Barring major security problems in the weeks and months ahead, jobs and incomes will stay at the top of people’s concerns in the run-up to November 5 elections.

Opinion polls show that those two economic variables, and the quality of economic management, have already determined the voters’ election choices.

All that is very different from the media noise about the presidential debate based on the looks, speaking style and the stage management of the two opponents.

Predictably, they announced no “bread-and-butter” news, or credible policies to significantly improve American living standards.

In fact, those existential questions of daily lives, captured in Reagan’s famous one liner “Are you better off today than four years ago?” were obscured by selective and unimportant details.

That is a pity because problems related to jobs and incomes have become structural features of the U.S. economy spanning long periods of Democratic and Republican administrations.

Higher taxes, spending cuts and easier money

Key among them is a fact that 100 million Americans remain out of the labor market -- people who are practically unemployable for lack of skills and professional qualifications. And that is about 40% of American civilian labor force.

That huge problem of the U.S. human capital has far-reaching consequences for the country’s growth potential, price stability, employment and personal incomes.

Physical limits to growth is one of those consequences. Based on the average growth of labor force and productivity over the last three years, the U.S. economy can grow only at an annual rate of 1.8% without creating accelerating inflation pressures.

But that crucially important problem is completely lost in America’s four-year election cycles. Most of the attention is usually focused on monetary policy, ignoring the fact that the monetary policy must ultimately conform to economic growth compatible with price stability.

The fiscal policy must also observe objectives of price stability. Any departures from that line will force an offsetting action of monetary policy to keep the economy on a steady and sustainable noninflationary growth path.

The current U.S. economic policy mix is an example of that.

The fiscal policy is hugely expansionary. Budget deficits of 8% of GDP are pushing up a soaring public debt to 125% of GDP this year, with an estimated debt level of 130% of GDP in 2025. That has brought the process of monetary tightening to a roughly neutral position – but poised toward restraint if the fiscal stimulus is not promptly and considerably scaled back to keep inflation down.

As things now stand, that precarious policy setup will continue, because budget deficits are expected in the range of 7% to 8% of GDP over the next two years.

That means that a sharp U.S. fiscal retrenchment is inevitable: Taxes must go up and government spending must go down to reduce budget deficits in order to stop – and reverse -- the unsustainable increase of public debt.

If the next administration does that, the Federal Reserve will most probably respond with easier credit policies to keep the economy afloat during such a delicate adjustment process.

U.S. business would love peace and cooperation

Apart from issues of cyclical demand management, Washington must also come to grips with structural problems to increase the growth potential of American economy from the pitiful 1.8% we have now.

That would require active labor market policies and stepped-up investments in education and science to increase the stock and quality of human and physical capital.

Washington will also have to review its international trade and investment policies to stop the erosion of U.S. economy and to reinforce the position of the dollar as a key transactions and reserve currency. A closer look at pervasive trade sanctions is a must.

But all that would require a peaceful and cooperative approach to world affairs as the only modus operandi with increasingly sophisticated, economically powerful and nuclear armed actual or potential trade partners.

In such an environment, the U.S. neocons idea of the “full spectrum global dominance,” based on force, or threat of force, is a fool’s errand.

Putting its own house in order is America’s most urgent task. That is also a condition for keeping a key role in world affairs.

To do all that, it would be helpful if Washington could mend ties with China, Russia, India and Brazil. That would open the way to build a better security architecture in Europe, Middle East, Indo-Pacific and Northeast Asia -- and it would restore huge trade and investment markets for American businesses.