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Mitt Romney means business

December 28, 2011, 3:00 PM UTC

In an interview, the Republican presidential candidate says he’ll reduce corporate taxes and overturn regulations. Will that be enough to turn the economy around?

Mitt Romney stumps in New Hampshire.

Mitt Romney came to Manhattan for a day in mid-December to ask for money from his Wall Street friends. In a tactical shift preceded by Newt Gingrich’s unexpected surge in the polls, he also sat for a series of interviews with news outlets, including Fortune. I had been trailing Romney for a while. The week before, in a parking lot in Manchester, N.H., after his advance team turned down the volume on the country music, I had watched him deliver a campaign speech, awkwardly, from the cargo bed of a pickup truck. A few days later I listened while he endured a hostile query from an anti-Islamic zealot at a town hall gathering inside an animal-feed factory in Cedar Rapids, Iowa. Hardly a scientific sample, but I have to say he seemed a lot more comfortable, more human, talking business across a conference table at the Regency Hotel on Park Avenue.

In 2008 the Republicans gave us John McCain, a Vietnam War hero who once confessed that “the issue of economics is not something I’ve understood as well as I should,” and who tried, even in the midst of a global economic meltdown, to focus the election on national security. This time? If Romney does turn out to be the GOP nominee, we’ll get the founding CEO of Bain Capital, a candidate who can’t seem to decide (or maybe just doesn’t want to tell us) how he really feels about gay marriage, abortion, climate change, and universal health care, but who snaps into focus the moment the topic turns to the economy.

Romney has a simple message for Fortune readers: “I see businesspeople as friends, not as enemies.” He rails against President Obama for launching a “campaign of demonization of people who work in the private sector.” He swears that the business leaders he talks to “feel they’re being attacked by their own President,” and that Obama’s tax and regulatory policies have convinced them that “this is not a great place to invest.” He says he wants “to make America the most attractive place in the world for enterprise — for entrepreneurs, for inventors, for people managing big companies or small companies.”

When I ask Romney to name the single gravest threat to economic prosperity in America today, his response is immediate. Not foreign oil. Not the deficit. Not the rise of China. Not the collapse of the housing market. Not runaway entitlement programs or calamity in the eurozone, and certainly not, as McCain said four years ago, radical Islamic extremism. The real threat, Romney says, is “a government that is overbearing, intrusive, and demanding.”

He’s not just talking about Obama-era reforms. Near the top of Romney’s list of meddlesome intrusions: Sarbanes-Oxley, which was passed overwhelmingly by both houses of Congress in the wake of the Enron scandal and signed into law by President George W. Bush, who proclaimed at the time, “No boardroom in America is above or beyond the law.”

“Having spent my life, career, in business, I understand how it works,” says Romney, who left the business world for good in 1999. “When government creates a certain policy or a regulation, I understand what impact that may have on an enterprise in this country. I know, for instance, when I read Sarbanes-Oxley and see its requirements that this is going to cause more businesses to go offshore.” Romney would amend the law specifically as it applies to midsize companies. “Water finds the lowest point,” he says. “Businesses find the most attractive place.”

Fact or fiction? Romney’s private equity past

Romney says his election all by itself will “send a signal to people who hire people that our future is positive and that they’re not going to be demonized.” On the day he takes office, he promises, he will launch his pro-business agenda with a set of far-reaching executive orders. “I will put a hold on Obamacare until I can get it repealed in Congress,” he says. “I will open up lands for drilling for oil and gas. That will put a lot of people to work right away. I will reverse the President’s executive order that virtually insists that federal projects be done only by union labor, thereby opening up these projects to competition.”

On taxes, Romney says that eventually he wants to “bring down rates and broaden the base” with a “flatter tax code.” For now, he would not raise rates on the rich, but neither would he lower them, as all of his Republican rivals have proposed. (“I’m not looking to reduce the burden or the share of taxes paid by the top 1%.”) His plan to eliminate all tax on interest, dividends, and capital gains for those earning less than $200,000 is largely symbolic; it would remove a burden almost no one in the real world bears. (“Look, I recognize that it’s not a huge tax cut,” Romney later told Fox News.)

Most businesses, on the other hand, would see dramatic reductions. Romney wants to lower the corporate tax rate from 35% to 25% (most of his GOP rivals would lower it even more), and he says he would allow U.S. multinationals to bring home all the profits they’ve earned overseas — an estimated $1 trillion — without paying any tax at all. (Only Ron Paul, among the other candidates, would go that far.) “The idea that if companies make money overseas and they keep it there and invest it there, they don’t pay U.S. tax, but if they bring it home, we’re going to charge them the U.S. tax differential, that makes no sense at all,” Romney says. “We should encourage money to come home.”

“I’m trying to help the middle class,” Romney says more than once during our half-hour conversation. The best way to accomplish that goal, he insists, is by loosening the reins on business so that business can create more jobs. The last thing Romney is concerned about is income inequality. “I want to make everybody richer,” he says. “I don’t want to make the few rich poorer and make everyone else poorer at the same time.”

It’s an argument that Republicans have been making for decades, despite ample evidence that what drives economic growth and job creation is almost certainly more complicated than fiddling at the margins with taxes and regulations. From 1950 to 1963, for instance, the top marginal tax rate was never less than 91% — and the economy roared. (More recently, under President Clinton, the top tax rate was 39.6% and annual GDP growth was 4.01% after inflation; under George W. Bush the top rate fell to 35% and the economy grew at only 2.14%. Clearly taxes don’t tell the whole story.)

There are simple explanations for the postwar growth phenomenon, Romney contends: One, the fact that “two of the greatest economic powers in the world had been leveled,” which meant less competition for American goods and services, and two, “we had pent-up demand from years of frugality. And so looking at the 1950s and 1960s as a reflection of tax policy, I think, ignores the great realities of the world economy.”

Maybe. Or else all it proves is that there’s no substituting for demand. Steven Fazzari, professor of economics at Washington University in St. Louis, cites several reasons for the funk we’re in right now, but the fundamental problem, he believes, is weak spending brought on by the collapse of the housing market. “You can take the shackles off of businesses, and I’m sure businesses would be happy,” Fazzari says. “But if they can’t sell the stuff, why would they produce any more or hire anybody?”

Romney was a successful investor and a stellar operator as head of the Salt Lake City Olympics. But if he wins the election, he’ll face a painful lesson, which Obama is learning now: Presidents, it seems, can’t make businesses sell or customers buy.

This article is from the January 16, 2012 issue of Fortune.