Notes [a] I like the idea of extending the holding period for short term capital gains to 3-5 years, and cutting the long term capital gains rate closer to 5%-10%. It could encourage more business formation, since more of what people create, they keep. Ifthe cutoff year is properly set, it could be done on a deficit-neutral basis. [b] According to methodology described by Keith Poole of the University of San Diego in the American Journal of Political Science, McGovern ranks as the 99" most liberal politician out of 3,320 politicians serving from 1937 to 2002. [c] In a letter to the Wall Street Journal. Reprinted with permission; emphasis added. [d] This may not have been a permanent change. The National Taxpayers Union rated the Blue Dog Democrats as having a fiscal conservatism score of 52% in 1995; by 2009, it had fallen to 18%. [e] Would McGovern’s focus on red tape make sense today? According to surveys conducted by the National Federation of Small Business, the answer would be yes. The 3 issues most frequently mentioned as each respondent’s “single most important problem” are Poor Sales, Regulation & Red Tape, and Taxes. Two things of note. First, Regulation & Red Tape concerns have been steadily rising over the last two years. Secondly, availability of credit does not show up as an issue. As the NFIB wrote in May 2011, “92 percent reported that all their credit needs were met or that they were not interested in borrowing. Eight percent reported that not all of their credit needs were satisfied. Three percent reported financing as their #1 business problem, so credit supply 1s not a problem for the overwhelming majority.” [f] As reported by Reuters, Gerald Wynn, November 22, 2010. The material contained herein is intended as a general market commentary. Opinions expressed herein are those of Michael Cembalest and may differ from those of other J.P. Morgan employees and affiliates. This information in no way constitutes J.P. Morgan research and should not be tre