Time nears for an American tax overhaul

However the U.S. presidential election turns out, the trifecta of the Bush tax cut expiration, the debt limit ceiling on the horizon once again, and the Congressionally mandated sequesters – cuts in domestic spending – will force the president and Congress to wrestle with fiscal issues either in a lame duck session after the election or in early 2013. The decisions they make will have profound impacts on America’s fiscal future.

For many observers, the central question on the table is about entitlement programs: What will be done with them? Growth in entitlement spending associated with our aging population and its rising health care costs is the major factor in overall federal spending growth. But the capacity of near-term policy changes to have large impacts on that spending is less than many would suppose. The rising ratio of retirees to workers means that Social Security benefits at current levels will not be sustainable without some kind of tax increase. Sooner or later, revenue will have to rise or else outlays will have to be curtailed. While it is surely better to act sooner, the reality is that, out of necessity, action on entitlements is inevitable.

While almost everyone agrees on the desirability of containing federal health care spending, this is likely to be more difficult than we’d like to believe. Certainly beneficiaries can bear more of the cost of their government insurance than others, and there are steps like malpractice reform and the further encouragement of preventive medicine that should be taken. Yet without intrusions into the private health care system that are unlikely to be politically acceptable, there are severe limits on what can be done. Otherwise the result will be unacceptable cuts in the availability of care for the clients of federal programs. Given all the uncertainties associated with new technologies, changing lifestyles, and ongoing changes in the private system, health care reform will and should be a continuing project.

But let’s place health care aside for now. Less discussed in the context of major deficit reduction is tax reform. For a variety of reasons, 2013 should be the year when the tax code is overhauled in a substantial way.

First, the United States will need to mobilize more revenue. This year the federal government will collect less than 16% of GDP in taxes—far below the post World War II average. The combination of an aging society, rising health care costs, debt service costs that will skyrocket whenever interest rates normalize, a still-dangerous world in which our allies’ defense spending is falling even as that of potential adversaries rises rapidly, and a growing fraction of the population unable to hold steady work means that in all likelihood federal spending will need to be larger not smaller relative to GDP in the future.

Raising marginal corporate rates or increasing individual rates beyond their Clinton-era level raises serious issues about incentive effects or encouraging tax shelter activities. Raising rates is, in any event, unlikely to be politically feasible. A much better strategy for raising necessary revenue would start from the premise adopted by the Simpson-Bowles bipartisan commission that tax expenditures are a form of government expenditure and presumptively should be cutback unless they can be justified.

Second, the current tax system is, in certain ways, manifestly unfair at a time of rising inequality. As is well recognized, America’s rich have gotten richer with the top 1 percent’s income share rising from the 10 percent range to the 20 percent range over the last generation, while middle class incomes have stagnated or worse. There is plenty of room for debate about the causes of rising inequality, and the extent to which reducing inequality should be a central objective of government policy and about the possible disincentive effects of excessively progressive taxes.

But there are fairly expensive aspects of the current tax system that favor the most fortunate – aspects that border on the indefensible. Recent political debates have pointed to loopholes that permit a few of the very fortunate to accumulate tens of millions of dollars in a tax-free IRA when almost everyone else is constrained by a $2,000 contribution limit. Can the observation that Ireland, Bermuda, and Luxembourg are three of the five jurisdictions where the U.S. corporate sector earned the most profits reflect anything other than rampant tax sheltering? Anyone who doubts this should ponder the fact that in 2007, U.S. corporate profits in Bermuda totaled 646% of Bermuda’s GDP. The treatment of profit incentives paid to investment operators who make no investment of their own money but simply receive the “carry” as they invest other people’s money is another example of an inappropriate provision.

These examples and many others are not only significant because of revenue the government could recoup while also making the tax system fairer. They matter because they illustrate the power of special interests to shape fundamental aspects of economic policy. Reform could be an important step towards rebuilding citizens’ confidence in the federal government, which is sorely lacking today.

Third, even while raising too little revenue and giving much away to various shelter efforts, the current tax system also manages to excessively burden economic activity. Corporate rates at the very high end of the world range encourage firms to manage their affairs so as to minimize reported U.S. profits using devices like transfer pricing, and to encourage the use of debt rather than equity finance. Employers who know that their workers face high tax rates work to find ways of providing compensation in the form of tax free perquisites rather than money income. High marginal rates on individuals, along with a substantial capital gains differential, encourages individuals to spend time and effort that should be used more productively on engineering conversions of ordinary income into capital gains.

While the U.S. tax code is altered frequently, serious reform is no more than a once in a generation happening. The last serious tax reform effort took place in 1986, meaning we are overdue. The Simpson-Bowles proposal for eliminating all tax expenditures and radically reducing tax rates provides an excellent starting point for a debate the country should have.

The delicate question is: How should Washington prepare for serious tax reform during what is likely to be a unique window of opportunity in late 2012 and 2013? The timing is essential, both because of all of the deficit reduction activity, but also because spending-side reforms will have a much more difficult time moving forward if revenue is not addressed as well.

It is tempting to say presidential candidates should put forward their tax reform proposals in detail and allow voters to choose. However, this is unlikely to work. Indeed, the more tax issues are discussed during the campaign, the more the candidates will be driven to make pledges about things they will never do—pledges that might make tax reform that much more difficult.

Here is an alternative: Leaders in both parties should commit themselves to the goal of tax reform for growth, fairness and deficit reduction. They should acknowledge that every tax expenditure or special break has to be on the table. They should have their staffs are compile a large inventory of options. The relevant Congressional committees should take testimony from experts of all persuasions. And then right after the election, the negotiations should begin. Nothing that is likely to be done during the next four years will be more important.

Photo: U.S. President Barack Obama receives a standing ovation as he addresses a Joint Session of Congress inside the chamber of the House of Representatives on Capitol Hill in Washington September 8, 2011.

This economy could be as good as it gets

A familiar refrain that was popular in the early 1990s is making a comeback during the great recession of 2008-2009, which has rocked the economy and labor market for more than five years: Is it possible that the children of this generation will not be as well-off as their parents? The labor market has been hobbled. The duration of unemployment has reached unprecedented levels, and it is now the case that unemployed workers in certain age groups face the prospect of never being employed again. If all of this sounds grim (and it is), consider the possibility that this may be as good as it gets.

It is true that the depth of the recession and the current sluggish recovery are much different than anything we have seen since the Great Depression. But rather than look at the current recession in comparison with previous U.S. recessions, consider its comparison with Europe. The events in Europe that sent crippling shockwaves through much of the world might be of such a magnitude that the current speed of the recovery is fast enough. The current downturn is unusual because it was triggered by a large common shock, rather than the idiosyncratic components that usually put individual countries into a recession. We don’t have a lot of experience with such shocks, so it may be useful to look across countries to see how others have fared.

The U.S. economy accounts for about 22 percent of world GDP; the European Union is about 25 percent. The figure below from Europeansnapshot.com compares the 2008 recession and recovery in the U.S. with those in the major economies of Europe. First note that the size of the contraction was much steeper in Germany, the UK and Italy, whose economies fell roughly 6 percent from their peak. In the U.S. it was more like 4 percent. But note as well that the recovery in the U.S. has been steady compared with these countries. All except Germany appear to be headed back into recession.

Many argue that the slow recovery in the U.S. is due to insufficient demand. As seen below, consumption – the biggest component of aggregate demand – never fell below its peak in Germany. In the U.S. it fell, but it has recovered and now looks very similar to where Germany is today.

The unemployment rate in the U.S. rose sharply in the first quarters of the recession, but it started from a level that was lower initially than most of the European comparison group. The U.S. is the only country other than Germany where unemployment has fallen from its peak.

Considering how different the recovery has been across these economies, it seems reasonable to consider the role of policy responses by governments or central banks. The impact of “stimulus” is inherently difficult to measure. A simple measure of the change in government consumption as a percentage of GDP is shown below.  One has to be careful in interpreting such data, but they don’t suggest that the different recoveries are likely connected with governments’ willingness to spend in response to the shocks – all of these governments increased spending – with very different results.

It is worth noting that the continental European economies depicted here all had the same monetary policy, but their economies responded very differently. Moreover, the U.S. the UK and the euro zone economies all engaged in quantitative easing that increased the sizes of their central bank balance sheets by a factor of 2.5 to 3.

There is one notable difference in the European economies. They have been quite variable in the extent that they have reformed labor market institutions and invested in human capital. Germany reformed its labor market beginning in 2003, while Spain and Italy have only now begun to think about it.

The evidence simply doesn’t support the conclusion that governments can mitigate business cycle fluctuations through discretionary changes in aggregate public spending or even unconventional monetary policy.

The U.S. recovery is dismal when compared with other post World War Two recessions, and it is far from where it should be in terms of growth and employment. Labor force participation is the lowest it has been since 1979. But this may be the best that we can expect with the tools that the government has used. The important policy question to ask now is which structural reforms and investments in human capital can make our longer-term growth options better. If we focus on quick monetary or stimulus fixes rather than those questions, then we can’t expect anything better than this slow, painful recovery.

It’s not the economy, stupid!

Tonight’s debate could be the most negative presidential debate ever. That’s because the best thing each candidate has going for him is negative opinion of the other guy.

This election was supposed to be a referendum on President Barack Obama. That’s what usually happens when an incumbent is running for re-election. Sometimes the incumbent is popular enough to win re-election (Ronald Reagan in 1984, Bill Clinton in 1996). Sometimes he’s not (Jimmy Carter in 1980, George H.W. Bush in 1992).

The biggest single factor determining the incumbent’s popularity is the economy: good in 1984 and 1996, terrible in 1980 and 1992. By that standard, Obama should be in deep trouble. That’s the big surprise this year. He’s not.

If Obama were running against himself this year, he would lose. But he’s running against Mitt Romney – and that is a race he can win.

He can win because Democrats have managed to frame the election as a choice – not a referendum. It’s not just “keep Obama or fire him”. It’s “keep Obama or hire Romney”. And the simple fact is, most voters don’t want to hire Romney.

The Pew poll reports that “Romney is the only presidential candidate over the past seven election cycles [since at least 1988] to be viewed more unfavorably than favorably” by voters. Even losers like Michael Dukakis (1988), George H.W. Bush (1992), Bob Dole (1996) and John Kerry (2004) had a positive image. Not Romney.

When Mother Jones magazine leaked a video of Romney’s remarks at a Florida fundraiser last month, the effect was devastating. The Republican candidate came across as disdainful of Americans who depend on the government safety net, depicting them as slackers and freeloaders. Look at the polls of battleground state voters since Sept. 17, when the video was released. Every state shows a widening lead for Obama.

This election is a choice between two contenders. That’s what makes it different from the 2010 midterm. In 2010, there was no other guy. It was just an up-or-down vote on Obama and the economy. The result was a catastrophic defeat for Democrats.

Romney’s mission will be to focus on Obama’s failed record. He started with his acceptance speech at the Republican convention, when he spoke about Obama more in sorrow than in anger. “I wish President Obama had succeeded,” Romney said, “because I want America to succeed. But his promises gave way to disappointment and division.”

By naming Representative Paul Ryan of Wisconsin to the ticket, however, Romney took the focus off the economy.  Republicans should be discussing jobs.  Instead, they’re discussing Medicare.

There’s something very strange about the economic issue this year. Most objective indicators show that the economic recovery has stalled. The unemployment rate has been stuck at more than 8 percent all year. Job growth is less than 100,000 a month – not enough to keep up with the growing labor force. The Commerce Department revealed that economic growth in the second quarter of this year was just 1.3 percent. The Federal Reserve has just announced a new drive to revive the economy. As Paul Ryan put it: “The Federal Reserve is saying that we don’t have a recovery.”

At the same time, subjective indicators are improving. Consumer confidence is up. The number of voters who believe the country is headed in the right direction is the highest it has been since 2009, according to the NBC News/Wall Street Journal poll. So is the number who believe the economy will get better in the next year. Most Americans think the nation’s economy is recovering.

What’s driving the optimism? Politics. Optimism about the economy is growing fastest among Democrats. It’s their way of expressing confidence in Obama. Instead of the weak economy dragging Obama down, the president’s growing popularity is pulling economic confidence up.

Most forecasting models assume that the economy is the cause and the election is the effect. That may be backwards.

Just as it was in 1992. The economy was actually recovering in 1992. But voters refused to acknowledge it because they had lost confidence in President George H.W. Bush. He didn’t seem to be doing anything to boost the economy, and that made the economy seem worse.

Moreover, Bush seemed hopelessly out of touch with ordinary Americans. Message to Romney: Whatever you do in this debate, don’t look at your watch.

Who knew jobs data could be so exciting?

The September jobs report ignited a firestorm when Jack Welch, former General Electric chief executive officer and Reuters contributor, asserted (or implied, or wondered if) the unemployment rate had been politically doctored to give President Barack Obama an electoral advantage. After all, how can the unemployment rate drop a full 0.3 percentage points to 7.8 percent when the economy is creating only 114,000 jobs?

More on that later. First, let’s dismiss the notion that the integrity of the data-collection process was undermined. Anyone at all familiar with the production of federal economic statistics – at the Bureau of Labor Statistics, the Bureau of Economic Analysis, the Federal Reserve, or elsewhere – can appreciate the firewalls that exist between the professional collection, analysis and publication of economic data and the remainder of the agencies’ missions – especially their political appointees. It is unfathomable that these would be breached.

It is even more unfathomable that they would be breached without the career civil servants getting on the telephone to, say, Reuters and reporting the political manipulation within a nanosecond of it occurring. And still more unfathomable that such a breach would be initiated and covered up successfully, while only lowering the rate to 7.8 percent. Why not 6.8?

For many, that simply makes the puzzle all the more baffling. How did this happen?

The employment report, as we now all know, has two measures of job creation: the payroll survey and the household survey.

In September, the payroll survey – derived from asking employers how many people they employed that month – showed that the economy created 114,000 jobs. This is consistent with an economy growing at 1 to 2 percent. The household survey – derived from asking households who in the house has a job – showed a stunning 873,000 new jobs. This is this highest that number has been since June of 1983. This makes no sense; it is out of line with any of the other data on the economy for September.

Even more amazing, more than 560,000 of those are part-time jobs. That is really stunning. One would expect that as extended unemployment benefits expire (and they are), some workers would migrate back to employment – that is a tried-and-true economic link. Some of those might first end up in a part-time setting. But why 560,000? And why in September?

The fact is that the household survey has only 55,000 to 60,000 households in the sample. To make it representative, it has to cover gender, age, race and education level. That means that there are likely relatively few people in any particular “cell” – how many female, Asian-American, 34-year-old, high-school-educated individuals will be in the September survey. So there is always the chance that the sample is simply not representative of the U.S. population and a misleading indicator of what is going on in the labor market. That appears to be the case here.

So in my first reading of the Bureau of Labor Statistics report, I throw out the household survey.

Digging a bit further, the September jobs report is solid – assuming you have bought into the new normal. Yes, the economy is creating jobs. But the pace remains far too slow to dig the U.S. out of its malaise quickly. At a rate of 114,000 jobs per month, unemployment would not get back to 6.6 percent (the average unemployment rate two years into the average postwar recovery) until September 2026. That pace is far, far too slow.

Average hourly earnings finally increased in September. One component of recovery that has largely been missing, and unreported, is increases in real, disposable income. So rising earnings is no doubt a positive change for the economy.

Labor force participation is up 0.1 percent, to 63.6 percent. Over the past several months we have seen labor force participation plummet – indicating that people are giving up all hope of finding work. It’s positive to see consumer confidence increase. Americans who have been struggling for years are looking for work again – and finding it.

What we learned Monday is that the economy is not falling, but it is not accelerating. The economy is moving sideways.

The broadest measure of unemployment remains unchanged at 14.7 percent. We are still facing a number of downside risks, still generating too little income, and well behind schedule in recovering.

So, on the whole, September’s report was modestly positive and no cause for either conspiracy theory or celebration.

But get ready for more finger-pointing and controversy. In October, the statistical anomalies will likely disappear, the 873,000 jobs will evaporate and the unemployment rate will jump north just prior to the election.

Who knew economic data could be so exciting?

PHOTO: People wait in line to enter a job fair in New York, April 18, 2012.  REUTERS/Shannon Stapleton

First Gilded Age yielded to Progessives, can today’s?

Mark Twain labeled the late 19th century the Gilded Age – its glittering surface masking the rot within. This term applies today for the same reasons: The rich get richer; most everyone else gets poorer. And the public thinks corruption rules.

New technologies similarly transformed the economy in that era and boosted productivity even as life for many Americans grew worse. Bloated tycoons? Desperate workers? A threatened middle class? Poverty amid the sweeping progress? Check, check, check and check.

But the silver lining of our current Gilded Age redux is that we left this stunning income inequality behind once. We can do it again. Americans eventually escaped the Gilded Age because they also made it a period of reform that ushered in the Progressive Era.

The past seems so present. The Gilded Age had immigrants attracted to the idea of golden opportunity and resented by its earlier inhabitants. So do we. In the Gilded Age many Americans regarded Catholicism as an alien religion that threatened the nation, just as many Americans regard Islam now.

Many of the basic economic and political problems we face today are indeed far too similar to those of the late 19th century. Today the top 1 percent of the U.S. population now controls 42 percent of the country’s financial (non-home) wealth. The bottom 80 percent possesses 5 percent. After adjusting for inflation, median household income has fallen by 8 percent since 2007, which was the year before the recession.

Corruption? Sixty-two percent of Americans now believe corporations are routinely corrupt. Only 20 percent trust the banks. Americans are right to be suspicious. Wall Street can seem a giant perp walk – but the perps are well connected, and most suffer little.

Yet we far outdo our 19th century ancestors in many ways. Political corruption pervaded the Gilded Age. But except for the selection of senators by state legislatures, money could not reliably buy elections. Lobbyists found it more efficient to corrupt officeholders. Now, vast amounts of money, much of it from people who can financially benefit from the election’s outcome, corrupt the process.

A modern brew of evenly matched political parties, weak presidents and a conservative judiciary usually bent on diluting or eliminating the reforms that politicians do manage mimics the late 19th century. The Gilded Age seems to fit the country we live in like a tailored suit.

These Gilded Age parallels are easy to see when we look in an historical mirror. But there are faint outlines of a better – and often virtually forgotten – late 19th century age of reform. Its shadows appear in an odd place – at the edges of current campaign rhetoric.

The presidential campaign rhetoric has been resolutely mundane and distressing. We have been in what is, for all practical purposes, a depression. But the candidates only offer anodyne praise of the free-enterprise system, which less-timid observers might think was what got us into this mess.

One party seeks to stay the course, while the other wants to recreate the conditions that brought on the crisis. Neither presidential candidate seems able to articulate his position without stumbling into gaffes seized on by his opponents.

There was President Barack Obama’s mangled syntax – “you didn’t build that” – and Republican presidential nominee’s Romney’s attack on him. There was Romney’s statement about the dependent 47 percent and the ensuing Democratic attack.

These gaffes and the various responses have been the most revealing part of the campaign because the candidates’ worst moments bare traces of quite profound 19th century debates on the purpose of the economy in a democratic society. The 30-to-60-second spots that these gaffes have yielded dominate the airwaves and the Internet. They have the intellectual content of a quick kick to the groin.

But the important thing is not in the kick – it’s the target. The campaigns know the sensitive spots in the body politic.

In capitalizing on their opponent’s mistake, the Republicans and the Democrats aim at the same places. The two parties recognize that Americans seek economic security, dislike economic privilege, desire opportunity and value independence. The opponent’s weakest spot is anything that can connect the opposing party with threats to security, opportunity and independence or with economic privilege. These words now sound like clichés – but they once had deeper meanings that dominated the Gilded Age.

Anti-monopolists are now largely forgotten, but they were powerful in the late 19th century. They included Democrats, Republicans and members of third parties. They attached particular significance to words like security, privilege, independence and opportunity.

For them monopoly meant corporation. They were avowedly anti-corporate – something now entirely heretical. What happened?

Though they were all for growth, anti-monopolists did not think growth was the purpose of an economy. They believed that in a democracy the economy should produce independent citizens. These citizens have to possess sufficient economic security and leisure to take part in the affairs of the republic. To do so they needed the opportunity to gain a competency.

Competency, another lost 19th century word, meant sufficient income to support a family and to tide it over in hard times. A competency was not great riches. Indeed, anti-monopolists thought that great riches had as their inevitable corollary great poverty. The same causes produced both.

Special privilege yielded an economy both with fabulous rewards for a few and with large numbers of poor. The middle class would be crushed between them.

The presidential campaigns’ use of security, independence, opportunity and privilege are just shadows of the power these words once possessed. They once helped lead the way out of the Gilded Age. That both campaigns, perhaps cynically, probably ignorantly, recognize the continued potency of this language is a sign of possibilities that it might still contain.

The anti-monopolists were full of flaws, but, unlike us, they were able to enunciate a clear idea of what reform should look like. Growth, if unevenly distributed, weakens the republic. Job creation – if the jobs do not bestow a competency – sap the society.

Give words like economic security, independence, opportunity and the hatred of privilege some substance, and there is hope of reform. The idea that in a democracy the economy should produce the democratic citizens needed to sustain it is not a bad place to start.

C.K.G. Billings, a Gilded Age plutocrat, rented the grand ballroom of the celebrated restaurant Sherry’s for an elaborate dinner on March 28, 1903. He had the floor covered with turf so that he and his 36 guests could sit on their horses, which had been taken up to the fourth-floor ballroom by elevator

What women want is political key

No matter how artificial and canned the candidates can seem at a presidential debate, no matter how competent or ineffectual the moderator — the nominee’s true self will peak out at some point.

Thus did GOP presidential nominee Mitt Romney tip his hand when it comes to the all-important female vote — which both he and President Barack Obama have been scrambling after. He didn’t make a huge gaffe or get ensnared in a tough debate about choice. Moving around the stage, he seemed a 1950s throwback who had wandered in from a different decade — one where men were men, women wore shirtwaist dresses (Ann Romney’s uniform) and marriage was between a man and a woman.

Of course what drove this home was Romney’s anecdote about trying to find talented women for his staff when he was governor of Massachusetts from 2003-2007. He said he actually went to a number of women’s groups “and they brought us whole binders full of women.” Though he apparently flipped this story: The groups came to him unsolicited.

However it happened, it was the telling moment, the one that has continued to dog him.

What? He couldn’t just look around and find qualified women? He couldn’t look through the ranks of his colleagues at Bain Capital or down the corridors of state power and pick out any number of terrific women? No, quite clearly he didn’t know such women because he was still operating in a world of men — the place he is comfortable.

You wonder: Did he have a clue how silly it sounded? How out of touch? You have to figure, given all the irritable and amused dust kicked up, that he will study his performance for the final debate — and try to rectify it no doubt — before the deciding third round on Monday.

That’s because the women’s vote is key to victory for both men. The famous gender gap — which opened back with Ronald Reagan when there was a decisive, divisive split between the presidential preferences of men and women — has become the Democrats’ best friend. Women supported Obama over John McCain by 13 points. Thus the dogged scramble to appeal to women, specifically women in the swing states.

A  slew of polls showed that Romney had narrowed that gap after the first debate — that he had surprised women, in particular, by appearing warmer and more approachable than he had previously. He was the beneficiary of a “surge among women in favorability,” in the words of longtime Democratic pollster Celinda Lake.

Women who went into that debate with a decided antipathy toward the smooth, distant uber-capitalist/rich kid (people were not fooled by his convention anecdotes about his and Ann’s struggles as young marrieds, eating dinner on an ironing board) came away thinking maybe he did have some empathy for their plight after all and might be able to help them.

Because the fascinating split for women and in women is: abortion versus jobs.

If choice is at the top of your list — or health care and availability of contraception and keeping Planned Parenthood funded (no surprise that Obama mentioned that organization five times) — then you will be for the president.

But concern about the debt and deficit has risen sharply on the list of female concerns. It was fourth on a list of five issues among women in a March poll of battleground states. Now it ranks second — which plays to Romney’s strength.

I heard a woman on an airplane last week saying she was absolutely pro-choice but still leaning toward Romney because she thought he might be better about creating jobs. I had never heard a woman say something like that.

Choice was The Issue, the litmus test — to use a loaded expression — for so many women of my generation. That was where the buck stopped. If a politician was against Roe v. Wade or wanted to overturn it, well that was that. He or she wasn’t going to get your vote no matter what. That one issue spoke to many women in a way no other did. They saw it as the bedrock freedom on which every other freedom hinged.

So I was amazed to hear this young woman. What’s clear is that things are shifting around there in the hearts and minds of women. Many, as the president himself pointed out, are the breadwinners in the family now. Hanna Rosin, in her provocative new book, ‘The End of Men,” writes not just about the frisky, sexually entitled and well-compensated women at the top of the economic and educational ladder (the ones Mitt Romney couldn’t seem to find without help) But she also focuses on the women in the middle and at the lower ends of the economic scale, those now often forsaking marriage and raising kids solo.

Rosin talks about the “ambiguous independence” many women feel as the old roles have shifted and the traditionally male jobs in manufacturing and the like have disappeared, leaving women to make the money. And do much else as well.

Onto these shifting sands have walked our two presidential aspirants with their Harvard degrees and lovely wives and intact families — in a way anachronisms both. The question is who can speak better to the hopes and fears of women who find themselves in this new world, specifically the stressed-out single moms who are the typical swing voters.

Romney has tried to project the patrician demeanor of someone who can look after you by managing the economy the way he did Bain. I know how to run things; I can fix what’s broke. That’s his mantra.

When he tries to be personal — something he seems to assiduously avoid — with his off-the-cuff and probably innocuous-sounding anecdotes, like that about the binder or about giving a female employee more flex time so she could be home at five in time to make dinner for her kids, he just sounds patronizing and old school.

The president, meanwhile, is hitting women’s issues with every breath — from Planned Parenthood to equal pay for equal work. Though cool, he is clearly more comfortable being personal, talking about being raised by a single mom, his grandmother and the glass ceiling, and occasionally about his daughters.

So the fight is on — for and within women all over this country. Will the long-in-place gender gap remain or is this the election in which we will see a sharp shrinkage. That will say an extraordinary amount about what women really want.

Illustration: MATT MAHURIN

Key fiscal questions nominees must answer

We can only hope the final presidential debate Monday provides less heat and more light than the previous two. Especially with regard to fiscal matters, the debates have so far not provided the substance and solutions that voters need and deserve to hear.

Our nation’s escalating deficits and debt represent the biggest threat to our national security, as I said in early 2007. Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, said much the same in 2010. So the topic of the third debate, foreign policy and national security, needs to include a frank discussion of fiscal issues.

For, as our economy weakens, so does our position in the world. It will eventually compromise both our national security and domestic tranquility if not effectively addressed. Both our allies and adversaries recognize this, and we need to take action.

It’s time to see what type of leadership ability both candidates have in this critical area. Because it will require extraordinary presidential leadership and bipartisan cooperation if we expect to avoid a U.S. debt crisis.

The first step should be for the candidates to start providing substantive answers to serious questions instead of talking generalities and attacking each other. There are still many topics that need to be addressed and answers that the public needs to hear before Election Day. Consider:

Neither candidate, for example, has defined a clear goal for their overall fiscal policy. What do they plan to do and when? Will they reduce the budget deficit by a stated percentage, or reduce debt as a percentage of the economy? If so, to what level and by what year? A clearly defined goal can provide a mandate for action.

Our fiscal challenge cannot be successfully addressed without fixing our health care system — which could bankrupt the nation. So what specific steps will the candidates take to rationalize the government’s health care promises and bring down the overall health care costs?

Taxes are always a challenging topic, but neither President Barack Obama nor Republican presidential candidate Mitt Romney has provided enough specifics about his tax plan.

Romney needs to state three specific loopholes he would be willing to eliminate or reduce to enhance his credibility in connection with comprehensive tax reform. Obama has advocated for an additional and higher tax rate, as well as a new alternative minimum tax on the “wealthy.”

However, wouldn’t this approach just add to the complexity of our current broken tax system, while failing to generate enough revenue to effectively address the deficit?

Reforming social insurance programs like Medicare and Social Security is essential to reining in unsustainable federal spending.  Obama, however, has so far refused to offer any specific Social Security and Medicare reforms. He needs to address this critical issue.

In addition, Romney needs to say what he will do if his proposed Medicare “premium support” system fails to keep pace with the cost of health care inflation.

Given the foreign policy and national security focus of the upcoming debate, both candidates should also be prepared to state how they would reduce defense spending without compromising national security.

During my more than seven years as an ex-officio member of the Defense Business Board — a panel appointed by the defense secretary to advise on business and transformation issues — I became convinced that this is not only possible, it’s appropriate. The Defense Department is a bloated bureaucracy with significant opportunities to cut costs through greater efficiency and by focusing on future rather than past threats.

If the presidential candidates won’t address these types of substantive questions, how can the American people make an informed choice as to who can best lead a long overdue transformation of the federal government? Tough choices are necessary, and declining to provide specifics on key issues like these is both inappropriate and a failure of leadership.

Both candidates need to start providing real answers. They should begin Monday night.

Phot0: A 2011 U.S. Individual Income Tax Return form.  Shannon Stapleton / Reuters