As always, the economy is the central issue of the unfolding U.S. election campaign. In the weeks and months ahead, we shall be hearing about the candidates' economic programs, focusing on jobs, incomes, public finances and international trade policies.

To understand the limits, or the pure wishful thinking, of these programs, we have to see the binding constraints the U.S policies face in these areas.

People are yearning for a better economy and a rising standard of living. Primaries show that the "same old thing" message and its proponents have serious problems. Tough contests lie ahead. Votes have to be won with the proverbial "meat and potato" issues and a country at peace.

So, let's start with the room to maneuver in U.S. fiscal policies.

A 'tight fiscal corset'

The initial position here is quite difficult. The budget deficit last year ended up at 4.5 percent of GDP, compared with budget deficits of 1.9 percent of GDP in the euro area and a 1 percent of GDP in China. No significant improvement in U.S. public sector accounts is expected this year or next.