How Mitt Romney’s tax returns became a political boil that needed to be lanced

One week ago, former Massachusetts governor Mitt Romney was coasting toward a likely victory in South Carolina — a win that would have put him on a glide path to the Republican presidential nomination.

Republican presidential candidate and former Massachusetts Governor Mitt Romney speaks at a campaign stop in Ormond Beach, Florida January 22, 2012. REUTERS/Brian SnyderThen came a duo of debates in which former House speaker Newt Gingrich shined and Romney stumbled — badly — when it came to the issue of releasing his tax returns.

Romney looked caught off-guard when asked about the issue on Monday’s debate and downright defensive by Thursday. Less than 24 hours after his South Carolina drubbing went official, Romney reversed course and announced he would make his 2010 return — and an estimate of his 2011 return — available on Tuesday.

“This is one of the few unforced errors of the Romney campaign to date,” said one senior Republican strategist granted anonymity to speak candidly. “Voters demand transparency, and what they saw as a sideshow became a central tenant of an unhelpful discussion that cost them.”

It’s remarkable that a candidate as disciplined as Romney and a campaign that has functioned at such a high level throughout the race would so badly misjudge the political danger of his tax returns.

And, like all major political problems, it grew from relatively innocuous-seeming circumstances.

Just before Christmas Romney was asked by NBC’s Chuck Todd about releasing his returns in the context of his years spent at Bain Capital. “I can tell you we follow the tax laws, and if there’s an opportunity to save taxes, we like anybody else in this country will follow that opportunity,” Romney said. “But we don’t have any current plans to release tax returns, but never say never.”

Roughly a week later, Romney shifted position, slightly, in an interview with NBC’s Andrea Mitchell. He said that if elected president he would “consider” releasing his returns. But, Romney’s answer was less important than Mitchell’s follow up; “Is there some secret?,” she asked. “People know you’re wealthy.”

And that’s when Romney’s tax returns went from a molehill to a mountain. The story became less a conversation about the fact that Romney was rich and more focused on whether there was something he was hiding by being so unwilling to release his returns.

Romney’s hesitancy to answer tax return questions in the debates last week made things worse, as did his admission that his tax rate was “probably” 15 percent. (Last week Romney also said he planned to release his tax returns in the spring.)

Romney’s team insists that his double-digit loss in South Carolina had almost nothing to do with his unwillingness to release his tax returns and almost everything to do with what they describe as a lack of aggression when it to Gingrich.

And, there is nothing in the exit polls that allows us to get a handle on how much the tax return issue factored (if at all) into how South Carolina voters made up their minds.

Still, Romney’s quick reversal on releasing the returns — not, accidentally, on the day of President Obama’s State of the Union speech — is all the evidence you need that the campaign had decided that it was a political boil that needed to be lanced.

The lesson? You never know when a small issue becomes a major problem. (Another proof point of that theory: Hillary Clinton’s stumble on driver’s licenses for illegal immigrants way back in October 2007.) Because of that, vigilance is required. Always.

Gingrich fundraising increases: Gingrich’s campaign says it has seen a surge in contributions since his win Saturday, pulling in more than $1 million in a 24-hour moneybomb.

Even as Gingrich surged to victory in South Carolina, he did it with what was still a pretty meagerly funded campaign. Most of his advertising came courtesy of a super PAC supporting his campaign that received $5 million from casino mogul Sheldon Adelson.

To the winner go the attacks: Gingrich also got the true frontrunner treatment Sunday, with attacks flying his way from all directions.

Romney, in a speech in Florida, called Gingrich a “failed leader” whose tenure as speaker ended “in disgrace.”

“We’re not choosing a talk-show host,” Romney said. “We’re choosing a leader.”

Romney proceded to attack Gingrich’s work for Freddie Mac and attempted to tie him to the housing crisis, which is a major issue in Florida

Santorum, who opened up several lines of attack against Gingrich at Thursday’s debate, continued in that vein Sunday, saying the former House speaker is an unreliable leader.

“When Newt was speaker of the House, within three years the conservatives within the House of Representatives tried to throw him out, and in the fourth year they did,” Santorum said in Florida. “Why? Because he wasn’t governing as a conservative.”

Meanwhile, Gingrich says Romney is a “very good salesman” selling a “really weak product” and says he’s been “dancing on eggs trying to find a version of Romney that will work.”

Fixbits:

New Jersey Gov. Chris Christie (R) said Sunday that he would consider being on a ticket with Romney.

Saul Alinsky, explained.

Nate Silver explains how the paradigms of a presidential campaign have changed.

Previewing a key redistricting battle in New York.

Can freshman Rep. Scott DesJarlais (R-Tenn.) avoid a primary?

Must-reads:

“Rick Santorum wins! And still can’t catch a break” — Melinda Henneberger, Washington Post

“Meet the super super PACs” — Dave Levinthal, Politico

“Newt Gingrich launches fund-raising, organizing blitz” — Sandyhya Somashekhar and Karen Tumulty, Washington Post

“Line of Scrimmage Forms Over Union Bill” — Monica Davey, New York Times

“Five Consequences of Gingrich’s South Carolina Win” — John Heilemann, New York Magazine

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