storm clouds on the horizon. The challenge for President Bush on Tuesday night

is to communicate two messages: First, the success story of his economic

stewardship; second, the blunt reality that without further action to strengthen

and deepen his agenda, our prosperity gains could be reversed.

Since the bursting of the stock market bubble, the

recession and the Sept. 11 terror attacks, the president has had a terrific

economic winning streak. But it wasn't luck, it was skill.

On trade, the GOP came together to pass a landmark pact

with Central America - an achievement that allowed global trade liberalization

to move forward, continuing most recently with a pact with Bahrain bringing free

trade for the first time to the Persian Gulf.

On spending, the GOP used the budget reconciliation

process to check autopilot increases in entitlement spending for the first time

in nearly a decade. The crowning economic achievement of the Bush era so far was

the 2003 tax bill, which reduced the tax rates on capital gains and dividends,

reviving the stock market and the broader economy, and in turn boosting federal

tax revenues.

Looking forward to 2006, the president's top economic

priority should be to lock in those achievements. Due to sunset provisions in

that law and in the preceding 2001 tax bill, a series of major tax hikes are now

scheduled to occur over the next few years. These tax hikes will significantly

curtail our prosperity. Bush's mandate on this issue, central to his 2004

re-election campaign, is as clear as on any other issue - it's time for him to

make it his clear top domestic policy priority to /block all of these impending

tax increases.

One tax provision that deserves particular attention from

the president is the death tax, which under current law will be repealed in

2010, but only for one year before, perversely, being hiked all the way back up

to 55 percent in 2011. The death tax is fiscally irrelevant, raising about 1

percent of federal revenue, and a recent study by Carnegie Mellon University

professors found that repeal would actually increase federal revenues, through

dynamic growth effects. The tax is economically destructive, destroying hundreds

of thousands of jobs and forcing many family-owned businesses and farms to be

broken up.

Although he must be careful not to let the push for

fundamental tax reform eclipse and derail the top-priority cancellation of

impending tax increases, Bush should continue to make the case for a flat, fair,

pro-growth replacement for the current internal revenue code. The president's

advisory panel on tax reform's recommendations lacked boldness and imagination.

More fundamental tax reform, such as a flat tax, a national retail sales tax, or

a hybrid sales-tax/business transfer tax, as envisioned by Sen. Jim DeMint,

R-S.C., would dramatically increase the well-being of all Americans.

Several other economic policy issues are also crucial for

2006. Reform of the nation's outdated telecommunications regulations for the

first time in a decade looks possible this year, and the president should weigh

in on the side of free markets, streamlined regulation, reduced taxes, and open

competition between all carriers, regardless of the technology they use.

The president should continue to push for liberalized

international trade, both on the bilateral and multilateral fronts, and should

ask for an extension of trade promotion authority, set to expire on July 1,

2007, as soon as possible to prevent any risk of disrupting ongoing trade talks.

The president's 2007 budget should, and will, ask

Congress to restrain the growth of spending to keep federal borrowing at

sustainable levels. The president's health-care proposals will be modest but

necessary steps toward structural reforms that will move away from the

inefficiencies of third-party payment toward the equity of a consumer-empowered

system.

Perhaps the most important economic policy issue that the

president probably won't mention on Tuesday, but should: the Sarbanes-Oxley

corporate governance law. Sarbanes-Oxley may have succeeded at restoring

investor confidence, but the act also contains provisions that are both

ineffective and extremely costly. Some parts of Sarbanes-Oxley, particularly

section 404, which is estimated to cost businesses about $35 billion annually,

are a classic example of government overreaction - a dramatic expansion of

regulatory power in response to a series of extraordinary events. Without

reform, this law will continue to drive great companies out of U.S. markets -

into private hands or overseas - and create barriers to entry that prevent small

businesses from ever entering U.S. markets.

This is an exciting and challenging time for the free

market movement.

The president is committed to the policies that we know

work - low taxes, light regulation, limited government spending and free trade.

He knows that prosperity grows from economic freedom, and he knows that the best

social program in the world is a well-paying job. His challenge Tuesday and in

the coming year is make this case to the American people and continue to move

the economic freedom agenda forward.

And one last point: If the White House shows good

leadership, will the Congress show good "followship"? The president should not

be shy about reminding lawmakers that me Orlando Sentinel on Friday, Jan. 27:

X X X

In a public-relations blitz last week, President Bush and

top officials in his administration suggested the country faces a choice between

accepting his warrantless-surveillance program or ignoring terrorists' telephone

calls.

Nonsense.

Under a 1978 law, the government can monitor

international communications between people in the United States and suspected

terrorists as long as it obtains a warrant from a secret court. The court has

been quite willing to issue warrants, rejecting just four of more than 10,000

applications from 1995 to 2004. And the law allows the government to wait up to

72 hours after it begins spying before getting court approval.

The Bush administration has argued the president's

authority as commander in chief, and a 2001 congressional resolution authorizing

him to use force against the perpetrators of the Sept. 11 attacks, give him the

power to carry out surveillance involving suspected terrorists without warrants.

Not just Democrats have questioned this legal

justification. So has the nonpartisan Congressional Research Service and several

Republican senators, including Judiciary Chairman Arlen Specter. Their concern

is well taken. There is enormous potential for abuse in unchecked government

power. That's why the Founding Fathers established a system with rigorous checks

and balances.

The Bush administration has said the process of obtaining

warrants for terrorist surveillance is too cumbersome. If so, rather than skirt

the law, the president needs to persuade Congress to change it.

© 2006, The Orlando Sentinel (Fla.).