The job market is brutal and the economy weak. More than 12 million Americans can't find work; the unemployment rate fell in September but is still at a recession-level 7.8 percent. It had been more than 8 percent for 43 straight months. A divided Washington has done little to ease the misery.
Where they stand:
President Barack Obama wants to create jobs by keeping income taxes low for everyone but the wealthiest, and by spending more on public works as well as offering targeted tax breaks to businesses. Mitt Romney wants to keep low tax rates for everyone, including the wealthy; slash corporate taxes; relax or repeal regulations on businesses; and encourage production of oil and natural gas.
Why it matters:
The economy didn't take off when the recession ended in June 2009. Growth has never been slower in the three years after a downturn. The human toll is staggering. Forty percent of the jobless, 4.8 million people, have been out of work six months or more — a "national crisis," according to Federal Reserve Chairman Ben Bernanke. Millions of Americans have given up looking for work.
The agonizing recovery is the consequence of the deepest recession since the 1930s. The economy lost a staggering 8.8 million jobs and has only clawed back 4.6 million, or 53 percent. A financial crisis dried up credit. Collapsing home prices destroyed $5.9 trillion worth of home equity — the biggest source of wealth for most families. More than 1 in 5 homeowners is stuck with a house worth less than the mortgage on it. Feeling poorer, families have limited their spending and paid down debts.
Weeks after taking office, Obama pushed $862 billion worth of tax cuts and government spending programs through Congress. The package was meant to generate economic growth and revive hiring. Romney and other Republicans have declared the stimulus program a failure. But most economists — and the nonpartisan Congressional Budget Office — say it kept unemployment from going even higher.
Still, faced with a persistently sluggish economy, Obama proposed another plan last year to rev up hiring with increased spending on public works projects and tax breaks to small businesses. But most of his $447 billion jobs plan went nowhere, blocked by congressional Republicans who say government programs to help the economy accomplish little other than swelling the $11.2 trillion federal debt — $16 trillion if you include money government agencies owe each other.
They advocate lower taxes and fewer government regulations. Specifically, they want to repeal Obama's health care law and a law that tightened regulations on Wall Street.
With the politicians paralyzed, the Federal Reserve has stepped in, pushing short-term interest rates to zero and pouring more than $2 trillion into financial markets by buying Treasury debt and mortgages. The central bank's actions may have kept the economy from slipping back into recession, but they have not stimulated healthy economic growth.
Republicans and Democrats also will have to find some common ground before the year ends to prevent the economy from falling off a "fiscal cliff." If they don't reach a budget deal, about $1.2 trillion in spending cuts and tax increases will start to kick in next year. The threat of the fiscal shock is meant to force Republicans and Democrats to compromise. Otherwise, the combination of spending cuts and tax increases probably would send the economy back into recession and drive unemployment back to 9 percent next year, according to CBO estimates.