How Mitt Romney Can Use His Wealth as a Political Asset

Americans envy the rich, but hate phonies.

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Memo to Mitt Romney: Please do us all a favor and just admit you're rich. 

The Democratic presidential contender, after all, is comfortably a millionaire. President Obama earned more than $7 million over the last two years, mostly from book sales. Once he leaves the White House, Obama will no doubt earn considerably more from follow-on books, speeches, and the natural draw of being one of the world's most famous celebrities.

[See how Romney and Obama differ on the economy.]

Romney, the probable Republican candidate, is much richer than Obama. Romney amassed an estimated fortune of $250 million or so while running the private-equity firm Bain Capital for 15 years. Even though Romney left Bain in 1999, it's a safe bet that he still earns seven or eight figures per year, mainly from the return on investments.

Romney now says that if he becomes the GOP nominee, as expected, he'll release his tax returns around tax time, in April. That will put him on equal footing with Obama, at least in terms of disclosure. But Romney's income statements may cause fresh controversy, because Romney says his effective federal tax rate is only about 15 percent—the rate paid on investments, which is lower than the rates that many middle-class workers pay on wages. That may sharpen Romney's aristocratic image, while exacerbating a peculiar affliction that Romney seems to suffer from: He's uncomfortable admitting that he's rich.

Any politician running for national office needs a sort of Everyman appeal, of course. It was Bill Clinton's unique political talent, and even George W. Bush talked the talk, even if he walked in designer cowboy boots. But Romney, so far, has been unconvincing in his pursuit of regular-guy credibility. He generated chuckles recently by claiming that he started at the bottom and that he knows what it's like to worry about getting laid off—even though he began his business career with twin degrees from Harvard Business School and Harvard Law, and a famous father who was an auto-company CEO and then the governor of Michigan.

Romney's campaign plays down the fact that he owns at least three mansions, while offering up tidbits such as Romney's preference for oatmeal at breakfast and his old habit of scolding his kids for taking long showers that drove up the hot-water bill. While other candidates wear suits on the campaign trail, Romney's signature campaignwear is jeans and a button-down shirt. For anybody missing the point, Romney himself declared on the Today Show, "I'm just an ordinary guy."

[See why raising taxes on the rich is so hard.]

Not to ordinary people, he's not. But instead of trying to disguise his gilded pedigree, Romney might be better off if he embraced it. It's true that many middle-class families are struggling, but that doesn't mean they'll shun a candidate who's better off than they are. Romney could even use his phenomenal success as an asset. Here's why:

Americans admire rich people. Especially those who seem to have earned it. The "Occupy" movement has unnerved the affluent by targeting the "1 percent," but protesters aren't complaining merely because the rich are rich: The main gripe is that the rich enjoy unfair advantages and political favors unavailable to everybody else. Overlooked, meanwhile, is the fact that many Americans still empathize with the wealthy, for one simple reason: They hope to become one of them some day. "Millionaires are always an easy target," says Dennis Jacobe, chief economist for the Gallup polling organization, "but there are still many Americans who hope to be rich."

Instead of dodging his socioeconomic status, Romney could tap into the normal aspirations of many voters by sending the message that you, too, can get rich in America, just like I did. He might even offer a pointer or two, serving as the nation's career-counselor-in-chief. Nobody else is.

[See how Mitt Romney can defend his record on jobs.]

He can neutralize Obama's class appeal. Obama wants to raise taxes on the wealthy but not on anybody else, even though most budget experts say that it will take middle-class tax hikes (or big cuts in middle-class entitlement programs like Medicare) to make serious progress paying down the national debt. Obama certainly knows that, but he's withholding the bad news until after the election (or later), while campaigning on an us-versus-them theme by singling out the wealthy as the only ones who need to do more.

Romney could broker a truce in the class warfare by first acknowledging that he's a privileged member of the 1 percent, and then saying that "we should go first" on meaningful tax hikes or benefit cuts. Changing the rules that tax investment income for the wealthy at a lower rate than middle-class wages might be a good place to start. Those sorts of reforms, in turn, might be exactly what's needed to set the stage for the broader sacrifices that most taxpayers will inevitably have to make. So far, however, Romney's tax policies generally favor higher earners over lower ones, aligning him with the stereotype of a rich guy who's mainly interested in padding his own nest and further enriching his friends. He needs some new policies to get ordinary folks in his corner.

[See how to reclaim the American Dream.]

He can dress down corporate America. Whether accurate or not, Obama suffers from an "anti-business" reputation that undermines his leadership on jobs and the economy, partly because he has never led a private-sector organization. Romney, by contrast, has helped run many companies and knows his way around a boardroom. There are a lot of corporate reforms that might help reinvigorate the economy, but voters are sick of bailouts and corporate giveaways. So they need to see tangible results in the workplace to support anything that fattens corporate coffers.

It might make sense to lower corporate taxes and streamline regulation, for instance, if it will promote investment and help create jobs without undermining health and safety. Romney has the standing with corporate America to get buy-in from CEOs on any new policies. But voters need to see him as their own CEO, working hard to enhance their own fortunes as shareholders in the U.S. economy, the way he delivered stellar returns to investors at Bain Capital. The risk for Romney is that he overdoes the hollow gestures in an effort to offset his preference for the country club, like the boss who drops in on the lunchroom and overstays his welcome. Romney needs to show that he's a 24/7 CEO who can smack down the big boys every now and then if that's what it takes to deliver results to voters. Take charge, man.

[See 3 scenarios for the economy on Election Day.]

Being phony is far worse than being rich. Voters won't punish Romney just because he's 10,000 times richer than they are. As New York Times columnist David Brooks has pointed out, "Great presidents are often aristocrats and experienced political insiders." Theodore Roosevelt, Franklin Roosevelt, and John Kennedy were all able to hone a highly effective populist appeal, in spite of their privileged backgrounds. A self-made image helps, but it's not a requirement for the office.

Voters, on the other hand, tend to punish candidates when they sense a prince masquerading in coveralls, as they did with John Kerry in 2004. As we learn more about Mitt Romney and his exalted net worth, the Massachusetts multimillionaire will have to decide whether to keep hiding from his money, or to accept it as part of his core identity. If he's honest about his wealth, people will envy him. If he fakes it, they'll lampoon him. Either way, Americans will be voting for a millionaire on Election Day, and many will choose the one who seems most sincere.

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  • Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success, to be published in May.

    Follow him on Twitter: @rickjnewman