Workers hang a U.S. flag as the backdrop for conservative Rick Santorum's stage before his announcement that he is dropping out of the Republican presidential race in Gettysburg, Pa., April 10, 2012.MARK MAKELA/REUTERS/Getty Images
Let the real battle begin. Rick Santorum's exit from the Republican presidential primary race once and for all pits Mitt Romney against President Barack Obama. That means the debate can finally turn to issues that move markets. Fewer distractions over social issues will force the two candidates to focus on economic issues like taxes, budgets and jobs. Americans will finally be able to judge the candidates by their policies.
Many of the issues discussed during the Republican primaries made great theatre if unreasonable policy: Rick Perry calling Federal Reserve chairman Ben Bernanke treasonous, Mr. Santorum proposing to triple the tax break for each child and Newt Gingrich's moon missions. So it will be a relief for investors to see the relatively moderate Mr. Romney unfettered in taking on Mr. Obama.
The unsustainable financial trajectory of the United States will come into focus as the policy debate narrows to the two contenders. So, too, will their differing approaches to the fiscal problem. Mr. Romney prefers slashing spending and low taxes while the President wants modest spending cuts and higher taxes – particularly for the wealthy.
Indeed, as Mr. Santorum conceded, Mr. Obama unveiled a policy that would subject millionaires to a 30 per cent tax rate floor. The so-called Buffett Rule has folks like Mitt Romney in mind. Mr. Obama singled him out for not paying his fair share. The former private equity chieftain paid an effective rate just below 15 per cent over the past two years.
On economics, much of the debate will boil down to the candidates' philosophies on the 1 per cent. The President says that if they pay more, inequality will decline and the government can spend more to create jobs. Mr. Romney would rather that money remain in the hands of the private sector, where investment can drive growth and hiring.
That ultra-wealthy contingent will also help shape the election through campaign contributions. Over the past four quarters, the two candidates have raised over $230-million (U.S.) – compared to just $160-million over the same period in the 2008 cycle, according to Opensecrets.org. But the 99 per cent will cast most of the votes, so the winning candidate's policies must be embraced by average Americans.