Dear Mr. President: Now It’s Time to Deliver on Your Promises
By the time you are reading this, either Barack Obama or Mitt Romney will have won the race to be the 45th President of the United States.
Yet I will remind the winner that there’s not much time to rejoice in the victory, as there’s plenty of work ahead, which will dictate the direction of America over the next four years in relation to debt, job creation, economic growth, and foreign policy.
Whoever has won, they need to work on job creation at a much stronger rate than the current pace. All those promises that were made during the election campaign must now be acted upon. We need to create strong job creation and sustained jobs growth, while lowering the unemployment rate. The Federal Reserve is cautious about job creation into 2013. Obama and Romney have different strategies for lowering the unemployment rate and increasing job creation. But the reality is that unless Americans are put back to work, the economic recovery will likely stall and add to a possible financial crisis.
The most immediate concern for the next president will be what to do about the pending fiscal cliff on January 1, 2013, which calls for $607.0 billion in automatic budget cuts to avert a financial crisis. The Congressional Budget Office (CBO) recently warned that the U.S. economy could contract in 2013 if the spending cuts are allowed, which would impact job creation. (Source: Congressional Budget Office, last accessed November 6, 2012.) I expect the same.
At a round table meeting of the Group of Twenty Finance Ministers and Central Bank Governors (G-20), there was talk of the U.S. promising to avert a “sharp fiscal contraction” in 2013. (Source: “U.S. Vows to Avoid Fiscal Cliff Amid G-20 Warning,” Bloomberg, November 6, 2012.) At the meeting, the International Monetary Fund (IMF) suggested the fiscal cliff would result in a four-percent decline in the country’s gross domestic product (GDP) growth, which is horrible, given the light growth of the U.S. and fragile job creation.
The decision on what to do with the fiscal cliff will be critical and imperative, given the national debt is $16.0 trillion; this could grow to a whopping $22.7 trillion by the end of the next president’s term in 2016 if nothing is done, based on the current pace. (Source: U.S. Debt Clock, last accessed November 6, 2012.) If Obama has won, look for tax hikes for the rich; if Romney has won, look for cuts to overall spending.
The key focus for the next president will be to drive job creation for middle-class America to encourage consumer spending. Of course, how this is done will depend on who has won. Obama wants to extend the Bush-era tax cuts to those making under $250,000 a year, which represents the majority of working Americans; while Romney wants the cuts to apply to all income earners.
The tax cuts are crucial to low- to middle-class Americans, mainly because of the widening income gap between the rich and the poor.
Finally, whoever has won now dictates the running of the Federal Reserve. There’s speculation Romney would dump Ben Bernanke and handpick his own Wall Street crony if he won. Whatever the case, something needs to be done to get the economic engine going. We’ve had a first round of quantitative easing (QE1), followed by QE2 and now QE3, and so far, their impact on the economy has been disappointing.
So my congratulations to the next president; but you need to buckle down and stop the rhetoric, as the real work must now begin.