But, of course, spending and tax cuts aren't the only forms of stimulus available. Both camps will probably look favorably on helping young private companies raise capital and find talent. One of the few things Republicans and Democrats agreed on in the last Congress was the start-up-oriented JOBS Act. That bodes well for the prospects of Startup Act 2.0, described on page 69.
As for giving a longer-term boost to the economy, Republican strategists believe there are no better economic elixirs than tax cuts and freeing business from government interference. But the evidence is mixed. The tax-cut-and-deregulation formula didn't work in George W. Bush's term, which suffered two steep recessions. Moreover, cutbacks in government spending aren't always a springboard to an economic boom. Ask the Irish, who still face 15 percent unemployment.
Priority No. 3: Cut Taxes
Strictly speaking, the Inc. 500 CEOs' request for lower taxes is off the table from either party. Obama would raise taxes on top earners with a higher income tax rate and a Medicare surcharge, which was part of the Affordable Care Act. If he is reelected, your taxes will probably go up if you earn more than $250,000 (as do about 3.5 percent of small-business owners). And Romney promises that his tax strategy will be revenue neutral.
But what could happen in the next administration is the beginning of a debate on tax reform. Reforming the tax code—with or without raising taxes—was the fourth most-popular goal among Inc. 500 CEOs. Both Obama and Romney have said they are in favor of a plan that streamlines the tax code, lowers income tax rates, and does away with tax deductions and preferences. "Democrats want to use tax reform to raise taxes on the rich, and conservatives want it to be revenue neutral," says Heritage's Darling. "But either way, the tax code is a mess and needs to be fixed."
There are two elements to tax reform, however. The easy part is to lower tax rates, which would pass without a dissenting vote in a Republican Congress. The hard part is wiping out tax breaks to offset the lower rates, especially when you consider that the largest of them are the mortgage interest deduction, the charitable deduction, and the tax exclusion for health care (without which employees would have to pay tax on the value of their health benefits). These deductions are woven into the financial fabric of many, many American lives.
Their extermination is not necessarily something Republicans want on their resumé. In a National Association of Home Builders poll in January, for example, 77 percent of Republicans opposed eliminating the mortgage interest deduction. Romney has said he would preserve it for middle-income families. But that makes the budgetary math only harder.
Where Do We Go From Here?
If all you cared about in next month's election was realizing the entrepreneurs' agenda, your best hope would seem to be a Republican sweep. Arguably, a Republican legislature and executive uninhibited by the need for Democratic votes is the team most likely to reduce the deficit and reform the tax code in the near future.
But the Republican steamroller scenario makes some ambitious assumptions. It requires that a President Romney and a Republican legislature fractured between Tea Partiers and traditional politicians be able to deliver a unified vote on tough issues. It assumes Republicans have the ability to face down the special interests that are certain to campaign against cuts to their favorite spending programs and tax breaks. Most of all, it assumes that Republicans will resist the fiscally catastrophic temptation to do the easy thing—namely, to cut tax rates—and not the hard thing—to cut popular spending programs and beloved tax breaks. Congress tried once before in the Bush years—and failed. That's why there's a case for a split government for the next two years. "The majority of Americans live politically in the center," says Kauffman's Stangler, "and thus very likely would prefer divided government. It may result in less sweeping legislation, but if radical change makes you nervous, that may be fine."
Isn't a split government a euphemism for stalemate? Not necessarily. We've actually seen the grownup approach to the issues that matter to entrepreneurs. It was embodied in the chairmen's report from the National Commission on Fiscal Responsibility and Reform, better known as the Simpson-Bowles report, of late 2010. It's true that Paul Ryan, a member of the committee, disavowed it. Barack Obama, reading the politics of that, didn't endorse it. But Simpson-Bowles embodied the way the deficit will actually be tamed: with a painful, widely loathed combination of revenue increases and spending cuts.
That was also the premise of the talks last summer between President Obama and House Speaker John Boehner, the so-called Grand Bargain talks. Until the negotiations fell apart at the 11th hour, it seemed that all the necessary noses were going to be held and a deal was going to be struck.
It may be that the only way such difficult deals can be reached is, in fact, in a divided government. Bruce Bartlett, a former senior policy analyst in the Reagan White House and a staff member for the late Congressman Jack Kemp, co-author of the Kemp-Roth tax reform legislation, points out that on all three occasions when serious tax reform took place in the past 40 years, it happened under a Republican President and a Democratic (or at least a divided) Congress. The two sides gave each other cover for the inevitably tough choices. "Without genuine compromise between the two parties," he writes in his book on tax reform, The Benefit and the Burden, "nothing would have happened."
Business owners are not impressed by the absolutism and posturing that have characterized this election year. They don't need warriors, not on economic issues. They need results from Washington, just as they need results from their own business. Perhaps the only good thing to come of the bitter stalemate of the past two years is that it has increased risks to the economy so much that a deficit reduction plan almost has to be put in place in 2013 or 2014. Maybe that's when the fever will break. And Washington—finally—can get down to business.
Eric Markowitz and Jeremy Quittner contributed additional reporting for this story.
