David Rohde

Since asking the candidates at Tuesday’s presidential debate how they would improve his job prospects, college junior Jeremy Epstein has been lionized on Twitter, repeatedly interviewed on television and declared a nerdy sex symbol.

Unfortunately, as they have throughout the campaign, Romney and Obama avoided details when answering Epstein’s thoughtful question. Instead, they lampooned each others’ records and policies. Such answers are to be expected, arguably, in the waning weeks of an extraordinarily tight presidential campaign.

But an analysis of Obama’s and Romney’s specific proposals and the positions of their key advisers – particularly when it comes to creating manufacturing jobs – shows that voters do face a critical choice. This is, in fact, an election that will send the federal government in one of two very different directions when it comes to long-term job creation.

In his answer at the debate, Romney referred to his five-point plan that he said will create 12 million new jobs in the United States. The plan, which is detailed in a white paper endorsed by four leading conservative economists, is a full-throated endorsement of using tax breaks and market forces alone to revive the American economy. While Romney is tacking toward the center in the race’s final weeks, it is fair for voters to assume that he will slash the size of government, and rely on a free-market approach to the economy.

The white paper, for example, calls for reducing federal spending to 20 percent of GDP by 2016, its pre-financial crisis average. It hails Romney’s proposed across the board 20 percent tax break. And it calls for a sweeping reduction in government regulation, specifically repeal of the Dodd-Frank Wall Street regulations and Obamacare. The word “manufacturing” does not appear in it.

The Romney camp seems wary of even a light-touch attempt to boost manufacturing. During this spring’s Republican primaries, R. Glenn Hubbard, lead author of the white paper, dean of Columbia University’s business school, and a top Romney economic adviser, criticized a proposal by Republican presidential candidate Rick Santorum to use tax policy to bolster American manufacturing. In February, Santorum proposed that government aid the sector by exempting manufacturing companies from corporate income taxes.

“By proposing special tax breaks for manufacturing, Mr. Santorum follows Mr. Obama’s incorrect lead and introduces a significant economic distortion,” Hubbard wrote in a March Wall Street Journal editorial. “In a world with highly mobile capital, tax policy needs to be neutral toward different forms of business activity and not succumb to the temptation to pick winners and losers.”

If Romney is likely to embrace a no-government approach, it is fair for voters to assume to assume that Obama will do the opposite. Obama also tacked to the center in Tuesday’s debate, but he and many liberal economists embrace an entirely different view of economic theory and American history.

Members of the administration and liberal economists credit the role of government research and defense spending with creating everything from the Internet to high-speed semi-conductors to the completion of the human genome project. That level of basic research, they contend, created the foundations for enormous growth by private sector online, pharmaceutical and computing companies.

“There is a long history of government involvement in supporting innovation and growth in many ways,” Gary Pisano, a Harvard Business School professor, told me in an interview today. “Sometimes, it is very broad, like land grant colleges. Sometimes, it is very specific like granting railroads right-of-way in the American west. It has had a role. We can’t deny it.” (A separate interview I did with Pisano about his new book Producing Prosperity: Why America needs a manufacturing renaissance earlier this week is below.)

A second Obama term is likely to involve heavy government role in promoting manufacturing. An investment in community colleges would theoretically create the skilled machinists, for example, that are needed for advanced manufacturing. A National Institute of Manufacturing – modeled on the National Institutes of Health – may even be created.

Ironically, whoever wins the presidency is likely to enjoy a sharply improved economy.

The Congressional Budget Office estimates that even if the so-called “fiscal cliff” is not averted in January, the American economy will create 9.06 million jobs between 2013 and 2017, nearly double the number created in the last four years. In an even more optimistic prediction, Moody’s analytics says that whoever is elected president, 12 million jobs will be created by 2016.

Whether they deserve it or not, the winner will claim that the improving economy is an endorsement of their economic vision. In short, the decision is an important one. It is also stark.

Obama has at times gone too far in intervening in the economy. The administration’s disastrous investments in Solyndra and other alternative energy companies was a classic example of government trying to pick winners and losers. But we ought not to conclude that just because certain types of government investing go awry there is no role for government at all.

I agree with Pisano’s outlook that government, in fact, plays an enormous role in the economy. The carried interest tax break is a massive subsidy to the private equity industry. The home mortgage interest deduction is an enormous boost for the middle class.

And in today’s globalized economy we compete with economic rivals who aggressively subsidize their leading industries. Having no government assistance in manufacturing is the equivalent of unilateral disarmament in today’s de facto trade wars.

I believe there is a broad, long-term role the government can and should take in reviving manufacturing, but it should not engage in picking winners and losers. Both candidates’ plans have their shortcomings. In the end, I err toward the approach that is less ideological. On job creation and reviving manufacturing, Obama is more realistic.

PHOTO: U.S. President Barack Obama (L) and Republican presidential nominee Mitt Romney (R) speak directly to each other during the second U.S. presidential campaign debate in Hempstead, New York, October 16, 2012.   REUTERS/Win McNamee/POOL

It began two weeks ago with a little-noticed speech at the Clinton Global Initiative, where Mitt Romney distanced himself from Tea Party Republicans and defended the legitimacy of American foreign aid programs. And it continued in a speech on Monday at the Virginia Military Institute, where Romney – after months of hailing only Israel – called Turkey and pro-democracy Arab Spring demonstrators American allies as well.

“As the joy born from the downfall of dictators has given way to the painstaking work of building capable security forces, and growing economies, and developing democratic institutions,” Romney said, “the President has failed to offer the tangible support that our partners want and need.”

Just as in domestic policy, Mitt Romney is softening his rhetoric in foreign affairs. Moving away from more strident stances on supporting Israel, increasing U.S. defense spending and fearing the Arab Spring, he is adopting a more measured tone. The question, of course, is whether voters will embrace the new Romney or see him as an opportunistic chameleon.

Romney’s campaign won’t acknowledge any official shift, but recent press reports have noted the rising prominence of Richard Williamson, a senior foreign policy adviser and veteran diplomat viewed as a relative moderate in Republican foreign policy circles. Williamson led a call with reporters before Romney’s speech on Monday and appears to have had a hand in his recent change of tone. Rhetorically at least, the role of neo-conservative advisers – such as former George W. Bush administration officials Liz Cheney and Dan Senor – seems to be waning.

In an hour-long phone interview on Wednesday, Williamson denied any shift – or division – within the Romney campaign. But he presented a far more nuanced version of Romney’s approach to the Middle East than displayed on Romney’s trip to Israel in July. The Israel trip was organized by Senor, the neo-conservative former Bush administration official.

In a wide-ranging critique of Obama administration policy, Williamson laid out an approach that went beyond backing Israel. As Romney did in his speech on Monday, Williamson said a Romney administration would work with its allies to ensure that Syria’s rebels receive missiles that will allow them to shoot down government attack jets and helicopters. And he said a Romney White House would do more to back post-Arab Spring countries as they try to democratize.

In a critique that sounded more as if it were coming from the left than the right, Williamson accused the Obama administration of relying too heavily on drone strikes in counterterrorism operations. He said a Romney administration would do more to address the political, economic and social conditions that foster extremism.

“Drone killings, targeted killings, is not a foreign policy,” he said. “It’s not even a strategy to deal with Islamic extremism and terrorism.”

An opinion piece that Romney published in the Wall Street Journal last Sunday made a similar argument. The Republican nominee accused Obama of failing to use “the full spectrum of our softer power” to help “those who have for too long known only corruption and oppression.” And in his speech on Monday, Romney criticized Obama for not doing more to aid the economies of post-Arab Spring countries.

“The dignity of work,” Romney said, “and the ability to steer the course of their lives are the best alternatives to extremism.”

That rhetoric is a far cry from the language Romney used in a speech in Jerusalem in July. At the time, he called the Middle East a region of “rising tumult and chaos” and warned darkly of the election of an “Islamist president” in Egypt. In last week’s Wall Street Journal piece, the new Romney called the Arab Spring “an opportunity to help move millions of people from oppression to freedom.”

Colin Kahl, a senior foreign policy adviser in the Obama campaign, scoffed at Romney’s changes. He said the Republican nominee was frantically trying to soften his image.

“The Romney campaign is in a desperate final few weeks of trying to reinvent themselves,” he said. “I think more in tone than in substance, you saw a slight shift.”

Kahl has a point. Romney’s recent speeches have been an odd combination of sophistication and pablum. In one passage, he rightly calls for working with Turkey and backing moderate Muslims in the Middle East. In the next, he calls for showing “no daylight” between the U.S. and Israel. Romney correctly highlights the central role that economic growth can play in countering extremism, but then simplistically states that the answer to the region’s complex problems is reducing trade barriers.

Don’t expect that to change. In the interview, Williamson flatly denied that there were any contradictions in Romney’s stances. Instead, he vowed that Romney would continue to aggressively attack Obama on the subject through a pivotal final Oct. 22 presidential debate on foreign affairs.

“If he thinks he’s going to be fine,” Williamson said, referring to Obama, “he’s going to have another bad day.”

So far, the Obama campaign has struggled to derail or discredit Romney’s new shift to moderate ground. As in domestic policy, Romney stays vague on details and offers contradictory rhetorical tidbits that appeal to divergent voters. Hailing Israel pleases the Christian right. Supporting Turkey charms Republican internationalists.

What Romney actually believes is impossible to know. The former Massachusetts governor may not be a better president than Obama, but in the last two weeks he has been a better politician.

PHOTO: Republican presidential nominee Mitt Romney delivers his foreign policy speech at the Virginia Military Institute in Lexington, Virginia, October 8, 2012. REUTERS/Shannon Stapleton

The Barack Obama of last night’s presidential debate was eerily similar to the man who delivered a muddled acceptance speech at the Democratic National Convention. The incumbent was cautious, tired and on some level – it seemed – turned off by the manipulation of facts that is the ugly heart of politics.

Mitt Romney, on the other hand, seemed to relish it. The challenger was fresher, faster and folksier than a sub-par president. Obama seemed startled and frustrated by Romney’s deft shift to the center and audacious effort to portray Obama as the extremist: Obama is a defender of the big banks; Obama is gutting Medicare; Obama funneled $90 billion to fat-cat contributors in the renewable energy industry.

Fact-checking by Reuters and other news organizations shows that Romney glaringly twisted the facts. What was more surprising – and troubling – was Obama’s tepid response.

As in Charlotte, Obama was extraordinarily careful last night. While Romney adopted a wholly new political tack, Obama used the same tired rhetoric, calling for a “balanced approach” to reducing the deficit, all Americans “playing by the same rules” and Romney favoring “those who are better off.”

I can’t think of a single new policy idea that Obama unveiled last night or in Charlotte. The president and his speechwriters must develop more lucid, pithy ways of describing his policies. That may be distasteful, but it is real.

Romney, on the other hand, dramatically shifted to the center. As Matt Miller of the Washington Post pointed out, Romney and his aides will be lauded as geniuses if he wins. Instead of shifting to the center after securing the nomination, as candidates have for decades, they are dashing to the center in the race’s final weeks.

Whether voters believed Romney or not remains to be seen, but last night he was a Rockefeller Republican moderate who embraced the need for regulation, Social Security and his governorship of Democratic-leaning Massachusetts. All of the hard-right, Tea Party red meat of the primaries vanished. Whatever the veracity of his statements, credit Romney with having a plan last night, taking a risk and executing well.

Obama and his aides may have decided to sit back, hold steady and maintain the presidential high ground. They may have gambled that Romney would make a gaffe, trip up or somehow stumble. Clearly, they lost that wager.

In the end, there is a problem that goes beyond debate tactics. Obama is failing to lay out a clear agenda for his second term. Yes, specificity is the enemy of any politician. But Americans need a reason to vote for Obama, not just a reason to vote against Romney.

I don’t know the true dynamics inside the White House, but from the outside two forces seem to weaken Obama’s presidency: insularity and overconfidence. To the surprise of many, the Obama White House has proved to be as isolated as that of the George W. Bush administration.

In the Obama White House, a small circle of aides plays a central role in all major decisions, according to press accounts. The president rarely engages with outsiders. Since taking office, he has developed few strong relationships with leaders of Congress or foreign heads of state. And like all presidents, he lives in a bubble.

As David Gergen noted after the debate, Obama joined the long line of incumbent presidents who seemed thrown off their game when their opponents bluntly challenged them in their first re-election debate. News stories have euphemistically referred to Obama being “distant” or “aloof.” The president – like all of his predecessors – is reported to have a staggering ego.

Surviving the pressure, brutal criticism and isolation of the presidency clearly requires self-confidence. But both performances created the sense that Obama needs to work harder for this win.

Lastly, David Brooks raised another possibility after Obama’s weak performance in Charlotte. Is the Obama administration, he asked on the PBS NewsHour, intellectually exhausted?

For me, this is the most troubling scenario. Four years of brutal partisan warfare in Washington could leave the administration out of touch and bereft of new ideas.

In the weeks ahead, we’ll find out if that is true. Romney may have inadvertently done the president a favor by publicly humbling him. Obama needs to come down from the mountain, take more risks and be a more daring and deft politician. More aloof calculation could cause voters to send him packing.

PHOTO: President Barack Obama (R) listens as Republican presidential nominee Mitt Romney speaks during the first presidential debate in Denver, October 3, 2012. REUTERS/Jim Urquhart

Throughout the last two weeks of political conventions, Barack Obama, Mitt Romney and a vast array of surrogates accused their opponents of gutting the American middle class.

Paul Ryan and Bill Clinton did it blatantly. Michelle Obama and Ann Romney did it subtly. And all speakers tried to portray themselves as in touch with the middle class, from the Romneys eating “lots of pasta and tuna fish” to Barack Obama’s proudest possession being “a coffee table he’d found in a dumpster.”

In the process, though, both parties gave politically skewed definitions of the middle class, simplistically blamed each other for its struggles and presented pat solutions for the complex problems it faces.

In Republican oratory, the middle class consists of small-business owners who are being crushed by taxes, regulation and a bloated government. In truth, only about 11 percent of American heads of household are self-employed.

In Democratic speechifying, the middle class is made up of hard-working teachers, police officers and union members being laid off by miserly Republicans. Yet those Americans, however hard they work, depend on successful businesses and banks for their prosperity.

In reality, the middle class is a dizzyingly complex demographic. It includes the 50 percent of Americans, for example, who work for large companies with more than 500 employees. And it includes drillers and farmers in North Dakota who are collecting hefty paychecks and cashing in on bumper crops in the state, which has a 3 percent unemployment rate, the lowest in the nation.

The middle class is not in free-fall, as some Republicans argued. And the middle class is not the country’s sole economic engine, as Democrats suggested. Overall, the American middle class today is struggling to surmount torpid wages, global competition for jobs, low home values and spiraling healthcare and education costs. The middle class is stagnant.

What follows is the first of several efforts to sort through Republican and Democratic portrayals, pronouncements and promises for the middle class. More will follow between now and Nov. 6.

Middle-class taxes

In his acceptance speech, Romney said Obama had raised taxes on the middle class. And multiple Obama surrogates – including Vice-President Joe Biden and Massachusetts Senate candidate Elizabeth Warren – said that Romney would raise taxes on the middle class by $2,000. All of their statements were misleading.

Since taking office, Obama has, in fact, cut middle-class tax rates. Romney, though, was probably referring to the $960-to-$1,200 annual penalty that an estimated 3 million middle-class Americans who fail to obtain health insurance will be expected to pay under Obamacare. In its ruling upholding the healthcare law, the Supreme Court declared the penalty a tax. Definitions of the middle class vary, but most experts view it as the middle 50-60 percent of Americans, or roughly 114 million working-age adults. The penalty will apply to approximately 3 million of roughly 57 million middle-class Americans.

Biden’s and Warren’s claim that Romney will increase middle-class taxes is pure speculation. Romney has promised that he will cut tax rates across the board by 20 percent but not reduce overall tax revenues in the process. Independent experts have said it will be extremely difficult for Romney to achieve this goal, and the Republican nominee has declined to give specifics. But the New York Times notes that Romney could decide, instead of increasing middle-class taxes, to add to the deficit, take away preferential rates on savings and investments or make smaller cuts to marginal tax rates. And Romney has repeatedly promised not to raise middle-class taxes.

“Crushing the middle class”
Romney blamed Obama for a decline in middle-class incomes and a rise in family expenses.

“In the richest country in the history of the world, this Obama economy has crushed the middle class,” Romney said in Tampa last week. “Family income has fallen by $4,000, but health insurance premiums are higher, food prices are higher, utility bills are higher, and gasoline prices have doubled. Today more Americans wake up in poverty than ever before.”

Romney’s figure of $4,000 includes 13 months of wage decreases that took place before Obama took office, according to FactCheck.org, a non-partisan organization run by the Annenberg Public Policy Center. Romney is right, though, about food prices, which have risen by 6.2 percent.

Gas prices have, in fact, doubled, but the global recession sparked by the financial crisis artificially lowered them just before Obama took office. Healthcare premiums are up by 9 percent, but independent experts attribute 1 percent to 3 percent of the rise to Obamacare.

And while the total number of Americans living in poverty has never been higher, that is because the U.S. population has grown over time. Today 15 percent of Americans live in poverty, a figure significantly lower than the 23 percent that did when poverty rates were first calculated in 1959. In short, the middle class has definitely suffered under Obama, but not to the extent Romney claimed.

“Tax breaks for millionaires”

In his acceptance speech, Obama said that Romney’s proposed tax cuts for the wealthy would add to the deficit and fail to spark economic growth. “I don’t believe that another round of tax breaks for millionaires,” Obama said, “will bring good jobs to our shores, or pay down our deficit.”

Experts generally agree that the more educated a workforce, the higher its earnings, according to the Washington Post. But economists are divided over tax cuts for the wealthy. There is broad agreement that reducing taxes for the wealthy has led to increased deficits in the past, but there is disagreement over whether tax cuts for the rich spur economic growth. Some economists say it does not, while others insist that it does.

“So what’s the job score?”

Bill Clinton declared that 24 million private-sector jobs had been created during the 28 years Republicans held the White House over the period since 1961. But, he said, Democrats produced nearly twice as many private-sector jobs – 42 million – in the 24 years they were in power during that 52-year period.

Clinton’s figures are accurate, according to Bloomberg Businessweek. But other experts have found that if job creation starts being counted one year after a president takes office – and his policies take effect – the numbers are more even. And many economists argue that the U.S. economy is so large that short-term government policies enacted by any president have a limited effect. Administrations are given too much credit for a growing economy, they say. And too much blame for recessions.

***

With low TV ratings and the vast majority of voters having already made up their mind, the conventions are unlikely to decide the election. The unimpressive jobs report issued on Friday – only 93,000 new jobs in August – could blunt any momentum the Democrats gained.

In the end, both candidates stayed disappointingly true to form. Romney was cautious and vague. Obama was cautions and incremental. The middle class heard some debate, but mostly got pandering.

PHOTO: Confetti bursts following the speech of President Barack Obama during the final session of the Democratic National Convention in Charlotte, North Carolina, September 6, 2012.  REUTERS/Jonathan Ernst

In presidential races, the gaffes get the headlines, but the prepared texts and advisers are more telling. Mitt Romney’s widely reported blunders in his three six-day trip to Britain, Israel and Poland dominated press coverage, but the candidate’s prepared comments and the aides who advised him were far more disappointing.

At a fundraiser in Jerusalem this week, Romney said that aspects of Israel’s culture explained why the average per capita income in Israel was twice that of the Palestinians. Within hours, Palestinian officials called the statement “racist” and accused Romney of ignoring the economic impact of Israeli’s military occupation of the West Bank, as well as $3 billion a year in American aid to Israel.

Romney could have dismissed the episode as a misunderstanding. But instead he stood by – and expanded – his argument that culture is why Israelis were wealthier than Palestinians.

“In some quarters, that comment became the subject of controversy,” Romney wrote in an opinion piece published in the National Review on the final day of his trip. “But what exactly accounts for prosperity if not culture?”

He went on to expand his line of thinking to the United States, saying that several aspects of American culture made it “the greatest economic power in the history of the earth.” One, though, stands out.

“The American economy is fueled by freedom,” Romney wrote. “Free people and their free enterprises are what drive our economic vitality.”

Throughout the trip, Romney used the same tired rhetoric. In Poland, he hailed “economic liberty.” in Jerusalem, he said Israel and America “share in “the reward of economic freedom.” Throughout the trip, he stuck to a simplistic narrative that America’s greatness is unrivaled in human history and one sinister force – and one alone – is destroying it: big government

At the fundraiser where he made the remarks that angered Palestinians, Romney also repeatedly referred to a book written by one of his foreign policy aides titled Start Up Nation, which hailed Israel’s fast-growing high-technology industry but gave a cynically selective description of its findings.

The book, in fact, argues that culture is one of several factors that combined to create Israel’s high-tech boom. A central force is a government entity: the Israeli army, which conducts research and creates a culture that has fueled entrepreneurship. (Yes, a government entity, apparently, can foster entrepreneurship.) The book says that government funded R&D and research universities are vital as well. And one reviewer warned that Israel’s high-tech growth could lead to a bubble if the country does not address its long-term economic challenges.

Beyond his misleading description of the book, Romney ignored rising income inequality in Israel and Poland – a major issue in the American election. Poland has one of the highest income inequality rates in Europe and an astonishing 15-year differential in life expectancy between Warsaw’s poorest and wealthiest districts, the Guardian recently reported.

The Solidarity trade union – which Romney lavishly praised in his speech – criticized him for supporting “attacks on trade unions” and refused to meet with Romney. Last year, the union held nationwide demonstrations protesting rising income inequality.

In Israel last September, 450,000 people demonstrated against rising inequality in what was believed to have been the largest protest in the country’s history. Critics of Israel’s conservative government say its Republican-style laissez-faire policies boosted economic growth but have given a handful of families control of 30 percent of Israel’s economy, from banks to supermarkets.

Romney’s foreign trip is further proof that, despite the primaries being over, he is not moving to the center. The foreign policy aide who was the driving force behind his trip to Israel – and the author of Start Up Nation – is Dan Senor, a former official in the administration of George W. Bush and best known for cynically downplaying the chaos in Baghdad as spokesman for L. Paul Bremer. (I experienced this firsthand while covering the invasion of Iraq in 2003.)

“Under real-world rules, Dan Senor should not be anywhere near Mitt Romney’s foreign policy inner circle,” Time’s Massimo Calabresi wrote this week. “If there is a foreign policy moment in the last 20 years with which an adviser should not be prominently associated, it is the Bremer era in Iraq, during which Rumsfeldian incompetence and willful ignorance produced an era-defining foreign policy failure.”

Willful ignorance was on display throughout Romney’s trip. Yes, President Obama twists facts as well, and together both candidates are producing what David Brooks correctly called this week the “dullest campaign ever.” But Romney’s tired rhetoric, omissions and hubris on the world stage were disappointing. He played to the far right, grossly exaggerated his “culture” point and tried to make it a wedge issue in foreign policy.

Like it or not, simplistic narratives about our innate greatness are not answers to the global economic forces battering our nation.

Outside the U.S., American economic power is increasingly viewed as in decline. A June Pew survey of global public opinion found for the first time that more people believe China is the world’s leading economic power rather than the United States. In truth, the American economy is still twice the size of China’s, but the credibility of China’s state-capitalist model is growing.

Would Romney argue that the Chinese government’s economic policies have made that country an economic laggard? Would he urge Norway’s central bank to hand over management of its $593 billion sovereign wealth fund – one of the best-run in the world – to American bankers? Would he travel to South Korea and tell the government to stop the export subsidies to industry that have given Asia’s 14th-largest country its fourth-largest economy?

It is right to believe in free markets, and there is a great deal of evidence of their benefits. But it’s naïve and wrong to think that all economic success is attributable to free markets, unfettered capitalism and our exceptional culture. Even before our economy collapsed, that kind of argument got you laughed off the world stage.

We need to look outward, not inward. We need to partner with and learn from foreign countries, not use them as campaign props. And we have to talk honestly, not offer tired platitudes and sly omissions – even if we’re running for president.

(Correction, August 3: This piece originally misstated the length of Mitt Romney’s trip overseas.)

PHOTO: Republican presidential candidate Mitt Romney delivers foreign policy remarks at Mishkenot Sha’ananim in Jerusalem, July 29, 2012.   REUTERS/Jason Reed

Barack Obama is going to save America’s middle class by taxing the rich and fostering an American manufacturing renaissance. Mitt Romney is going to revive it by creating more jobs for women and rewarding successful people instead of punishing them.

Welcome to the so-far deeply disappointing 2012 general election. This week’s middle-class-related broadsides from both campaigns bordered on the comic.

Obama’s promoting of the Buffett Rule in Florida on Tuesday was smart politics, but the measure is unlikely to create jobs or significantly reduce the deficit. Even liberal pundits assailed it as an election-year “gimmick.”

And Obama’s concept of reviving American manufacturing is politically appealing but completely untested. As my colleague Chrystia Freeland noted, it flies in the face of decades of Anglo-American conventional wisdom that state interventions in the economy inevitably fail. Whether Obama is right or wrong will not be known before Election Day.

Romney, meanwhile, used a piece of carefully selected economic data to try to attack a 19-percentage-point advantage Obama enjoys among female voters. On Tuesday, he toured a Delaware company that has a female CEO and said women have suffered 92.3 percent of job losses since Obama took office in January 2009. Within hours, the figure, while technically accurate, was criticized as misleading.

Since the recession began in December 2007, men have lost 3.3 million jobs and women have lost 1.2 million jobs, according to the New York Times Economix blog. The surge in job losses among women is primarily due to cuts in the female-dominated government sector. Those reductions were backed by Republicans, not Democrats.

Both campaigns can – and must – do better. A deeply shaken American middle class is yearning for honest debate and realistic approaches to the country’s economic and fiscal dilemmas.

The far left and far right have gotten louder thanks to Fox, MSNBC and the corporate owners of those media outlets, which profit financially from the division they sow. But I believe Middle America – and the independent voters who will decide the election – will award the White House to the candidate who shows the most pragmatism and political courage.

In truth, there are no simple answers when it comes to helping the middle class or understanding what is happening to it. No official U.S. government definition of the “middle class” exists. Nor does a consensus: Democrats say the middle class is in free fall, while Republicans insist it is doing just fine.

Whatever is occurring, public opinion polls show deep unease in Middle America. An ABC News/Washington Post poll conducted last week found that 76 percent of Americans believe the country is still in recession and 68 percent think it is headed in the wrong direction.

Economists broadly agree that the best way to help the middle class is to create large numbers of high-paying new jobs. It is also crucial to rein in the federal deficit and make Social Security and Medicare – two cornerstones of a middle-class retirement – financially sustainable. The problems are far more complex than Warren Buffett paying less tax than his secretary or conservative diatribes against government regulation.

As Matt Miller correctly pointed out in the Washington Post this week, both parties are ignoring hard truths and hard choices. “The big Republican lie” is that the American government does not need to raise taxes in any form as baby boomers retire and the number of people on Social Security and Medicare doubles. And “the big Democratic lie” is that the country can solve its staggering fiscal problems by raising taxes only on people who make over $250,000 a year.

“More than most political deceptions,” Miller wrote, “these two warp the debate in ways that make pragmatic progress impossible.”

Miller’s solution? A truth-telling third-party candidate. The chances are low, but the stirrings of an independent bid still exist. Independents now make up 34 percent of voters across the country, according to a 2011 poll by the Pew Research Center, compared with 34 percent identifying themselves as Democrats and 28 percent as Republicans. A website, Americans Elect, has collected 2.5 million signatures in an effort to place an as-yet-unchosen independent candidate on the ballot.

I share their disappointment. So far, the two-party system is failing to spark the serious debate we desperately need.

Obama should detail exactly how he would tackle the deficit and create a lean but effective federal government. Romney should stop blaming government for all of America’s evils. Obama should announce specific reforms that will make Social Security and Medicare sustainable. And Romney should propose a reduction in defense spending instead of an increase.

Both candidates should take risks, be less political and get off their talking points. That is a naive sentiment, of course, but the country is divided, adrift and urgently in need of new models.

Romney, beware. Obama, for now, is winning the battle for Middle America.

Asked in last week’s poll which candidate would do a better job “defending the middle class,” Obama had a 10-percentage-point advantage over Romney. Asked which was a bigger problem in America, 52 percent chose “unfairness in the economic system that favors the wealthy” and only 37 percent said “over-regulation of the free market that interferes with growth and prosperity.”

And Obama, beware. He may narrowly win re-election, but avoiding hard truths is no way to gain a mandate. Tactical compromise has not served the White House well for the past four years. Is the Buffett Rule really the legacy Barack Obama wants to leave?

PHOTOS: President Barack Obama speaks about tax fairness and the economy at Florida Atlantic University in Boca Raton, Florida, April 10, 2012. REUTERS/Kevin Lamarque  Republican presidential candidate and former Governor of Massachusetts Mitt Romney (L) walks into a campaign event with business owners Lorri Grayson (C) and Becky Suppe during a campaign event in Wilmington, Delaware, April 10, 2012. REUTERS/Tim Shaffer

Mitt Romney’s declaration that he wasn’t concerned about “the very poor” was lampooned by Republicans and Democrats alike this week. But his next statement in a CNN interview is the one that could determine the fate of his candidacy.

“I’m concerned about the very heart of America,” Romney said, adding later: “My focus is on middle-income Americans.”

With astonishing speed, the 2012 presidential election is becoming a referendum on how best to help the American middle class. So far, Romney’s solutions are likely to be far more pleasing to the Republican base than the general electorate.

Reduce corporate taxes by 25 percent. Increase oil and gas drilling. Repeal Obamacare and Dodd-Frank. Cut non-security discretionary spending by 5 percent. Weaken unions. And reduce the federal workforce by 10 percent.

Where, Democrats contend, is the benefit to the middle class?

The conservative answer reflects the yawning ideological gap that will become more apparent in the months ahead. While Obama and Democrats call for the federal government — and society as a whole — to ensure that individuals have the opportunity to increase their social mobility, Romney and Republicans concentrate on broad economic growth.

“Republicans are focused much more on having a rising tide that lifts all boats, even if it lifts more yachts than dinghies,” said Scott Winship, a fellow at the Brookings Institution. “It’s very striking when compared to Obama’s very individual focus on human capital and a federal role in increasing it.”

As he has done in his approach to foreign policy, Romney is trying to channel his inner Reagan in economic policy. While Democrats contend that George W. Bush’s use of supply-side, unregulated, trickle-down economics caused the Great Recession, Reagan’s economic doctrine is alive and well on the right.

“Most of our problems now relate to this asset bubble that formed; it wasn’t so much what Bush did or didn’t do,” Winship argued. “The ’80s in retrospect were not a bad period economically. I think it’s hard to argue that trickle-down will end up hurting the poor or reducing middle-class opportunities.”

Winship and some conservative economists also go a step further. In a series of recent posts, they question a central liberal narrative: that middle-class wages have stagnated since Reagan’s presidency. Terry Fitzgerald, an economist at the Federal Reserve Bank of Minneapolis, has argued that the rapid postwar growth of the American middle class has slowed over the last 30 years, but the middle class has still increased in size.

“From 1947 to 1975, was very fast growth,” Fitzgerald told me. “It was slower since then, but it hasn’t been stagnation.”

Fitzgerald argued that economic studies showing little increase in the median income of American households are skewed by social changes, not only economic ones. Beginning in the late 1970s, high divorce rates reduced the percentage of American households made up of married couples from 63 percent in 1976 to 50 percent in 2006. Single-parent families earn far less than two-parent families, Fitzgerald argues, and drive down the median income.

Richard Burkhauser, a Cornell University economist, contends that the value of benefits families receive from the government and employers are also not included in studies showing meager increases. When the value of these benefits is included, he argues, the stagnation of middle-class incomes disappears.

Liberal economists scoff at such findings. They say a comprehensive study by the non-partisan Congressional Budget Office included such factors and still found tepid middle-class wage growth since 1979. Jared Bernstein, a former chief economic adviser to Vice-President Joseph R. Biden Jr., said supply-side economics failed in the 1980s and the 2000s and would fail again.

“Not only did it fail to reach the vast majority of American families, it actually contributed to the worst recession since the Great Depression,” Bernstein told me. “I can say with complete confidence that the supply-side, deregulate, trickle-down model is a failed model.”

“When I look at all the Republican candidates,” he added, “this is still at the heart of their thinking.”

Meanwhile, Romney, who is trying to unseat an incumbent, embraces a suffering-middle-class narrative. Doing otherwise would be political suicide. The bogey-man, he argues, is government intervention. Top-down economic growth will ease Middle America’s woes, not government programs.

Obama, on the other hand, regularly unveils new federal initiatives that he says will reduce the cost of college, make it easier for homeowners to refinance, and return manufacturing jobs to the United States. The philosophical difference could not be more profound — or more reminiscent of the 1980s.

One or two of Romney’s ideas are close to those of Obama. Unlike every other Republican candidate, the former Massachusetts governor supports instituting automatic increases in the federal minimum wage to keep pace with inflation. And he talks about the central role that increasing American exports and retraining workers could have in reviving the middle class in a globalized economy. But the similarities end there.

Romney argues that the federal government should get out of the job-training business, for example, and devolve all such efforts to the states. Asked for a specific step that would aid the middle class, Andrea Saul, a campaign spokesperson, cited a Romney proposal to eliminate all interest, dividend and capital-gains taxes for people earning less than $200,000. She argued that the philosophy of Barack Obama, not Ronald Reagan, was gutting America’s middle class.

“President Obama’s big government policies have been disastrous for the middle class,” Saul said in an email Thursday. “Mitt Romney is focused on helping those middle-income Americans who have been hurt worst by the Obama economy.”

In the months ahead, we’ll see if Middle America buys it.

PHOTO: U.S. Republican presidential candidate and former Massachusetts Governor Mitt Romney mingles with the crowd after speaking at a campaign stop in Eagan, Minnesota, February 1, 2012. REUTERS/Craig Lassig



Update: The December job numbers released this morning continued the same trend described in yesterday’s column. Of the 200,000 new jobs created last month, 78,000 – or nearly 40 percent — were in transportation, warehousing and retail, sectors known for low pay and seasonal hiring. In a far more positive sign, manufacturing gained 23,000 workers in December after four months of little change. A vast expansion of that trend would benefit the middle class tremendously.

WASHINGTON — Between now and November, middle class Americans are going to hear an enormous amount of bragging about job creation.

Mitt Romney will tout his role in the creation of Staples, The Sports Authority and Domino’s, three firms that he says created 100,000 jobs. Barack Obama will say 2.9 million jobs have been created since March 2010, and highlight a surge of 140,000 new private sector jobs in November.

The central question for middle class Americans, however, is: What quality of job is being created? The November job surge, for example, occurred primarily in retail, leisure and hospitality, sectors known for low wages. The other high-growth areas were professional services and health care, where higher education is a central determinant of income. Manufacturing and construction, one of the few areas left in the American economy where members of the middle class without elite educational pedigrees can find strong wages, were moribund. The following chart from the Bureau of Labor Statistics breaks down the numbers.

In a rare moment of bipartisan agreement, Republicans and Democrats both recognize the problem. After years of Democratic politicians complaining about a lack of social mobility for Americans, The New York Times reported this morning that Republican candidates are complaining about the problem as well.

Presidential candidate and former Pennsylvania Senator Rick Santorum warned this fall that movement “up into the middle income is actually greater, the mobility in Europe, than it is in America,” according to The Times. Wisconsin Congressman Paul D. Ryan, a leading House conservative, recently wrote that “mobility from the very bottom up” is “where the United States lags behind.”

The story reported that at least five large studies in recent years have found the United States to be less mobile than comparable nations. A Swedish research project found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. In Denmark, the number was 25 percent. In Britain, it was 30 percent. At the same time, only 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

A Canadian study found that just 16 percent of Canadian men raised in the bottom tenth of incomes stayed there as adults, compared with 22 percent of Americans, The Times reported. Similarly, 26 percent of American men raised at the top tenth stayed there, but just 18 percent of Canadians.

Economists argue that a central tool in reviving the middle class – and creating social mobility – is the creation of better-paying middle class jobs. Like so much else, that task is enormously complex. Scholars say the reduction in pay is the product of worldwide economic trends, from technological change to globalization, that are difficult to counter. Harry Holzer, an economist at Georgetown University, tracked which parts of the economy featured high paying jobs over time. The percentage of well-paying jobs provided by the manufacturing sector fell by half – from roughly 27 percent in 1992 to 13.5 percent in 2003.

Holzer notes that the nature of business in the United States changed over the last several decades. In the past, large, capital-intensive manufacturing companies faced relatively little competition from overseas and depended on workers in the United States.

“Big, stable, highly profitable and not very competitive means a bigger pie,” Holzer said in an interview. “The simplest thing to do is to cut a bigger slice of the pie for workers.”

That business model has disappeared. Globalization caused American firms to face fiercer competition from foreign companies. And technological change allowed American firms to ship manufacturing overseas but still tightly monitor quality. Overall, companies have gained the upper hand on workers, who are increasingly easy to replace.

Paul Osterman, an MIT professor, agreed that those dynamics are irreversible. But he argued that some changes in American business norms unnecessarily accelerated the elimination of middle class jobs. Executives once praised for creating jobs are now rewarded for eliminating them.

“Think about who gets their picture on the cover of Fortune.” he said. “It used to be the ones that were admired were the ones who treated their workers as a family. Now it’s all about re-engineering, downsizing and shareholder value.”

Osterman said research shows that companies have reduced the amount of training they give their workers. He advocates tax incentives that would encourage companies to retrain employees.

Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former economic adviser to Vice President Joe Biden, said the U.S. should not repeat the mistake it made after the last two downturns: building a recovery on a financial bubble.

“A lot of money shuffling at the top, a lot of arbitrage, which has very little to do with adding productive capacity to your economy,” he said. “A better way would be to add jobs that produce value, manufacturing jobs.”

He advocated that the American government adopt a manufacturing policy similar to the one Germany employs, where public-private partnerships target areas where German firms could gain global market share. Such an approach is anathema to many, though not all, business leaders.

The political debate, meanwhile, remains polarized. Democrats see government jobs as a tool in strengthening the middle class, arguing that police, teachers and sanitation workers stabilize the economy. Republicans see government jobs as relentlessly growing cancer that stifles the private sector.

Bureau of Labor Statistics data shows that overall government employment steadily grew from the 1940 to the 1970s, according to Bernstein. Since then, it has declined slightly.

Chart: Jared Bernstein, Data: Bureau of Labor Statistics

Hoping for constructive debate in a presidential election year is naive. And bipartisan commissions are notoriously ineffective. But I wish the National Academy of Sciences or some other nonpolitical group could be tasked with creating a Simpson-Bowles-like effort to examine ways to create better paying jobs. GE’s Jeffrey Immelt and other American executives who have doubled-down on American manufacturing could be included. So could retired Democrats and Republicans willing to move beyond party orthodoxy.

Study after study shows that a dearth of high-paying jobs is dividing our society, politics and middle class. We are falling behind the Canadians, British, and Europeans, as well as the Chinese and Indians. An honest debate over what mix of approaches might save us would be a godsend.