Today is all about restoring business confidence

by Ryan Streeter on November 6, 2012. Follow Ryan on Twitter.

It’s not too soon to look frankly at the situation facing the next President, whether it’s incumbent Obama or challenger Romney. Both campaigns have stuck to their talking points the past few weeks, none of which specifically address the scope of the economic challenges facing us.

It’s commonplace to hear the Clinton-era “It’s the economy, stupid,” rehashed by advisers and pundits. And with good reason. This election is no doubt about the economy. But the issue, as I see it, is more specific than that.

It’s about restoring confidence among business owners.

More than ever before, private companies are highly sensitive to policy choices made in Washington. What the next President chooses to do, and what he is able to do given congressional limitations, will have a big effect on job growth and income growth.

The current path we’re on has us in what Mort Zuckerman calls in today’s WSJ “a disastrous new normal: For the first time, the U.S. economy has shifted in the direction of a part-time, low-wage workforce.” As he points out, the unemployment rate jumps from 7.9% to 14.6% when you account for involuntary part-time workers.

It’s only going to get worse, not because of the large uncontrollable macroeconomic forces Obama constantly cites to remain inculpable on the economy, but because of policy choices. Exhibit A is Obamacare, which has incentivized employers to hire more part-time workers in place of full-time employees.

The law is a dull tip of a larger spear that hasn’t succeeded in defending or advancing America’s interests. The burgeoning regulatory state, a more inhospitable environment to entrepreneurs, an unwieldy and uncompetitive tax code, and lots of uncertainty in financial regulation that keeps capital holed up in accounts rather than deployed in new enterprises – all of these have become the new status quo.

That’s why, as Glenn Hubbard writes at Politico, prosperity isn’t just around the corner. He cites the Legatum Prosperity Index, which I was privileged to have a hand in designing a few years ago, showing that America has grown less competitive and dynamic on a range of important indicators. This year is the first time the U.S. hasn’t appeared in the top ten in the Index. More importantly, Hubbard notes, the lousy policy environment here translates into real-world cost:

This failure to launch is costly to Americans. Compared to the more optimistic projection offered in the administration’s FY 2010 Midsession Review of the Budget, the cumulative GDP loss translates into an income gap of about $5,400 per household. The same comparison can be drawn between the struggling recovery from the 2007-2009 recession and the more vigorous recovery from the deep 1981-1982 recession. Benchmarking the 13 quarters since the end of each recession yields a cumulative gap in income per household of about $28,000. Accumulated over time, weak recoveries are devastating for family incomes as well as for employment.

Getting us out of these dark woods is what this election is all about. Obama has not given us one clear policy showing that he is serious about reversing course.

Romney has perhaps been too vague on a number of policies, but what he has shown us gives a strong enough indication that he’ll restore the business confidence we need to get people working full-time jobs again, and doing so with a better chance of seeing their incomes rise.