After the most expensive campaign season ever, it appears that Americans have ended up just about as evenly divided as when the season began. No matter who wins the White House in Tuesday's voting, it is now unlikely either candidate will win with enough of a mandate to break the political stalemate that has prevented bold action on a wide range of economic issues -- from energy and trade policy to Social Security and tort reform -- since the final years of the Clinton administration.
Despite what they say during campaigns, presidents are relatively powerless to alter the course of the economy over the four years of their term. As for the one macroeconomic factor Washington can influence -- the federal budget deficit -- both President Bush and Democratic nominee John F. Kerry are promising to cut it in half, but neither has put forward a very detailed or convincing plan for how.
Certainly the new president will get to name Alan Greenspan's successor when Greenspan's term as a member of the Federal Reserve ends at the end of next year. And even if Bush is reelected, the new president is likely to have the chance to appoint new chairmen for two agencies -- the Federal Communications Commission and the Securities and Exchange Commission -- now shaping the transformations of key sectors of the economy.
Tax policy is the most contentious economic issue dividing the two parties. If Republicans continue to hold the White House and both houses of Congress, most of the tax cuts set to expire over the next few years are likely to be extended. But the president may have a harder time pushing through a more comprehensive tax reform that would move toward a consumption-based tax.
Sen. Kerry would no doubt win approval of his plan to extend tax cuts to the middle class, but a Republican-controlled House won't easily give its approval to his idea of raising the tax rate on upper-income households. Kerry's chances are better for closing corporate tax loopholes that encourage companies to shift production abroad.
Health care is the other area where the election outcome could make a big difference. Even the normally Republican corporate community is intrigued by Kerry's plan to shift some of the cost of private health insurance to a government-funded reinsurance program that would insist on more-cost-effective treatment of chronic illness and end-of-life care. Kerry may even be able to win small business support for his plan to offer their employees the same insurance options now offered to federal employees. Finding money to pay for such reforms will be more difficult.
The Bush program -- which at its core aims to wean Americans from employer-paid health insurance and toward a system that they pay for and manage themselves -- is a more radical idea that is supported by many economists but may require more time, even for a Republican Congress, to embrace.