficulty for other drivers, and are often driven by apparent maniacs. This program is at the behest of a particular voter in Raleigh, NC.

These ten proposals will raise squiddly trillion dollars. They will eliminate our deficit from now until the sun goes supernova. And money will be left over. With that leftover money we will begin three new programs.

--Every resident of the U.S. who doesn't currently have health insurance for any reason--because of lack of income, or a pre-existing condition, or rescission by an insurance company--will, upon a showing of a good faith effort to get a policy to the Dept. of Health and Human Services, be cut an annual check sufficient for the premium for a no-frills insurance policy. The assistance will last as long as the condition that prompted the need. But twelve months after the start of this program it will become a first-degree felony for any resident to whine about access to medical care.

--Every resident of the U.S. will get a flat annual cash grant to pursue education, broadly defined. (Who opposes education?) It could be applied to tuition at a four-year college, a two-year college, or trade school, or for private schooling, home schooling, apprenticeship, or even self-study. The main exceptions will be that it can't be applied to any college or university that has broad distribution requirements that complicate scheduling, delay graduation, and maintain departments and courses that faculty like but students don't. It also won't be applicable to any college or university that spends thousands of dollars producing and distributing promotional materials to its own employees. These exceptions are at the behest of a particular voter in Raleigh, NC.

--Subsidies to producers and consumers sufficient so that by November 2012, every household in the U.S. has South Korean-grade or better Net access. The Net can educate, entertain, employ. It can provide companionship and social interaction,. It can address, if not solve, almost any problem you have. We'll provide the access; after that, you're on your own.

At the end of the speech, Congress gives the President an 82-minute standing ovation, a record. Polling the next day shows 86% in favor, 7% against, 5% undecided, and 2% asking "What was the question again?". Except for Texans, whose concerns are immediately dismissed by the rest of the ecstatic country and are mercilessly lampooned by Jon Stewart. The president is reelected by a landslide in 2012 and is added to Mount Rushmore in 2020.

Note to the administration: don't thank me, just send money.