Steven Pearlstein: A tale of two Mitts

Steven Pearlstein
Columnist June 7, 2011

The Good Mitt could be the next president of the United States. The Bad Mitt won’t make it past Super Tuesday. The problem for Romney is that he just can’t decide which Mitt he wants to be.

I found both Mitts while reading his obligatory pre-campaign book, “No Apology,” with the lapel-pin subtitle, “Believe in America.”

Steven Pearlstein is a business and economics columnist who writes about local, national and international topics. View Archive

Despite what you might think from the title, the book doesn’t have anything to do with explaining why Mitt once drove to Canada with the family dog strapped on the roof or why the former governor helped create a mandatory health-care plan for Massachusetts that looks very much like the Obama plan he now vows to repeal.

Rather, it’s meant to be a dig at President Obama and other Democrats who, he asserts with very little evidence, don’t believe in free markets, free enterprise and free trade — or freedom of any kind for that matter. It’s a sneaky way of accusing people who don’t agree with him of having so little faith in America that they’re constantly apologizing for it, from which we are meant to conclude that they don’t love America as much as Mitt and the Republicans. This is the Bad Mitt talking.

Then there is the Good Mitt, the Mitt who graduated from Harvard Business School and was a successful strategy consultant and private-equity investor. This Mitt writes thoughtfully about productivity and entre­pre­­neur­ship and innovation — about how they thrive in an environment of limited government, low taxes, free trade and open competition and how they can be hampered by special interests that try to slow or subvert the sometimes painful process of creative destruction.

The Good Mitt has a firm grasp of what’s wrong with the current health-care system, acknowledges the culpability of Wall Street and the private sector in causing the financial crisis, and even admonishes fellow Republicans for being “overly fond of bashing regulation as the constant enemy of growth and competition.” While I surely don’t agree with all his analysis and many of his prescriptions, in terms of knowledge and sophistication about business and economics, he’s near the top of the Republican class.

But just when you’re beginning to think maybe you’ve misjudged the guy, the Bad Mitt jumps in and grabs the keyboard. Suddenly we’re asked to believe that less than 10 percent of the Obama stimulus funds created any jobs in the private sector, as if the money that goes to pay the salaries of state workers or finance public works projects winds up in a black hole rather than circulating through the economy.

According to the Bad Mitt, Treasury Secretary Tim Geithner has been “opaque” and “heavy-handed” in managing financial rescue funds while his Republican predecessor, Hank Paulson — the man who organized the first tranche of the auto bailout, forced banks to take bailout funds some of them didn’t want, and insisted on paying off every last one of AIG’s creditors and counterparties while refusing to disclose their names — was a hero who saved the financial system. This revisionist history is contradicted by every account of the crisis published so far.

The Bad Mitt also seems to have trouble with his sums when he claims that the tax on corporate profit distributed to shareholders is an eye-popping 67 percent. In fact, with dividends and capital gains now taxed at 15 percent, the correct number in most places would be closer to 55 percent, and that is only if the corporation had no deductions or credits, which is unlikely. At the average federal rate of 27 percent, the total tax bite would probably be no more than 47 percent.

Mitt does have a point about “double taxation” of corporate profit, which many tax experts agree is unwise and which many businesses go to great lengths to avoid. Half of all business income now goes through “pass-through” entities, such as partnerships and subchapter S corporations, where profit is taxed only once, whether it is distributed or not, at a maximum rate of 35 percent. That’s hardly the confiscatory nightmare Mitt conjures up.

Indeed, the Bad Mitt is addicted to hyperbole, particularly when talking about the Obama administration’s economic policies. In the book, we discover that Obama is the first president in history to “declare war on private enterprise.” And on the stump, the Bad Mitt likes to quip that the president “sees business as a necessary evil, and maybe not even necessary.”

Mitt knows this because deficit spending has risen during a deep recession, a federal health reform bill has passed, a financial crisis has led to tighter regulation on Wall Street and a plan to deal with global warming was proposed but not enacted. Oh, I almost forgot — the president didn’t name a single business executive to his original Cabinet. From this naturally flows the conclusion that the United States is “inches away from ceasing to be a free-market economy.” Inches!

“It breaks my heart to see what’s happening in this country,” the Bad Mitt said last week while announcing his candidacy.

Just to review: The Bolsheviks have taken over, capitalism as we know it is about to come to an end and, yet, somehow the Dow Jones industrial average has gained 47 percent since the Obama inauguration, private-sector profits are back at record levels and business investment in new equipment and software is growing at the annual rate of 11.7 percent. How weird is that?

These days, the Bad Mitt blames Obama for home foreclosures whose roots are in a housing bubble that began in the late 1990s. He also blames him for the rapid rise in global oil and food prices — the economic logic behind that one is still a mystery. I can’t wait for the speech in which he blames Obama for the Missouri River flooding.

Honestly, it breaks my heart to see what has happened to Romney. The Good Mitt had so much potential: the distinguished political pedigree, the successful career, the beautiful family. The latest Washington Post poll has him beating Obama.

The Bad Mitt jeopardizes it all by pandering so shamelessly and so inartfully to the Republican right wing. Instead of demonstrating the honesty and character to boldly lead the country beyond the partisan feud and the ideological holy war, the Bad Mitt reveals himself to be just another ambitious, poll-tested pol that no one can trust. It’s why he lost last time. And my guess is it’s why he’ll lose again.

I just hope he doesn’t take it out on the dog.

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