The stakes are high and the ramifications broad and clear as millions of Americans head to the polls Tuesday to elect a new president.
The candidates – incumbent Democratic President Barack Obama and Republican challenger Mitt Romney – have made their sharply differing governing philosophies abundantly clear following months of campaign barnstorming, in acceptance speeches at their respective conventions and during three recent televised debates.
Polls have shown the two running neck and neck for weeks. A small percentage of undecided voters in swing states such as Ohio and Pennsylvania are viewed as the keys to turning the presidential election in favor of one candidate or the other.
Stock markets rallied Tuesday on optimism that the election might produce a clear victory for one candidate or the other, ending months of uncertainty that have weighed on financial markets and hindered economic growth as businesses have put expansion plans on hold until after the election.
Another theory making the rounds on Election Day was that a win by Obama would mean four more years of loose fiscal policy, a boon for stock markets. Romney has said he would not appoint Federal Reserve Chairman Ben Bernanke to another term. Bernanke is the architect of the loose monetary policies that have dominated the U.S. economy since the 2008 fiscal crisis.
The Dow Jones industrial average closed up 133.24 points, or 1.02%, at 13,245.68. The S&P 500 Index closed up 11.13 points, or 0.79%, at 1,428.39. The Nasdaq Composite Index rose 12.27 points, or 0.41%, at 3,011.93.
Candidates Seen As Polar Opposites on Business Views
By almost every measure throughout the campaign analysts have viewed the two candidates as practically polar opposites with respect to their views on business.
If there is one broad criticism of Obama held by the business community it’s that the president failed to recognize the uncertainty that would arise from his biggest regulation proposals, whether those proposals affected Wall Street or the nation’s vast health care system.
“Businesses know they’re going to be regulated. What they can’t deal with is uncertainty,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis.
Businesses would likely expect more certainty from Romney, a former businessman.
Obama has based his bid for re-election on the premise that his broad policy of massive government intervention as a remedy for the worst economic downturn since the Great Depression has been successful.
The president has also made the argument that reform efforts marshaled under his administration -- notably the Dodd-Frank banking legislation signed into law in 2010 -- will provide a government-backed firewall against future financial collapses.
Obama and Romney Clash on Role of Government
The president’s signature piece of legislation -- the controversial 2010 health-care reform law that seeks to lower costs by requiring all Americans to purchase health insurance -- is viewed by many -- both Democrats and Republicans -- as a massive act of government intervention.
In sum, Obama would raise taxes on the wealthiest Americans to cover the costs of an active and expansive government that strives to care for its most vulnerable citizens.
Romney, a long-time businessman and former governor of Massachusetts, has relentlessly criticized many of the president’s interventionist policies, arguing that the government plays too large a role in American society and that the cost of maintaining that role has become unsustainable.
Romney has said he would cut wasteful government spending, reform bloated entitlement programs and make the sprawling U.S. tax code more equitable rather than raising taxes a a few to pay for necessary services.
In sum, he believes most Americans fare better when the government gets out of their way.
Specifically, the GOP challenger has argued that Obama’s interventionist policies have not been successful in the one area that concerns most Americans and the one issue on which the election has been focused from the beginning: creating jobs.
The fault line dividing the two candidates has been clear from a business standpoint since long before Romney emerged as the Republican candidate last summer after a bruising nomination process that included such high-profile Republicans as former House Speaker Newt Gingrich, Minnesota Congresswoman Michele Bachmann and Texas Governor Rick Perry.
Big business widely views Obama as a supporter of higher taxes and more burdensome and costly regulations. The president hasn’t been shy about publicly scolding Wall Street and other big business targets he feels have warranted his criticism. In response, nearly all of the big investment banks, notably Goldman Sachs (GS), that supported Obama’s candidacy in 2008 have since shifted their allegiances to GOP candidate Romney.
Romney, meanwhile, has portrayed himself as a friend of big business and someone who, as the former head of private equity firm Bain Capital, understands how big business contributes to the broader health of the economy.
Business leaders who support Romney believe his background in private equity make him familiar with how businesses operate and how government can support rather than hinder their operations.
Business Hopes Election Ends Uncertainty
“Either outcome could provide a ‘certainty’ dividend for markets looking for clarity, though a Romney win might be cheered more forcefully. But the economic reality is much more nuanced,” said IHS Global Insight US Economist Nigel Gault.
The president has been helped in recent months by monthly jobs reports that suggest long-dormant labor markets are stabilizing. Both the August and September reports saw the headline-grabbing unemployment rate fall unexpectedly. In September, the rate fell to 7.8%, the lowest since Obama took office in 2008. The rate edged higher in October, rising to 7.9%, but only because more people were looking for jobs again, a positive sign.
Romney and his supporters have looked deeper into the labor market numbers to note that the data hardly reveal a thriving, growing economy. Many of the jobs created in recent months fall under categories such as temporary or self-employed, jobs that don’t pay well and don’t contribute to helping the economy grow.
Besides, they argue, a U.S. unemployment rate of nearly 8% is unacceptable.
Whoever wins will step directly into the ticking time-bomb that is the so-called ‘fiscal cliff’ – the tax hikes and across-the-board budget cuts that will take effect in January if Congress can’t forge a compromise on government spending and the growing U.S. deficit.
The uncertainty over which candidate will win and which is better equipped to deal with the fiscal cliff -- among numerous other economic issues hovering on the horizon -- has stifled business growth in 2012 as employers put expansion and hiring on hold until after the election.
The wait is almost over.