Power Dinner

My good friend Joseph called me this morning.  He is a classic type A personality that can get your juices flowing in the morning better than a shot of double espresso. He informed me that he was having dinner with a few “influential” members of Congress tonight.

I wasn’t invited.

That said, he did offer up the opportunity for me to compile a list of talking points for him to discuss over dinner. Here are a few suggestions/concerns that come to mind when immersed in the wonderful game of Washington politics.

GOP Control of Congress – In a sweeping referendum against the policies of the Obama administration, the GOP took control of congress, winning the Senate and increasing their control of the House for the first time in eight years. There was an overriding theme that it was a message from voters against a “do-nothing” Congress to reach across the aisle and get something done. This constituent agrees that there should be productive bills presented and voted on for the merits contained within the legislation and how the benefits of that bill will better the country. The days of spiteful politics should end. That said we should refrain from legislating for the sake of legislating. Specific bills that are voted down are voted that way for a reason. If a bill is presented that is too one-sided or will not produce its’ intended purpose of bettering the country, then I’m in support of gridlock.

Clarity of Message – Now that the GOP controls Congress one certainly hopes that they will have a clear and focused agenda. We don’t want a rehash of the Contract with America – but something that we the constituency can look forward to, track and judge - a concise and organized Congressional roadmap. 

Tax Reform – Our corporations pay the highest tax rate in the industrialized world. Our tax rate of 35% is uncompetitive and promotes creative tax accounting and inversion. Through the use of loopholes, large corporations with large legal and accounting departments have the ability to bring their effective tax rates as low as 13%. Congress should lower the corporate tax rate. It would be constructive reform with bipartisan roots. The economic benefits would satisfy the right and equal opportunity for corporations among varying sizes will satisfy the left. Corporations will stay in this country and tax receipts may improve.        

Repatriation Tax Holiday – U.S. multinational firms are storing over $2 trillion in offshore profits because bringing those funds back to this country will subject those assets to a 35% repatriation tax. In 2004 Congress offered a repatriation tax holiday that allowed corporations to bring up to $500 million back to this country at an effective tax rate of 5.25%. It has been hotly debated as to the direct benefits those assets actually provided to the economy, many saying the experiment was a failure. This time around we should offer a repatriation tax holiday that will be directly invested for jobs and growth. Using the funds for direct investment into infrastructure is an idea that has been tossed up. This constituent believes the repatriation tax holiday will be stimulative if applied the right way this time around and should enjoy bipartisan support.

Regulation – Small businesses are being strangled with over-regulation and it has a sapping effect on economic growth. This issue is of the utmost importance considering small businesses are the key driver of economic activity and jobs.  This constituent believes in limited government and asks Congress to enact legislation to thoroughly comb through the 15 departments, 69 agencies, 383 sub agencies and the nearly 200,000 pages in the Code of Federal Regulations and trim the waste. A study from the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. Fixing this problem will have a profound effect on economic growth.

Budgetary Concerns – There should be a measured and calculated approach to balancing the budget and bringing the national debt to more reasonable levels. Taking the time to find waste, fraud and abuse among the varying government entities should be something taken seriously. We should avoid another sequestration type of hacking and certainly another fiscal cliff. Taken directly from the Citizens Against Government Waste website, “It is within the context of these looming, significant spending decisions that Citizens Against Government Waste (CAGW) releases Prime Cuts 2013. CAGW has been publishing the document since 1993. This year’s version contains 557 recommendations that would save taxpayers $580.6 billion in the first year and $1.8 trillion over five years.” These types of proposals should be taken seriously.

 As of the time of this writing, the breaking news has been President Obama’s plans on immigration reform through executive order. This just crossed the wire and I am sure this will be a topic discussed as well.

I wish Joseph fine dining and hope he would pass along these thoughts to his dinner companions.

Joseph S. Kalinowski, CFA

joe@squaredconcept.com