Romney and his conservative colleagues have made it clear that they care more about bottom lines than investing in people's lives.

In last week’s presidential debate, Governor Romney said he will make a great president because he is a businessman and has run companies. He might know how to make a profit and possibly balance a budget like he promises. But running a country is not just about balancing the budget – which, by the way, he likely wouldn’t be able to do any better than President Obama – and it is definitely not about making a profit.

President Obama is not trying to run America like a company. He has a background in community organizing and is trying to run the country like a community, like a family, a household. A nation is not just a material system of capital, investment, and revenue. It directly affects the human lives of each and every American. Households are invested in every family member, as their shared living space, culture, history, and lineage binds them together for life. In companies, on the other hand, employers and employees are generally tied together by monetary relationships.

A few years ago, I met a member of the Pan-African Parliament at the United Nations Commission on the Status of Women. We had a conversation about how to encourage women to participate in politics. She said she talks to women living in the villages in her country, and they typically respond that politics is not for them, as they “only” know how to run a household. The member of Parliament then told them that if they can run a household, they can run a country. Think about it: you have to work together and negotiate with your spouse or partner to make decisions and get things done (bi-partisanship), understand and respond to the needs of the various family members (constituencies), and do so strategically with limited resources (budgeting, redistribution, long-term investments).

This is President Obama's strength. Sure, he hasn’t been a perfect president – if such a thing exists. But I trust him as a leader. I believe he truly cares about all constituencies, especially those who have traditionally been disenfranchised. He understands the strategic, long-term social and economic benefits of investing in quality education, efficient universal healthcare, healthy lifestyles, fair distribution of resources, and respect and equal rights for every individual. He understands that a country is only as strong as its weakest link and that leveling the playing field for everyone facilitates equal opportunity and empowerment for individuals as well as for the entire country. He understands that creativity, innovation, and progress are promoted by leveraging our rich diversity. His commitments and policies regarding healthcare, gender equality, poverty, education, and immigration, for instance, give us the feeling that he is everyone’s president.

Governor Romney, on the other hand, recently made it very clear that it is not his job to be concerned about 47 percent of Americans. He implied that almost half of the country does not take responsibility for itself and that he won’t be able to convince it otherwise. But most people want nothing more than to be economically independent, and the fact that some are not is more a reflection of social inequalities than of their characters. As most parents know, to raise your children to be self-sufficient and productive members of society, they need to develop skills and gain knowledge. They need to be invested in; they need opportunities for personal and professional development.

David Brooks argues, "People are motivated when they feel competent. They are motivated when they have more opportunities. Ambition is fired by possibility, not by deprivation." Deprivation of opportunity -- an unleveled playing field -- does not create self-sufficiency and actually fosters dependency on others, including on the government. For all the conservative rhetoric about economic self-sufficiency and individual freedom, President Obama seems to get this logic better than his opponent, with a long-term plan to empower all Americans and with strategic budget decisions that will set us on the road to economic recovery, deficit reduction, and a more equitable society. Republicans say they so greatly value “the family as the cornerstone of society,” yet they disregard the factors that promote economically independent, educated, healthy, and thriving individuals and families.

By not raising taxes, cutting capital gains, and reducing the corporate income tax, Governor Romney is catering to big business and the wealthy and their interest in making a profit. Like companies, Republicans are focused on their own bottom line and the bottom lines of those they consider stakeholders in the conservative political ideology, rather than on the empowerment of all the American people. I’m sure Governor Romney is a wonderful husband and father. It just doesn’t seem like he would be a true family man when it comes to 100 percent of the American family.

Minjon Tholen is a Roosevelt Institute | Pipeline Fellow and the Training & Development Specialist at Cook Ross Inc.

Romney's new cap on tax deductions, like his other policies, would transfer wealth to the wealthy and hit the young while shielding the elderly.

On Tuesday, Mitt Romney hinted at a key detail about his mysterious tax reform proposal. While he had previously suggested that he might eliminate some tax deductions or credits to pay for his proposal to reduce rates by one-fifth, yesterday he suggested that he would instead cap each taxpayer's total deductions at $17,000. Some questions remain, such as whether he would include the exclusion for health insurance in the cap, whether it applies to single filers or married couples, or whether it would raise enough money to pay for his proposed cuts. (Probably not.) But assume that it's a cap on the value of the biggest deductions, such as the mortgage interest deduction and the deduction for state and local taxes.

Because Romney would keep the preference for capital gains and dividend income and lower the top rate, any proposal to eliminate major deductions would in effect be, exactly as the Obama campaign has argued, a tax increase for the middle class to pay for a tax cut for the rich. A cap would work differently. Since it would impact only those whose deductions total more than $17,000, it would affect only the fairly well-off – those whose mortgage interest, state and local taxes, out-of-pocket health expenses, and other deductions exceed $17,000. As Suzy Khimm points out at Wonkblog, that will mostly be wealthy people in high-tax jurisdictions – but even the purchaser of a $450,000 house in Washington, DC would pay $18,000 in mortgage interest at the beginning.

Yet the Romney proposal as a whole, with capital gains still protected, would nonetheless redistribute income from the merely well-off to the very, very rich. To see what I mean, let's look at Mitt Romney's own tax return for 2011: Romney's deductions total $4,519,140 – a lot of money. At his average tax rate of 14 percent, deductions saved him $632,679. A cap would take away all but about $2,000 of that $632,679.

But look at what the capital gains preference does for him: Romney took home $12,573,249 in capital gains in 2011. (I've left out dividends, just to keep it simple.) At 15 percent, that's about $1,885,950 of his taxes. But if he paid the same rate as on ordinary income, 35 percent, he would pay about $4.4 million. So the capital gains preference saved him $2.5 million, while deductions saved him only about $632,000.

I'm just using Romney as an example here, partly because he's a very rich person whose tax return I happen to have. But a well-off family, earning maybe $200,000 a year in ordinary income with a $600,000 house, is already paying a much higher rate than the Romneys of the world and would face a significant increase.

There's one more thing about this proposal that hasn't really been mentioned: It would be a giant intergenerational transfer from young to old. Just as Paul Ryan's Medicare proposal creates a generational divide between those currently under 55 (who have spent much of their working lives in a stagnant economy) and those who are older and whose benefits would be protected, capping deductions has a similar generational effect. Why? Because younger people benefit disproportionately from the mortgage interest tax deduction and older people benefit from preferential rates on capital gains and dividends.

The mortgage interest deduction is worth much more in the early life of a mortgage, when most of each monthly payment is interest, than later, when it becomes mostly principal. And the deduction has no value for people who have paid off their homes or paid mostly in cash from the sale of an old home. Finally, older homeowners are more likely to have purchased before the real estate bubble of the 2000s. In a 2008 paper, the economists James Poterba and Todd Sinai examined the distribution of tax deductions by age and other categories. They found that homeowners between the ages of 25 and 35 got an average value from the mortgage interest deduction of $1,155, and homeowners between 35 and 50 got $1,598. But homeowners over 65 got only $149 on average from the deduction.

Who benefits from the preference for capital gains and dividends? Here's a chart from Paul Caron's TaxProf Blog: 

As the chart indicates, taxpayers over 65 are twice as likely to have capital gains or dividend income than those 45-55, and those preferred sources of income make up much more of their income than for younger groups – six times as much in the case of dividends. The Romney tax plan would protect this advantage.

While many older Americans live under great economic stress and poverty, there is a significant portion of them who benefited greatly from the economic prosperity of the post-War era, who had significant economic gains from their early investments in housing and in the stock market in the 1970s and 1980s, and who also benefit from programs such as Medicare and Social Security that provide them significant economic security. The younger generation (by which I mean those under 55) has not had the same advantages, and both Ryan's budget and Romney's tax plan would make it worse for them while protecting the wealthiest of the older generation.

Mark Schmitt is a Senior Fellow at the Roosevelt Institute.

The expansion of the American education system produced 100 years of economic growth, but we need a new model to achieve a sustainable, equitable future.

The Next American Economy breakfast seminars resumed last week with a discussion with Professor Larry Katz focusing on his and Professor Claudia Goldin's book, The Race Between Education and Technology. If you haven't read this book, there is a great deal about our economy you won't understand. If you don't read at least the introduction now that you've been told, shame on you.

Larry has several fundamental insights. (These are the ones I picked out; he might prefer to highlight others.)

First, at a minimum, 25 percent of our productivity growth -- and therefore our economic growth -- over the 100 years between 1870 and 1970 is due directly to increases in the average number of years of education of the American people. It is highly likely that the actual contribution of education is significantly greater; 25 percent is a minimum.

Second, during this period, economic growth was high and equality actually improved in America despite fundamental economic and technological change -- change every bit as great as the changes we have seen in the last 30 years. In other words, we have been here before. We dealt with the effects of technological change in the past through advances in education. There is no obvious reason we could not do so again.

Third, the fundamental educational change during this period was "the high school movement," a grassroots-driven movement that saw free, gender-neutral access to high school as critical to community success. 

Fourth, there has been no recent educational revolution similar in scope to the high school movement, and the big change that has occurred -- the growth of post-secondary education -- has not been free. Not coincidentally, the growth of educational attainment in America has slowed, economic growth has slowed, and inequality has risen. 

Finally, this slowdown in education is probably a more important factor in the stunning rise in inequality we've seen than the shift of income toward the top 1 percent, which has grabbed more of the headlines.

Based on this discussion with Larry, I conclude that the mantra of the next successful political movement in America should be sustainable, equitable growth, and that this is a plausible goal. 

I'll go further. A long period of relatively high economic growth is within our reach starting in a couple of years if we would get out of our own way. I've written a piece on this titled "An American Renaissance," which I'll send to anyone who asks.

But this is not a layup. If we are to grow more rapidly over the next 20 years than we did on the last 20, we have to have a productivity revolution. More of our growth will have to come from productivity -- about 80 percent in the next decade, as opposed to 35 percent to 50 percent in the last three decades. To keep growth constant with the last 3 decades, labor productivity will have to grow by about one-third. If none of this happens, the generation born during the last decade will experience about 60 percent of the per capita income growth as did the generation born in the '60s.

The single most important thing we could do to increase the rate of growth of productivity is to increase the level of educational attainment of Americans. But sustainable, equitable growth is not a goal either of our current parties cares much about. The current progressive movement's singular focus on income distribution is both misplaced and convenient. Misplaced because there are better, more available paths to take that would accomplish both more equity and more growth; convenient because this focus enables it to ignore all the real issues. The right's obsession with unfettered markets is even more nuts and completely ignores the economic history of how American growth actually happened.

A true next American revolution in education will not be a simple linear extension of our current system. It will involve a combination of lifelong learning and certification, a commitment to teaching students how to learn continually, an equally deep commitment to what Larry Katz calls contextual training, a renovation and invigoration of our community college system, the use of the web in unique, student-oriented, and user-friendly ways, and major long-term costs. I would guess $50 to $75 billion annually for a long time -- between one-third and one-half a percent of GDP.

 But our current plan, of course, is to do nothing meaningful. As I've said before, the two parties are on a course to gut most of the government in order to protect the entitlements and retain the worst features of our current tax system. As an example, the total of all of the non-personnel investments in the federal budget is now $310 billion, or 8 percent of the total federal budget and slightly less than 2 percent of GDP, and it will fall to $270 billion, or 5 percent of the total budget and about 1.5 percent of GDP, over the next 10 years. This is a plan to build a low-growth, unsustainable economy with growing inequality.

Not to belabor a point I've probably made too frequently, but the door is wide open for what one might call a new progressivism or a new conservative movement. The old right can then focus on its Brigadoon-like vision of a time when the market roamed free and unfettered. The old left can focus on income distribution. And the real work of building a workable society based on sustainable and equitable growth can be carried out by whoever decides to reach first for the prize.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

School classroom image via Shutterstock.com.

Romney's comments may spark a widespread backlash against the kind of contempt for the poor that FDR once overcame.

But here is the challenge to our democracy: In this nation I see tens of millions of its citizens—a substantial part of its whole population—who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life…

I see one-third of a nation ill-housed, ill-clad, ill-nourished.

But it is not in despair that I paint you that picture. I paint it for you in hope—because the nation, seeing and understanding the injustice in it, proposes to paint it out. We are determined to make every American citizen the subject of his country’s interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - Franklin D. Roosevelt, 1937

Mitt Romney’s callous remarks about the 47 percent of Americans who “pay no income tax,” are “dependent on government,” see themselves as “victims,” and will never “take personal responsibility… for their lives,” have been seized upon by both conservative and liberal commentators as the strongest indication yet that Romney is out of touch with the American people. They have also proved to be something of an embarrassment for fellow members of his party who are running for office. In Massachusetts, for example, U.S. Senator Scott Brown told the Boston Globe that Romney’s remarks did not represent the way Brown viewed the world. “As someone who grew up in tough circumstances, I know that being on public assistance is not a spot that anyone wants to be in.” Similar sentiments were echoed by a number of other Republican candidates, like Senator Dean Heller of Nevada, who told Politico that as the son of an auto mechanic and a school cook—with five brothers and sisters—he did not "view the world the same way” Romney does. In New Mexico, meanwhile, Republican Governor Susana Martinez responded by noting that her state had “a lot of people that are at the poverty level…but they count as much as anybody else.”

Romney’s remarks have also sparked a good deal of interest in just who the 47 percent are and what this figure means. Ironically, the net result this furor may be to inject a more elevated discussion into the nation’s political discourse about one of the most important issues facing the country: the alarming rise in the number of Americans who have joined the ranks of the poor.

According to official statistics just released by the Census Bureau, the number of Americans living in poverty reached 48.5 million people in 2011, the highest number in 53 years. And while the percentage of Americans living in poverty finally appears to be falling from its high last year of 15.9 percent, it is important to remember that the number of “near poor”—those individuals and families who struggle with incomes just above the poverty line—has topped 51 million. That means the total number of Americans living below or just above the poverty line now stands at just under 100 million—roughly one-third of the population.

Given these statistics, and the growing number of Americans who have retired and are living off of Social Security (which the retirees have paid for through payroll taxes), is it any wonder that approximately 47 percent of the American populace pays no federal income tax? Of course we should not forget that most of these individuals do pay payroll taxes as well as state and local taxes, not to mention sales taxes, which are in place in 45 states.

A far more important question is how it is that the richest country in the world now finds itself with roughly one-third of its population living in such dire economic circumstances. According to Mr. Romney, these 100 million Americans are stuck in or near poverty because they have refused to take “personal responsibility and care for their own lives.” As such, they are quite happy to live on government handouts, firm in their belief that they are “entitled to health care, to food, to housing, to you-name-it.”

Quite apart from the debate over health care, one would have thought that access to food and shelter is not something that a civilized society in the 21st century would deny its most vulnerable citizens—and when pressed Mr. Romney has backed away a bit from such an extreme stance. But the undeniable disdain in his comments for “those people” whom he has characterized as freeloaders who regard themselves as “victims” has sparked a strong negative reaction, even, as noted, from many members of his own party.

This is welcome news, for it may portend the first glimmer of hope that the winner-take-all, you’re on your-own philosophy of the extreme right is being undermined by a far more compassionate and realistic view of how a modern society is supposed to function; a society where we can all agree that government has a responsibility to provide the average citizen with a basic level of economic security and equal access to economic opportunity. This would include policies that ensure that all Americans have equal access to education and affordable health care and where the focus of the debate about the size and role of government would center how best to use government—not eliminate it—in our fight to eradicate poverty.

Seventy years ago, in the midst of an even worse economic crisis, Franklin Roosevelt faced a number of critics who characterized the world in a manner that was quite similar to Governor Romney’s. “You know their reasoning,” FDR said. “They say that in the competition of life for the good things of life; ‘Some are successful because they have better brains or are more efficient; the wise, the swift and' the strong are able to outstrip their fellowmen. That is nature itself, and it is just too bad if some get left behind.’” But, he went on:

It is that attitude which leads such people to give little thought to the one-third of our population which I have described as being ill-fed, ill-clad and ill-housed. They say, "I am not my brother's keeper"—and they "pass by on the other side." Most of them are honest people. Most of them consider themselves excellent citizens.

But this nation will never permanently get on the road to recovery if we leave the methods and the processes of recovery to those who owned the Government of the United States from 1921 to 1933.

In Roosevelt’s day, those who “owned the Government” from 1921 to 1933 promoted the same type of laissez-faire policies that Governor Romney and Congressman Ryan embrace and which contributed to the economic collapse President Obama inherited in 2009. By the mid-1930s, however, most Americans found themselves in agreement with FDR’s comment that “we have always known that heedless self-interest was bad morals; we know now that it is bad economics.” They also concurred with his view that “out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays.”

Perhaps Mr. Romney has done us all a favor, for his apparent indifference to the plight of “those people” who make up the 47 percent of the American population has forced a good many of his fellow Republicans to admit that government does have a role to play in ensuring we live in a decent society. They may not agree with the Democrats on how just how large a role government should play, but their tacit acknowledgement that government can and must be part of the solution to the nation’s problems is a welcome change from the ceaseless and vacuous claim of the far right that government stands at the root of all our problems.

Who knows; in the long run, it may even lead to the moderation of the Republican Party, something which all Americans, even the 47 percent, would welcome with open arms. 

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.