On Taxes, ‘Modeling,’ and the Vision Thing

Does Mitt Romney have a governing vision, a dominating set of political principles? It’s the big question many voters say they have about the GOP presidential candidate. So when the former Massachusetts governor visited the Journal editorial board this week, we put it to him squarely, if perhaps tendentiously.

Voters see in him a smart man, an experienced executive, plenty of managerial expertise, great family—but they also see someone with the soul of a consultant who has 59 economic proposals because he lacks a larger vision of where he’d take the country. What does he think of that critique?

Mitt Romney predicts President Obama will resort to a campaign of “envy and divisiveness” that will “shock” voters and ultimately fail. Watch the Journal’s exclusive interview with the Republican presidential candidate.

Mr. Romney has been garrulously genial for an hour, but here he shows a hint of annoyance. “I’m not running for president for 59 ideas,” he says. “I’m not running for president because the country needs a management consultant or a manager. I’m not even the world’s greatest manager. There are a lot better managers out there.

“People who know me from my years at Bain Capital, Bain and Company, the Olympics and Massachusetts wouldn’t say he was successful because he was a great manager. They’d say I was successful because I was a leader, that I had a vision of how to change the enterprise, any one of those three enterprises, to make it greater.”

And that vision is? Mr. Romney says he’s running “to return America to the principles that we were founded upon.” He goes on, expanding on his campaign theme, Believe in America: “We have a choice in America to be remaining a merit-based opportunity society that follows the Constitution, or to follow the path of Europe. And I’m the guy who believes in the former. I believe America got it right. I believe Europe got it wrong. I believe America must remain the leader of the world. . . . I am absolutely committed to an American century. I see this as an American century.”

He concludes with even more force, “America doesn’t need a manager. America needs a leader. The president is failing not just because he’s a poor manager. It’s because he doesn’t know where to lead.”

Voters will have to judge the quality of that vision, and how it compares with President Obama’s. But there’s no doubt it’s a contrast with Mr. Romney’s visit to our offices in 2007, which became legendary for its appeal to technocratic virtue.

In that meeting the candidate began by declaring “I love data” and kept on extolling data, even “wallowing in data,” as a way to reform both business and government. He said he’d bring in management consultants to turn around the government, mentioning McKinsey, Bain and the Boston Consulting Group. Mr. Romney seemed to elevate the power of positive technocratic thinking to a governing philosophy.

So it is also notable that now Mr. Romney describes the core failure of Mr. Obama’s economic agenda as faith in “a wise group of governmental bureaucrats” rather than political and economic freedom. “It is a refrain that we have seen throughout history where smart people are convinced that smart people ought to be able to guide an economy better than hordes of individuals pursuing their self-interest,” Mr. Romney says, “the helter-skelter of free people choosing their course in life.”

The Republican presidential candidate says he never intended to run for office again after 2008—”I went back and bought a home which was far too expensive and grandiose for the purposes of another campaign,” he jokes. He was drawn back into public life amid Mr. Obama’s bid to “fundamentally transform” the country, to use the president’s own words, into “an entitlement society,” to use Mr. Romney’s.

“America can continue to lead the world from a values standpoint, from an economic standpoint, and from a military standpoint,” Mr. Romney avers. He says the coming election represents “a very simple choice” between Mr. Obama’s “European social democrat” vision and “a merit-based opportunity society—an American-style society—where people earn their rewards based upon their education, their work, their willingness to take risks and their dreams.”

Yet on that score—risk-taking—Mr. Romney’s campaign is sometimes timid, in particular on pro-growth tax reform. His 59-point economic plan, released this autumn, would maintain the Bush tax rates, cut the corporate rate to 25% from 35%, and eliminate the capital gains and dividend tax for those who earn less than $200,000.

But his plan doesn’t say what a more efficient, competitive code would look like, only that it would be desirable. Even Mr. Obama’s Simpson-Bowles deficit commission was bolder with its recommendations to lower rates across all brackets, including the top marginal rate to 23%, while broadening the tax base and cleaning out the IRS warren of deductions and subsidies.

Mr. Romney says he has “a positive inclination” toward Simpson-Bowles, with some exceptions, though the general framework “is a course that I would intend to pursue if I were to become president.” But pressed for specifics, he says that “Partially, I’m burdened by my experience in the private sector. I worked for a number of years as you know in the management consulting field.”

Here the technocrat re-emerges. Mr. Romney mentions pricing options for Corning Inc. fiber optics, a case study from his Bain salad days. “We spent six months with a team of people modeling and analyzing something as simple as that to make what we thought was the right decision,” he recalls. “I tend to be highly analytical, driven by data, like to gather the input of a lot of people, and then model out the various outcomes that might occur under different scenarios.”

When it comes to “something as extensive as the U.S. tax code,” Mr. Romney continues, “I simply don’t have the team . . . to be able to model out what will happen to all of the different income groups in the country, what will happen to the different sectors of our economy based on dramatic changes.”

He notes that “my 59-point modest plan are immediate steps I’ll take on Day One and that the steps I will take Day Two include moving toward a Simpson-Bowles-style lower tax rate, a broader base tax system. . . . People say, ‘Well, let me see that plan.’ It’s like, ‘That’s going to take a lot more analysis and modeling than I have the capacity to do in the confines of a campaign.’ But I will campaign for lower tax rates and a broader base of taxation.”

What about his reform principles? Mr. Romney talks only in general terms. “Moving to a consumption-based system is something which is very attractive to me philosophically, but I’ve not been able to sufficiently model it out to jump on board a consumption-based tax. A flat tax, a true flat tax is also attractive to me. What I like—I mean, I like the simplification of a flat tax. I also like removing the distortion in our tax code for certain classes of investment. And the advantage of a flat tax is getting rid of some of those distortions.”

Since Mr. Romney mentioned a consumption tax, would he rule out a value-added tax?

He says he doesn’t “like the idea” of layering a VAT onto the current income tax system. But he adds that, philosophically speaking, a VAT might work as a replacement for some part of the tax code, “particularly at the corporate level,” as Paul Ryan proposed several years ago. What he doesn’t do is rule a VAT out.

Amid such generalities, it’s hard not to conclude that the candidate is trying to avoid offering any details that might become a political target. And he all but admits as much. “I happen to also recognize,” he says, “that if you go out with a tax proposal which conforms to your philosophy but it hasn’t been thoroughly analyzed, vetted, put through models and calculated in detail, that you’re gonna get hit by the demagogues in the general election.”

That also seems to explain his refusal to propose cuts in individual tax rates, except for people who make less than $200,000, which not coincidentally is also Mr. Obama’s threshold for defining “the rich.”

“The president will characterize anyone running for office, and me in particular, as just in there to lower taxes for rich people, and that is not my intent,” Mr. Romney says. “My intent is to simplify our tax code and create growth, and so I will also look to see whether the top one-half of 1% or one-thousandth of 1% or top 1% are still paying roughly the same share of the total tax burden that they have today. I’m not looking to lower the share paid for by the top, the top earners like myself.”

But doesn’t that merely concede Mr. Obama’s philosophical argument? “No,” Mr. Romney responds, clipping his sentences. “I’m just saying that I’m not looking to change the deal. I’m not looking to go after high-income individuals like myself. I’m not looking to differentially favor. I’m looking to provide a system which continues to recognize that people of higher income pay a larger portion of the tax burden and I’m not looking, I’m not running for office trying to find a way to lower the tax burden paid for by the very high, very highest income individuals. What I’m solving for is growth.”

The growth point is crucial to a successful campaign, and Mr. Romney is betting that he can win by making a better case than Mr. Obama for how economies grow. But Mr. Romney also seems to think that by not calling for lower tax rates he can avoid a debate over taxes and equality. Mr. Obama won’t let that happen. The danger for Mr. Romney—and other Republicans if he is the nominee—is that in trying to dodge the argument Mr. Romney will cede the point to Democrats and end up losing the growth argument too.

Mr. Romney is less equivocal on two other campaign issues—the judiciary and Iran. Asked about Newt Gingrich’s proposals for constraining judges, he hits back hard. “The idea of the Congress being able to draw in the judiciary, subpoena . . . and remove courts is in my view a violation of the powers that is part of our constitutional heritage,” he says. “I think Speaker Gingrich said that if he disagreed with the Supreme Court on an issue like gay marriage, he might decide not to carry it out. Well, if that’s the case for President Gingrich, might not that be the case for President Obama?” He goes on to call the former House speaker’s proposals “unusual in the extreme.”

As for Iran’s nuclear program, Mr. Romney sounds a note of moral certitude reminiscent of, well, George W. Bush and the axis of evil. “I see Iran’s leadership as evil. When the president stands up and says that we have shared interests with all the people in the world, I disagree. There are people who are evil. There are people who have as their intent the subjugation and repression of other people; they are evil. America is good.

“I mean if we go back to Truman,” he adds, he “was able to draw a line between Communism and freedom, and having drawn that line, America was able to define a foreign policy that has guided us well until this president. I applaud Ronald Reagan’s brilliance in identifying the Soviet Union as an evil empire. I see Iran as intent on building, once again, an evil empire based upon the resources of the Middle East.”

So what would he do about it? “I do not have a top secret security clearance at this stage to be able to define precisely what kinds of actions we could take.” But he adds that “the range includes something of a blockade nature, to something of a surgical strike nature, to something of a decapitate the regime nature, to eliminate the military threat of Iran altogether.”

Some experts have told him that “the surgical strike option” would be inadequate because Iran could retaliate against our friends in the region. “And therefore if we were to be serious about going after Iran’s nuclear capacity, we would have to be prepared to go in a more aggressive way,” he says. The only thing he rules out are “boots on the ground.” If Mr. Romney gets the nomination, he seems prepared to make Iran and the bomb a major issue.

Which brings us back to the campaign and why he hasn’t broken above 25% in the polls. The former governor seems unconcerned. He compares himself to John McCain, who he says had the same problem in 2008 but won the nomination. He says no other candidate has been able to maintain any higher support, and that his strategy is to steadily build on that “floor” of 25% caucus by primary until he’s the nominee.

“Now I happen to believe that if I were to say some truly incendiary things, that there is in our party such, such anger about this president, for good reason, that if you’re willing to say some really vehemently, incendiary things that you can get a lot of quick support,” he says. But then “you’re gonna kill yourself in the general election.”

Mr. Romney rarely says incendiary things, which is why many Republicans think he is the most electable candidate. But it is also why he can be less than inspiring. His challenge—both to win the nomination and especially to beat Mr. Obama—is to persuade voters that the data-driven, economic-modeling, analytical manager can also be a leader.

Mr. Rago is a member of the Journal’s editorial board and Mr. Gigot is editorial page editor.