By far the best line from this week's dueling State of the Union messages came from Florida Sen. Marco Rubio. Nice and simple, and right to the point:
"Presidents in both parties -- from John F. Kennedy to Ronald Reagan -- have known that our free-enterprise economy is the source of our middle-class prosperity."
That's a brilliant summary of pro-growth policies, on the supply-side and in a free-market context.
Kennedy slashed tax rates and held down the budget. So did Ronald Reagan, who borrowed Kennedy's ideas: smaller government, lower tax-rate incentives and a thriving middle class, where the economic pie grows ever larger.
In short, the Kennedy-Reagan policies were (SET ITAL) growth (END ITAL) policies.
On the other hand, while President Obama quotes John F. Kennedy, he doesn't draw the dots to Kennedy's supply-side tax reforms. He does mention the phrase "tax reform," but he's not talking about lowering rates across the board while broadening the base to reduce deductions. Rather, he means penalizing companies that operate overseas and favoring companies at home that do what he wants them to do.
Think of it as taxation as a form of industrial policy, replete with tax targeting. This is decidedly (SET ITAL) anti-(END ITAL) growth. And while opposing the sequester spending cut, Obama wants another $800 billion in taxes. More (SET ITAL) anti-(END ITAL) growth.
Even with my low expectations for the speech, I had hoped President Obama would follow through on his occasional pledge for corporate tax reform. But he didn't. As a result, he missed a great growth opportunity. In fact, the president's State of the Union message had no growth elements at all. No growth message in a precarious economic recovery that is averaging 2 percent, grew only 1.4 percent last year and actually contracted in the fourth quarter.
Where's the growth, Mr. President?
He could have proposed lowering business tax rates from 35 percent (really 40 percent when you figure in the states) to 25 percent. He could have suggested that small businesses, now paying 40 percent, be made eligible to become C-corps, so that their tax rates also drop to 25 percent. He could have proposed repatriating roughly $1.5 trillion of corporate profits overseas, bringing them back home with a tax holiday, or even better, a permanently lower rate. Doing so would be like putting free money into our domestic economy for new investment and job creation.
But he didn't do it. Instead, he wants to penalize companies operating overseas and somehow reward manufacturers who create jobs at home.