Money & Politics with Larry Kudlow

President's SOTU Should Be Like an Annual Report


On Wednesday morning, Larry Kudlow interviewed GOP front-runner Mitt Romney. It was an early morning interview in Orlando, and one of the first times Mitt Romney could respond to last night’s State of the Union delivered by President Obama. Romney wants to be the one delivering the State of the Union in January 2013, so getting an interview with him today was worth the logistical headaches of getting Larry Kudlow down there in time. 


A good chunk of the interview, which you will see Wednesday night, deals with the President’s speech. The GOP has already put out an ad that takes the speeches in prior years, and ingeniously edits it so you can see how the speech is nothing more than a CTRL+C, CTRL+V of last year’s speech. But the more impressive line of questioning that you’ll see tonight surrounded equating the U.S. government with a business. Who better to revamp a company than a private-equity veteran?  

My brother Lawrence is also a private-equity veteran and the smartest man I know. He sent me a note today, and I think it’s worth sharing with a larger audience. His take: The State of the Union should be America’s Annual Report. 

Like most Americans, I eagerly awaited last night’s State of the Union Address so I could do something that involved not watching the State of the Union Address. It’s not that I don’t love my country or care about its financial future — on the contrary, I definitely do. Unfortunately, the relationship between the delivery of the SOTU and the delivery of the actual state of the union diverged long ago. No matter which president or party delivers it, the State of the Union has become the Wrestlemania of stump speeches: it’s big, it’s extravagant, and it’s ostentatious. The difference, of course, is that Wrestlemania is far more grounded in reality.

The State of the Union Address now follows the same formula year in, year out: A president congratulates himself on a job well done, he vehemently attacks enemies domestic and foreign, he trots out unfamous Americans with incredible stories so he may bask in their light and/or prove his agenda, then he invokes his Deity to save the United States from whatever mess he and the legislators seated before him have thrown it into. Along the way, he proposes Big Ideas to keep the average American excited for the coming year while downplaying the Even Bigger Price Tags for those programs.

There is, however, a model for the State of the Union that holds the spirit our Founding Fathers had in mind when they tacked it on to Article II, Section 3 of the U.S. Constitution: The Annual Report.

The first few Annual Messages — as they were called then — given by Washington were light on numbers, most likely because he was delivering it in person before Congress, a body that was even then not known for its ease with figures. Thomas Jefferson spared Capitol Hill the ordeal of listening to a president drone on and on by ceasing the public speech, giving the laudable excuse that it was too monarchical for him to do. By the time Lincoln delivered his Annual Message, Honest Abe’s written wit and witticisms were apparent with such lines as:

“The receipts during the year from all sources, including loans and balance in the Treasury at its commencement, were $901,125,674.86, and the aggregate disbursements $895,796,630.65, leaving a balance on the 1st of July, 1863, of $5,329,044.21.”
— Abraham Lincoln, December 8, 1863

The rest of that paragraph has a dozen more gems of detail. In other words, besides giving an overview of what was going on that year — you know, the Civil War, but also issues with foreign trade, natural resources, and projects — the Annual Messages from our nation’s greatest orator had the look and feel of a report from the Chief Executive Officer of the United States.

Randomly take a peek at Annual Messages from the 19th Century and you’ll see the nation’s fiscal policy laid bare for its legislators, citizens, and the world to see. Once the 20th Century rolled around, though, presidents decided not to waste a good broadcast with boring facts that would inform citizens of what was going on with their nation’s finances.

Let’s change that.

Every year, two government institutions put out reports, one looking at the past, the other looking ahead. The Treasury Department issues a Financial Report of the United States Government to tell Americans where their tax dollars went. Last year, it was a measly 254 pages. There’s a condensed, 16-page version and similarly-paginated Financial Statements by the Government Accountability Office, too. Then there’s the Congressional Budget Office’s 192-page Budget and Economic Outlook, which looks at the next decade. Happily, they also have a summary version just five pages long.

Here’s an idea: What if we mailed both reports together (the short versions, at least) like an Annual Report — along with the President’s State of the Union Address — to every household in America? What if we sent it to every voter in America along with a sample ballot? Or, what if we included them when you picked up your 1040 form at the Post Office?

Sure, these publications are online, but if they’re printed and in the hands of every American every year, perhaps voters will turn away from “Keeping Up With the Kardashians” just long enough to have an idea what they’re voting on. A little bit of data may spur many people to delve into the bigger reports to find out what’s behind the numbers. Crowd-sourcing budget details, which has proven to be incredibly effective in scouring data better than media outlets, would grow as more people get the facts laid out before them.

With the government’s finances laid out at everyone’s kitchen table, the discussion among the people will likely elevate, forcing politicians to focus on the real issues instead of media showmanship, and to be more accountable.

Then again, that’s precisely why it’ll never happen.

I think my brother is once again correct.

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