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Great divide for Obama, Romney: investment, profits, 'fairness'

It’s a political eternity between today and the first presidential debate on Oct. 3. And voters may be fated to spend it hearing point/counterpoint from the Obama and Romney campaigns on the Republican’s career as head of the private equity firm Bain Capital in the 1980s and 1990s.

The NBC News/Wall Street Journal poll released this week suggests that for now, Obama, and those who write his campaign ads, have some work to do in scuffing up Romney’s image: nearly three out of five poll respondents said if the former Massachusetts governor were president, his business experience would be an advantage in helping improve economic conditions and in reducing the federal deficit.

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But even if voters mute the TV when the campaign ads come on, questions emerge from this week’s rhetoric and polling data that could be answered in the fall debates:

• On Monday, Obama denigrated Romney’s Bain experience by saying, “When you’re president, as opposed to the head of a private equity firm, then your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot.” What does Obama believe is the role of profits in providing the capital for investments that entrepreneurs rely on to create firms and new jobs?

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• Obama spoke of the need for tax revenue that “allows us” – meaning his administration – to “invest in science and technology and infrastructure, all of which are going to help us grow.” When Obama speaks of his administration “investing” in science, technology and infrastructure, what has been the return on those investments in the last three years? For every Solyndra (the solar firm that went bankrupt and took with it $535 million in federal subsidies), have there been five or ten successes? Is the time horizon for federal investments too long to be measured merely on one presidential term? That was the implication of what Virginia Democratic Sen. Mark Warner – himself a former telecom entrepreneur – told NBC’s Chuck Todd: “If you’re in public service, if you’re investing in pre-school, if you’re investing in long-term infrastructure, you’ve got a much different time horizon” than private-sector investors looking to reap short-term profits.

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• How do Romney and Obama each define investment – and what is each man’s preferred mix of government investment versus private investment?

• Romney and other Republicans argue for lower tax rates on capital gains and dividends in order to spur investments in job-creating firms. In fact, there has been a bipartisan consensus in Congress for most of the past 80 years to tax capital gains at a lower rate than earned income. And in 2003, Congress cut the tax rate on dividends to 15 percent. A question for Romney is whether those lower tax rates have been effective in spurring job creation. If they have not been, why haven’t they?

• Obama repeatedly refers to “fairness” – as in his comment on Monday, that part of his job as president is “to think about how we set up an equitable tax system so that everybody is paying their fair share.” In putting the emphasis on “fairness” as the guiding principle in designing a tax system, how much higher does the top marginal rate need to go? Why does Obama not agree with former President Bill Clinton that all income tax rates must go up – even tax rates for middle-income people, not just the top-two tax brackets on upper-income people?

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• To what degree do attempts to achieve fairness in the tax system get in the way of efficiency in collecting taxes? For example, the Alternative Minimum Tax, first enacted in 1978, was intended to achieve fairness by catch high-income people with lots of deductions and require them to pay higher taxes. But now the AMT must be “patched” each year by Congress or it will hit more middle-income people. The AMT adds to the complexity of the tax system and the frustration of complying with it: millions of tax filers are forced to do the AMT calculation just to see whether or not they are required to pay the AMT.

• Are the poll respondents mistaken in thinking that Romney’s business experience would be an advantage in dealing with the federal deficit if he were president? Aren’t talents he’d need to clinch an accord on spending and taxes those of political bargaining and trade-offs, not business planning and analysis of corporate balance sheets? The last president who served at a time of balanced budgets and budget surpluses, combined with brisk economic growth, was a man who, like Obama, had spent his adult life not in business but in academia, politics and government – Bill Clinton.