Toward the end of the campaign, President Obama mentioned the need for a “secretary of business” to consolidate functions such as small business loans and export assistance. Coming so late in his first term, and given that there already is a secretary of Commerce, the notion was widely lampooned. But in this notion lay the seeds of the essential truth of the president’s second term: his presidency will be judged on the success or failure of America’s private sector in creating jobs.

Every single member of his administration should be spending at least part of every day, if not thinking like a secretary of Business, at least being mindful of their agency’s impact on private sector job creation. With layoffs already back to pre-recession levels, the answer to America’s unemployment problem is job creation. The greatest job creation is driven by entrepreneurs and young businesses so they merit special attention.

Reduce the impact of regulations and be continually mindful of each agency’s effect on private sector job creation.

Unfortunately, Tuesday night’s election results had an immediate adverse impact on the overall wealth of our nation. When the financial markets opened Wednesday, markets across the board dropped, with the Dow down 350 at one point. Confidence among those considering starting or expanding businesses takes a hit with every headline about higher taxes, expensive government mandates, overzealous regulators, litigation and federal fiscal recklessness. Confidence, capital and new markets fuel entrepreneurship and job-generating expansion of existing businesses.

The administration can immediately make progress on the confidence front by quickly and convincingly acting to lessen regulatory burdens (which cost $1.75 trillion annually), increase compliance assistance to help businesses efficiently comply with necessary regulations, lower and stabilize taxation, pursue litigation reform and get a handle on government spending. For significant job creation to occur, prospective entrepreneurs and current business owners must not fear the future or be under assault from their own government in the present.

Capital available for individuals to start and expand businesses would increase with regulatory and strategic tax reforms, like reducing marginal rates, repealing the alternative minimum tax and making the U.S. the most welcoming place for employers to relocate and create jobs. Opening new foreign markets for American enterprises will boost job creation and the president needs to step up the administration’s efforts in negotiating new trade agreements with more nations.

A closely divided electorate has given the president a second chance. Hopefully, he will leave the campaign rhetoric behind and incorporate proven private sector job-creating initiatives into his agenda. He should begin by demonstrating responsible leadership in handling the pending “fiscal cliff” of tax increases and indiscriminate spending cuts looming in January. He cannot lead from behind!

Elaine L. Chao, the secretary of Labor from 2001 to 2009, is a distinguished fellow at the Heritage Foundation.