Romney's Genuine Capitalist Bona Fides Could Be His Downfall

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Even in the Republican Party, anger at Wall Street is very real -- and his admission that he pays a 15 percent tax rate makes it worse.

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Say what you will about him, Mitt Romney is the real thing: a Wall Street guy to his bones, a numbers whiz who took a small start-up, Bain Capital, and helped turn it into a $65 billion giant among private-equity firms (which is what we now call the the old corporate-raiding leveraged-buyout buccaneers we used to think of as "barbarians at the gate" back in '80s; in case anyone was wondering, they're now allowed inside the gate). Romney actually is, in other words, what Newt Gingrich and Rick Santorum and Rick Perry can only talk about in the abstract: he's a real capitalist.

And now we find that he gets paid like one too. To the surprise of very few, the GOP's nominee presumptive acknowledged on Tuesday that he pays about 15 percent in taxes, far less a percentage than the average middle-class American, thanks to a host of tax breaks proffered by what Warren Buffett once critically called "our billionaire-friendly Congress."

But Romney's biggest political problem right now is not that he is at loggerheads with his fellow Rich Guy, St. Warren of Omaha, who has generously demanded that the billionaire-friendly Congress ask more of the super-wealthy in taxes (which Romney vehemently opposes). Buffett doesn't command that many votes. Romney's biggest problem is determining whether the mood of the country has really shifted against the financial plutocrats as much as the Occupy Wall Street movement might indicate.

I think it has, and Romney will have a lot of self-defense to do in the general election.

As much as they might have annoyed their conservative base, Gingrich and Perry were on to something when they attacked Bain Capital in South Carolina. The anti-Wall Steet anger cuts across party lines. It's not so much the kind of activities that Romney and Bain were engaged in; Bain is really just feeling the blowback from anger on both left and pight. Bain may sometimes destroy jobs, but when it fails at a venture, at least it loses money.

Yet the public may no longer be interested in making the distinction between Wall Street firms that follow the rules and those that don't. The reason that what Gingrich and Perry are saying resonates goes back to Wall Street's offenses over the last decade with subprime mortgage securitization. The issue here is not really about the ordinary "the rough and tumble of market capitalism," as The Wall Street Journal's Gerald Seib suggested at the debate last night. Most Americans don't have a problem with that. The issue is really the corruption of market capitalism represented by the massive fraud that Wall Street banks got away with, for which they were then bailed out by the federal government with no questions asked. All this has aggravated, for average Americans, the frustration they already feel because of the record levels of income inequality that exist in our economy.

That's why the public is likely to get its dander about Romney's 15 percent. It is an issue that unites conservatives and liberals, OWS protesters and tea partiers alike. As I wrote in my 2010 book Capital Offense, both the left and the right were justifiably offended by the way the American system of capitalism -- real capitalism, that is, the way it's supposed to work -- was subverted during the subprime era. Liberals were appalled by the rampant destruction of social equity, and the rigged way so much wealth was amassed in the hands of the 1 percent; conservatives were outraged that the system didn't work the way it was supposed to: in other words, if you fail, you die.

So Romney's biggest problem may not be his robotic campaign style, or the tin ear that lead him to bet Perry $10,000 (presumably at low tax rates) at one point. His biggest problem may be his golden resume. Given the mood of the country, Romney may have a tougher time persuading the public he's the One during the general election season than he thinks.

Image: Jason Reed / Reuters

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Michael Hirsh is chief correspondent for National Journal.

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