Mitt Romney is up with a positive ad in Iowa and New Hamsphire, which you can view below, focused on cutting spending as a solution to the economy. This tells us three things about what Romney is up to.

First, he is starting to spend serious money contesting the Iowa caucuses. Romney spent much of the last year trying to convey the impression that he might not compete in Iowa, but it was always a bluff. Now he’s in.

Second, the positive tone of the ad suggests he is so far avoiding a fight with Newt Gingrich, even though the latter is surging and many pundits are expecting Romney to go on the attack. The logic here is that in a multi-candidate race with sequential events, there’s no point in the frontrunner attacking any particular challenger because it just creates a Whack-a-Mole effect. Destroy Gingrich and yet another conservative candidate will pop up, as has happened again and again. It did make sense to attack Perry, because he was the only other candidate with both conventional credentials and mainstream conservative views. But Gingrich? If he is strong enough to beat Romney one-on-one after New Hampshire, then half a dozen of these candidates could do it.

Third, the ad doesn’t even mention taxes. This suggests that perhaps tax cuts are really losing steam as an issue among the serious Republicans who vote in these early events. Not that Romney would dream of proposing tax increases! But his rhetoric is dedicated in this ad entirely at the (dubious) beneficial effects of draconian spending cuts. Nothing about making the Bush tax cuts permanent; no new proposed cuts to compete with the flat taxers competing with him for the nomination. This is dramatically different than what George W. Bush in reaction to Steve Forbes in 2000: Unveil the proposal that became the Bush tax cuts.

It’s this third shift that seems especially important. It suggests Romney’s team may think conservative Republicans primary voters seem to care more about cutting spending, at least in the abstract, than about cutting taxes. It’s very rare for a leading GOP candidate to give up on the rhetoric power of tax cuts as a campaign centerpiece. If Republicans really shift to just a spending-cut party rather than a tax cut party, that’s a real change, with serious policy implications.