By now, we all know the well-worn tale of the stumbling U.S. economy: persistently high unemployment and stagnant growth. There have been glimmers of hope, strings of good news and the beginnings of good trends that vanish just as quickly as they appear. Earlier this year, for example, employment indicators seemed to be on the upswing, with several straight months of encouraging jobs growth. Then, just as they had in each of the previous two years, they hit a solid wall. Doom and gloom prevailed once more, and economists fretted that the United States could be very well on its way towards a Japanese-style lost decade.
On the campaign trail, President Barack Obama and former Massachusetts Governor Mitt Romney have been fiercely attacking each other on character and on record. With mere weeks to go before the election, each candidate and the super PACs supporting them have spent millions of dollars on advertising highlighting the weaknesses of their opponent. Obama, in particular, has launched a devastatingly effective campaign assailing Romney’s business record at Bain Capital by casting him as an out-of-touch member of the one percent, taking advantage of everything from Romney’s comment that 47% of Americans do not pay taxes, to his admission that he once strapped his dog atop his family car on a trip to Canada. Romney, meanwhile, has continued to hammer the idea that in three and a half years at the helm, Obama has failed to help the ailing economy, and has, in fact, exacerbated and prolonged the economic downturn by saddling the economy with ever more legislation. Just weeks from the election, it seems as though each candidate is telling voters to choose him because the other candidate is worse.
When Romney chose House Budget Committee Chairman Paul Ryan to be his running mate, many expected the tone of the campaign to change. But instead of Romney following Ryan’s lead in presenting a bold solution to the country’s economic problems, he has simply slotted Ryan into the attack dog role of the traditional vice presidential nominee. That is a shame, because there was a real chance to turn this into an election about ideas, and not about the politicians themselves. Instead of endless debate over gaffes and missteps, there could have been a substantive discourse in the media and the general public over the merits of each candidate’s specific policy proposals. Then, the candidate who wins the election in November would have a clear mandate to govern and implement his plan. And, in the short run at least, that would be good for the economy, no matter who wins.
The fundamental problem facing this economy is uncertainty. Part of that is a result of external factors like the European debt crisis and Middle East unrest. But much of the uncertainty is also a result of government policy originating from Washington. In particular, the impending arrival of the so-called “fiscal cliff” — a harsh combination of tax hikes and spending reductions — has put a damper on business spending. With business owners unsure of what the future will bring in terms of political climate, they have put off hiring new workers, instead simply sitting on their cash. The Republican argument that complex government regulation such as the Affordable Care Act and Dodd-Frank Wall Street Reform Act has made it more difficult for business owners does hold some merit. Increasing red tape and bureaucratic reach can dampen confidence and make it more cumbersome to hire.
But it is also true that partisan gridlock, in no small part a result of Republicans’ steadfast obstruction of the president’s agenda, has contributed greatly to this uncertainty. In the last three years, Congress has brought the nation to the brink multiple times, from not passing spending bills until the last minute, to temporary, short-term extensions of unemployment benefits, to a protracted fight over the debt limit. These battles have contributed to low consumer and business confidence. As the public has lost faith in Washington to resolve its differences, so too have they lost faith in its ability to solve the deep problems the country faces and provide the enduring policy changes necessary to foster economic growth.
Forget about the long term for a minute; at this point, any plan that is clear, consistent, and precise will be beneficial. If people believe that there is a strategy in place to tackle the country’s problems, and trust that the strategy will clear legislative hurdles and be enacted, confidence will be restored. Romney and Obama offer stark contrasts in their view of the role of government, and their fundamentally different prescriptions will have far-reaching and vastly different long-term consequences. But in the short term, whoever wins the election will have a mandate to carry out his agenda. And that is a good thing.