It's hard to say whether the economy has been naughty or nice this year. Employment growth has been up and down all year, raising hopes and then dashing them in a continuous cycle. Real GDP growth has improved throughout 2013, but remains fairly sluggish.
Even so, suppose you indulged the economy by letting it make a holiday wish list. What might that list include? Here are five things the economy could really use.
1. A long-term deficit reduction plan
Congress has scheduled more budget drama for early 2014. A patchwork budget approach that lurches from crisis to crisis would be bad policy under any circumstances, but it is especially harmful when the government is running a huge deficit. A sensible middle ground is needed -- cuts cannot be too drastic with the economy still in a fragile state, but there should be enough discipline to map out a long-term course toward balancing the budget. Not only would such a plan make fiscal sense, but having a long-term plan in place would give the private sector the clarity it needs to thrive.
2. A more flexible approach to the debt ceiling
If Washington could get budget discipline in place, the debt ceiling would become less of an issue over time. Meanwhile, the U.S. government's frequent, noisy arguments about whether to repay its debts are eventually going to make people more hesitant to loan it money. That would mean higher interest rates, and all those debt problems would only get worse.
3. Jobs, jobs, jobs
There are so many different economic indicators that it is easy for them to give false or contradictory signals. If you are trying to follow the progress of the economy, the No. 1 thing to keep an eye on these days is the monthly change in employment growth. What should you be looking for? Well, first of all, improvement. Job growth averaged 190,000 per month over the past year, and that's not good enough to make a real dent in the unemployment rate, because the number of people needing jobs also keeps growing. So, watch to see if job growth can start to pull that average up above 200,000 a month. The second thing to look for is more consistency. Month-to-month job numbers are always going to be a little erratic, but for the economy to improve, employment growth has to begin to show momentum over time.
4. Tax simplification
Economists may argue about whether we need more government revenues or lower taxes, but one thing that would provide a better business and investment environment is tax simplification. A bipartisan effort accomplished this in the 1980s, but over the past couple decades the twists and loopholes have sneaked back in. It is time to clear the clutter back out of the tax code.
5. An answer to money in politics
The Supreme Court has decided that the right of contributors to support the candidates of their choice is akin to free speech. Fine, but as long as politicians respond to those contributions by protecting narrow interests, it seems more like bribery than speech.
Unfortunately, much of this list depends on the politicians in Washington -- a group that most ordinary Americans, whether Republican or Democrat, would agree belong squarely on the naughty list this year.