Aug. 27 (Bloomberg) -- When Governor Mitt Romney set out to fix the dysfunctional health-care system in Massachusetts, one of his first moves was to embrace a political nemesis.
Romney had faulted John Sasso, a Democratic operative, for his 1994 election loss to Senator Edward Kennedy, yet now he needed Sasso’s political ties and instincts to deal with a Democratic legislature and achieve a signature goal.
“He said, ‘Look, you want me to be visible promoting the bill, I’ll be visible. You want me to disappear, I’ll disappear. All I want is to get this legislation on my desk,’” Sasso, who was then the lead lobbyist for the state’s largest hospitals and insurer, recalled in an interview.
It’s a consensus-seeking style starkly at odds with Romney’s approach to the last two presidential campaigns, when he has courted the Republican base on issues from immigration to abortion rights. His shift has been so complete that even some close allies now wonder which Romney will show up if he wins the election.
The answer would define his presidency, since he’d face immediate demands to curb the national debt while averting a fiscal crisis.
For Romney, it would be an agonizing choice: If he follows his pragmatic impulses and strikes a debt accord with Democrats, he’ll be branded a traitor to his party as was President George H.W. Bush in 1990 when he bowed to pressure to raise taxes. If he chooses partisanship -- keeping his hardline campaign pledges yet failing to resolve the nation’s biggest financial challenge -- he’ll risk shaking the confidence of global markets.
Since his first run for the White House in 2008, Romney has almost never taken on Republican Party conservatives.
Once a backer of abortion rights and an assault weapons ban, candidate Romney -- who now calls himself “severely conservative” -- opposes both. He dropped his support for a bipartisan immigration compromise giving undocumented workers a path to citizenship, something he now denounces as “amnesty.”
On fiscal issues, Romney, who battled through a divisive Republican primary to claim this year’s nomination, vows that no tax increases would be used to pay down the debt. That would rule out any agreement with Democrats, with ramifications for the U.S. economy and the world financial system.
Economists, analysts and many politicians say a broad agreement is essential to solving the fiscal woes.
“It has to be bipartisan,” said former Senate Budget Committee Chairman Judd Gregg, a Republican who is now an adviser at Goldman Sachs Group Inc. “You can’t do these big issues -- tax reform, Medicare, Social Security -- unless people think the package is fair.”
Many other Republicans, including those elected in the Tea Party wave of 2010, say incorporating tax increases in any agreement is a bad idea economically and politically.
Congressman Tim Huelskamp, a Kansas Republican, said it’s inconceivable that Romney would do that: “It’s a principle of the House, and it’s been a principle of the Romney campaign that we’re not going to raise revenue except by growing the economy, so I just don’t see him going there,” Huelskamp said.
Romney’s selection of Paul Ryan as his running mate reinforces the notion that he would take a partisan route. As House Budget Committee chairman, Ryan has taken any revenue increases off the table. He has pushed through partisan budgets, and, as a member of President Barack Obama’s deficit-reduction panel, voted against a bipartisan plan.
At the same time, if Romney decides to make a deal that reaches out to Democrats and includes tax increases, it would be easier to sell to his own party’s right wing with a Vice President Ryan leading the way.
Some of Romney’s confidants and former colleagues say they lie awake at night puzzling over whether his nature or Tea Party pressure will drive him.
“I just don’t know that answer,” says Tom Trimarco, who was secretary of administration and finance under Governor Romney and helped negotiate the health-care legislation.
“His motives are terrific -- all the right reasons -- but his party is now controlled by a lot of uncompromising, unyielding people,” said Trimarco, now a registered independent backing Romney.
The Romney that Trimarco, Sasso and others who have worked with him in the past describe -- a onetime corporate-turnaround artist who specializes in data-driven solutions and is willing to bridge partisan divides -- would strike a comprehensive bargain that called for most budget savings to come from spending cuts while including some tax increases.
Yet the former private-equity executive has positioned himself to force through tax and spending reductions with little Democratic backing.
He proposes a plan that would lower individual income, investment and corporate, taxes -- at a cost of about $5 trillion over 10 years, according to the Committee for a Responsible Federal Budget -- by limiting deductions and exemptions.
Though there’s support for base-broadening along those lines, those steps don’t begin to cover the cost of Romney’s tax cuts, and he won’t say which expenditures he’d limit to do so.
A Tax Policy Center analysis showed that for Romney’s math to work, he’d have to reduce tax expenditures by 30 percent in 2015, virtually guaranteeing the curtailment of popular deductions such as those for mortgage interest and health insurance.
Lanhee Chen, his domestic policy adviser, said Romney doesn’t want to cut homeownership and health-care and tax breaks, especially for middle-income people. He declined to provide specifics.
“This silly idea that, I’ve got to tell you exactly -- I’m going to presume and presuppose these are the things that we’re going to curb and these are the things we’re going to change --I think, represents an unrealistic view of how this works,” Chen said.
One thing Romney has said is he has no intention of using revenue generated by tax changes to reduce the deficit.
He has been vague about what spending reductions he would pursue to reach his goal of cutting $500 billion from the budget by 2016, in line with his promise to cap expenditures at 20 percent of gross domestic product. He would increase defense spending by some $2 trillion over 10 years, according to one estimate, meaning deeper decreases in social programs.
He has outlined a Medicare overhaul that would give future retirees a subsidy to buy private insurance rather than have all their health needs covered by the government.
Romney’s vision is close to the one Ryan pushed through the House. They’ve had so many discussions about how to steer a plan through Congress that even before Ryan was chosen to run with Romney, Chen was calling him by his first name.
“He’ll do whatever it takes to save the country from the debt crisis,” Ryan said of Romney, and Republicans could only hope for “a handful” of Democrats to join them.
Democrats will retain enough Senate seats to block any initiative, unless Republicans use reconciliation, a parliamentary tool that allows the majority party to fast-track budget bills. That’s how Senate Democrats passed Obama’s health-care law in 2010, and it sparked criticism from Republicans.
Whatever happens, the poisonous atmosphere in Congress will be a challenge for Romney.
In Massachusetts, he was known as impatient, frustrated with the slow rhythms of politics. Rather than seeing the expansion of health coverage as a matter of social justice, he approached the issue like a consultant.
He instructed his staff to conduct a survey to determine who lacked insurance, crafting solutions for each segment of the population. Romney reveled in the data, sometimes shooing young aides out of their chairs to tinker with the Excel spreadsheets.
He set a few principles: There could be no tax to finance the measure; no burden on employers; and, to ensure personal responsibility, every individual would be required to have insurance. Aside from those, he was eager to deal.
There was a sense that Romney had been “elected for certain things,” said Tim Murphy, his point-man in the negotiations. And “there was an ability to negotiate within those guiding principles.”
Romney badgered his staff for status updates and seemed mystified by how politics could hinder progress.
When a Democratic leader rejected a compromise on how to fund the bill, holding out for a tax on employers that he knew the governor opposed, an exasperated Romney wondered how an accord would ever be reached.
“He said, ‘That’s the problem, you know? How are you going to deal?’” recounted Trimarco.
In the end, Democrats got their way, with a wink and a nod from Romney. He signed the legislation in 2006, quietly vetoing the provision assessing a small tax on businesses, knowing the legislature would override him. Both sides could claim victory.
That could be a blueprint for how Romney would bring the two parties together to resolve the fiscal crisis. Five years later, however, he rarely mentions it.
“My gut? The man is bipartisan -- that’s where he wants to be,” Trimarco said. “Will the system allow him to be that? I don’t know.”
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