With the Republican national convention just twenty days out, the excitement over the potential vice presidential nominees is building.
This means that presumptive Republican presidential nominee Mitt Romney will make his announcement over the next two weeks, and maybe as early as this Thursday.
For Romney, and his hopes of becoming president, the pick is crucial and matters to the electorate: 74% of registered voters say the selection of a running mate will matter. More importantly, the choice will likely send a clear message about not only Romney’s candidacy, but also about the future direction of the party.
While this is fascinating for political pundits, it also should garner the attention of the markets for the selection will send a clear message on what policy will be under a Romney presidency.
This is no small matter given the Herculean tasks the next president of the United States faces.
From cleaning out the fiscal stables to killing the Hydra-like spending, our champion must fulfill the many tasks to achieve financial and economic redemption.
The choice of the next president of the United States will likely decide whether the country remains mired in slow economic — and fast debt — growth. It is a unique opportunity for the United States to re-set tax policy to encourage investment and create growth that will not only employ more, but also reduce the deficits.
Unlike the myth, a presidential candidate gets to pick someone to share the challenge. Therefore, the choice of a running mate is critical.
Here are my top three choices for both election outcome and the market reaction.
1. Paul Ryan.
Rep. Ryan (R-WI) is the chairman of the U.S. House of Representatives Budget Committee and has dedicated his career to reforming and reshaping the fiscal future of the country.
Ryan is extraordinarily popular in a swing district that was held prior by a Democrat for twenty years. He has held that seat with more than 60% of the vote six times in a row. Currently, Romney is behind Obama in Wisconsin 50-44, but a Romney-Ryan ticket shrinks that lead to a toss-up of 47-46%.
Ryan’s strength is his ability to explain complex and controversial issues to his “purple” voters and achieve their approval. This includes his plan for re-structuring Medicare to make it sustainable for the long run. On this subject, Democrats feel that Ryan would be a perfect choice to delineate the differences between the parties and champion President Obama. However, they should be quite concerned that a Ryan choice would mean that there will be a running mate who can clearly, concisely and convincingly explain his position. Romney has already stated he supports the Ryan budget and wants the Senate to pass it.
For the markets, this is the best choice as it will indicate that Romney is serious about correcting the short-run budget and long-run entitlement spending problems the country faces.
CANDIDATE #2: MARC RUBIO
2. Marc Rubio.
Sen. Rubio (R-FL) is a freshman, Hispanic senator from a critical swing state and is a Tea Party favorite. Unlike former Minnesota Gov. and VP hopeful Tim Pawlenty, Rubio didn’t give an early endorsement to the Romney campaign, but has since made up for it with numerous appearances and fundraisers.
Rubio’s Hispanic appeal is critical for voters in Florida and other critical swing states. Currently, President Obama has a wide margin of support in the Hispanic community with a NBC/Wall Street Journal/Telemundo July pollshowing a massive 67-23% advantage in five swing states with big Hispanic populations.
With Rubio on the ticket, Romney has a stronger chance of winning swing states necessary to put him in the White House. Rubio’s Tea party street cred is critical for energizing the fiscally hawkish Republican base to turn out and vote. Rubio has endorsed many of the key components of the Tea Party and would focus the campaign on reducing the size of government in the United States.
Like Ryan, a Rubio selection would highlight the differences in approach between Romney and Obama on the path forward for the country. The expansion of government under the Obama administration from Dodd-Frank to Obamacare ignited a movement that swept in the Republican majority to the US House of Representatives after just two years of a unified Democratic Congress.
This energy translated into other parts of the country with the most significant being the victory in the Wisconsin governor’s race and subsequent recall election with the key topics of fiscal and public union reform. The recent comments by President Obama (e.g., “You didn’t build that…”) provide an opportunity for a small government message to resonate with the entrepreneurs and small business leaders who create most of the new jobs in the United States.
For the markets, a Rubio choice would be a positive as it would be seen as both politically positive for the election and an economic positive as it would focus on reducing the massive size of a bloated US government and reducing regulatory burden on job creators.
CANDIDATE #3: CHRIS CHRISTIE
3. Chris Christie.
Gov. Christie (R-NJ) has been a fan favorite of the Republican base ever since taking over as governor from Dem. Jon Corzine by getting elected in a blue state that Obama won in 2008.
At one point, Christie debated joining the crowded Republican presidential race, but stayed out and gave Romney an early endorsement. Subsequently, he has been speaking strongly in favor of Romney.
Like Rubio and Ryan, Christie has strong roots in tackling the fiscal excesses present in government. Christie’s executive order designating a “state of fiscal emergency” helped him create the urgency and expediency in the NJ state legislature to move on reducing the state’s budget deficit.
He used a line item veto to wipe out half of the projected spending that created 50% of the deficit and endeared him to voters by not raising taxes to reduce the deficit. Moreover as a former US Attorney for New Jersey, Christie is a no-nonsense, straight shooter and his encounters with hecklers are legendary. He would be an attack-dog VP with the ability to tear down arguments against Romney proposals on spending and entitlements. Besides, the media would love to see a Christie-Biden VP debate!
For the markets, Christie would be a positive given the fiscal success he has had in NJ and his ability to communicate.
Given that Romney is about to embark on a swing state tour, the speculation is growing fierce over whom he will pick. These three represent the strongest candidates for addressing the fiscal and growth problems facing the United States. There are several other candidates being vetted, from Louisiana’s Gov. Bobby Jindal to Ohio’s Sen. Rob Portman to Minnesota’s Gov. Tim Pawlenty. All would be solid, but somewhat uninspiring picks for Romney and the markets. However, for the markets, Ryan, Rubio, and Christie are the top picks for generating excitement not only over a Romney presidency, but more importantly over correcting the fiscal and growth problems of the United States.
Andrew B. BuschDirector, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and reach him hereand you can follow him on Twitter at http://twitter.com/abusch.