Republican presidential candidate Mitt Romney  © Brian Snyder, Reuters

I'm just going to say it: Based on where things stand now, Mitt Romney's plans for the economy better address the problems we face than what we've heard from the president.

And clearly, despite a curious drop in the unemployment rate to 7.8% last Friday -- in what was the largest statistical outlier since 2003 just one month before Election Day -- we've still got problems. The employment-to-population ratio is mired at early 1980s levels. The underemployment rate remains near 15%. Wages are stagnant, barely keeping pace with rising costs of living. Household wealth remains well off its pre-recession peak. And recent job gains have been focused on part-time and government-dependent education and health care positions.

Why Romney? Sure, his delivery can be wooden. His compassion for the 47% of Americans who don't pay federal income taxes is in question. And the tower from which he looks down is a tall one.

But in the battle for economic ideas, he is winning. A new Pew Research poll reflects this. After last week's debate, Romney enjoys a clear advantage on ideas for jobs, taxes and the deficit.

This isn't to say we haven't made progress under the current president, as I discussed in "Are we better off under Obama?" Rather it's about where we're going, given recent stagnation. It's about who can best bury his spurs into the hide of this economy and take it from a lazy trot back into a full gallop.

Image: Anthony Mirhaydari - MSN Money

Anthony Mirhaydari

It comes down to this: Romney's focus on boosting the confidence of business owners large and small via streamlined regulation, tax cuts and simplification of the tax code is exactly what's needed to resuscitate growth, encourage investment, create jobs, help close the budget deficit and, yes, increase the welfare of average working Americans.

The right focus

Both candidates talk about cutting the corporate tax rate. But only Romney talks about income tax relief for the small and midsize businesses that are the engines of any robust recovery. These businesses have been limited by reduced financing from hesitant banks, are exposed to new requirements under President Barack Obama's health care plan and often pay taxes at the 33% and 35% personal tax rates.

Romney's plan, as outlined last week, is to cut marginal rates by 20% for everyone while streamlining the tax code and broadening the tax base by capping the use of deductions, credits and exemptions (which, I do need to note, haven't been specified). He also wants to encourage U.S.-based businesses to bring home money stashed overseas and to make temporary research and development credits permanent.

This is a pro-growth, simulative action designed to be revenue neutral via increased economic growth. As Princeton economist Harvey Rosen notes in his analysis of Romney's plan (.pdf file), if more people are working and making money as a result of the change, more people are paying taxes. The mechanism for action is the confidence boost from lower rates as well as reducing the dead-weight loss of the $400 billion spent annually to comply with the complex tax code used to collect overall income tax payments of $1.1 trillion.

(Rosen's study was itself a response to doubts created by a much-publicized analysis of Romney's plan by the Tax Policy Center, which said Romney's numbers didn't add up. Rosen says the Tax Policy study left out the so-called "micro-dynamic behavioral responses" he relies on.)

Romney also says that he will not change the progressivity of the tax code or the tax burden borne by upper-income households -- a burden that has the top 20% of households by income paying nearly 70% of all federal tax liabilities while earning 51% of all income.

Given Romney's shifting stances on many issues, and the deficit blowouts associated with prior Republican-led tax-cut campaigns, many doubt the effectiveness and authenticity of what Romney is calling for. Whether it's genuine, I don't know, and whether it works will also depend on the cooperation of Congress. But at face value, there is much to like.

The key is growth

Really, the only way to attack the budget deficit and start reducing the national debt is focused short-term growth measures combined with action on long-term structural drivers of the deficit, namely health care cost inflation and unfunded entitlements.

Tax measures, I believe, will be more effective than another round of stimulus spending, because they tap into the one area of the economy best positioned to help: the corporate sector, which has been underinvesting and is relatively unleveraged compared with the indebted household and government sectors.

Compare this to the tax hikes being deployed in Europe in a vain attempt to close budget deficits through painful austerity. That strategy didn't work in the Great Depression, since the more you raise taxes and cut spending, the weaker your economy becomes, causing tax revenues to drop and spending on things like unemployment benefits to rise, causing your deficit to widen again.

And as the International Monetary Fund warns in its latest World Economic Outlook (.pdf form) it won't work now, either. The focus must be on short-term growth combined with long-term reform.