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I also foresee the possibility of several large banks being merged to save themselves--Bank of America with Wells Fargo, Citicorp with JP Morgan Chase, and several others.

IMHO, I used to say 20 years ago and still do: combining two insolvent balance sheets does not make a solvent balance sheet. American business has to stop thinking that mergers are an answer to underlying inefficiency. There should be no mergers allowed, just bankruptcies. Merging two gigantic banks would be a huge mistake, as it would go further to justify that they pose a systemic risk.

I also foresee that Obama may finally "get the religion" and realize that a major overhaul of the income tax system to make it more business-friendly will now be on the table.

Most small business owners would experience almost no benefit from reduced complexity, but they would love to see lower rates. Congress created the maze of regulations that allows for various tax credits (directly applied against tax liability) to induce desired behaviors. Some businesses are more aggressive than others in making use of the rules to lower their tax - some to the point of paying no income tax at all. That seems very "friendly"; especially to large corporations who can easily afford Tax departments full of Tax accountants who know the tax code like the back of their hand. The mom and pop store ? Depends on how "aggressive" they want to be. If I'm mom and pop - do I want to be "aggressive" ? Not really. I'm risking my business in a potential disagreement with the IRS - an agency that can pursue you beyond your business, personally - and beyond bankruptcy. There is NO escaping the IRS for small business. NONE. You do not want to mess with them.

Businesses don't make plans based solely on corporate income tax considerations; there are many other factors right now that are inhibiting business growth in America, and the biggest factors have been growing for decades. Namely, unions and regulation. Left-wingers howl when business people mention those: we're trying to "take away" the union and we want to get rid of "all" regulation.

Well, as far as unions, yes, the concept of you having business employing 100 people and coming in one day to find them all on strike and using violence to keep you from replacing them, that very concept is wrong. If people are not happy in their job, they should simply change jobs. If they have civil damages, such has being hurt due to criminal negligence on the part of the company - they should pursue criminal prosecution and a civil lawsuit. They have the right to walk off the job, but they don't have a right to use extortion. If the company wants to terminate an employee, they should just terminate. It's called at will employment, and it's the law in I think about 35 states now. Either party, employee or employer, can end the relationship at any time - without cause. Just a good ol' buh-bye. It saves enormous amounts of wasted money on lawsuits.

As far as regulation, take the Feral EPA. Every state has their own environmental enforcement as well. If people want to start a small manufacturing business, they have the long term prospect of dealing with ever-tougher environmental reporting and requirements. And their business could be shut down completely - by administrative fiat - no trial, no jury, just shut down. Oh, and then you're bankrupt because you can't fulfill your contracts. Oh, and in manufacturing, you mostly have to pay for materials and labor before you get the cash in your bank from your sales. And you don't know what new rules the EPA will come up with 5 years from now - possibly putting you out of business with the stroke of a pen at the whim of the EPA or state environment authority.

These are the biggest things that make the investment of MILLIONS to start even a TINY manufacturing business a completely NUTTY proposition unless the entrepreneur has an utterly fantastic capability and is super well-financed and has incredible luck.

Oh, and just when you start making money - your customer rips the contract away from you. They buy the items overseas now.

Corporate Income Tax paid in 2010 was only about $190 billion. That's for EVERY U.S. corporation. Wow, that's low. The Feral government spends that much in a few weeks. That's about 1.42% of all business revenue for the year 2010. If businesses ran at 10% pre-tax profit, it would be about 7% of those profits. Many businesses evidently can handle income taxes fairly well. A small business that does very well, however, finds itself in the 35% category rather quickly.

I do like the idea of a very simple corporate tax scheme, somewhat like a sales tax, if and only if the IRS was completely abolished. But I just don't think that alone will overcome the above hindrances. Most important, IMHO, in terms of the Feral government, is it's spending more than it takes in, which creates a debt pile that increases faster than inflation. By definition, that's a bubble that has to burst, because it can't continue indefinitely.