FORTUNE — On the Friday after the Fourth of July, while the Romney clan was enjoying an extended midsummer break at the family manse on New Hampshire’s Lake Winnipesaukee and photographers with telephoto lenses were snagging pictures of the candidate in swim trunks, real news was happening, unobserved, 100 miles away.
Nearly two dozen luminaries from the worlds of finance, government, and academe had gathered in secret behind smoked-glass windows in a three-story concrete office building on Commercial Street in Boston’s North End — Romney campaign headquarters — for a meeting of the governor’s recently assembled Economic Policy Steering Group. Some had only to cross the river from Cambridge. Others flew in from Chicago, D.C., and the West Coast. Tough duty in the middle of a holiday weekend, but as one participant says, anonymously, it was “for a good cause.” Each had been requested by e-mail to “exercise discretion in keeping the contents of the discussion and the membership of the group private.” Indeed, no one who was there will confirm for the record that the meeting even took place.
Lanhee Chen, Romney’s brainy, combative chief policy director, presided. Among the attendees (a few phoned in) were five former chairmen of the President’s Council of Economic Advisers — Martin Feldstein, Michael Boskin, Glenn Hubbard, Greg Mankiw, and Ed Lazear — representing every Republican administration since Reagan’s. Also present were Al Hubbard, the top economic policy adviser during George W. Bush’s second term; Robert Zoellick, a former president of the World Bank (rumored to be a candidate for Treasury); Kathleen Cooper, the chairwoman of the National Bureau of Economic Research; Stanford professor John Taylor; hedge fund managers (and donors) Robert Grady and Chris Shumway; philanthropist Marie-Josée Kravis (third wife of billionaire Henry Kravis); and former Merrill Lynch CEO John Thain (see chart below for the full roster).
It’s an all-star lineup, and groups like this one serve as holding pens for senior officials in waiting. Columbia Business School dean Glenn Hubbard, who wrote the foreword to Romney’s campaign tract, Believe in America, and Mankiw, who teaches introductory economics at Harvard and wrote the textbook read by undergraduates everywhere, are among several holdovers from the 2008 campaign. There are deep ties to the Republican Establishment. (Ron Suskind, author of three bestselling books on George W. Bush’s presidency, compares the list to the “repeating landscape on a Hanna-Barbera cartoon.”) Some Ivy League, some University of Chicago, a lot of Stanford, especially scholars affiliated with the conservative Hoover Institution. And definitely no Tea Partiers or obvious allies of the vice presidential candidate Romney would choose several weeks later, Rep. Paul Ryan of Wisconsin.
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The question about Ryan’s selection is this: Does his presence on the ticket push a potential Romney presidency further to the right than it was before, or even give a vice presidential candidate unprecedented sway on budget matters? “My perception is that he has a very clean, free-market approach,” says University of Chicago professor John Cochrane (who spoke to Fortune without acknowledging his membership in Romney’s kitchen cabinet). “What I see in the choice is that they want to bring ideas to the forefront and not have the campaign be all about Bain Capital. And make the statement that this is a crossroads for America.”
Romney’s critics complain that he’s not saying enough. That he’s long on grand gestures — rein in the federal government, unshackle the private sector, restore America’s greatness — but short on specifics. The critics are not wrong. Romney says, for instance, that he favors lowering tax rates but preserving current tax revenue. He says he can achieve that by “broadening the tax base” — Washington-speak for closing loopholes and fiddling with deductions. But closing what and fiddling how?
A bipartisan research team at the Tax Policy Center (TPC) in Washington ran the numbers and concluded that “any revenue-neutral individual income tax change that incorporates the features Gov. Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers.” Some voters will think that’s great — just not the voters Romney still needs.
During the second of two interviews with Fortune, Romney took issue with the TPC analysis: “They made garbage assumptions, and they reached a garbage conclusion.” He said he’ll model his approach on that proposed by the National Commission on Fiscal Responsibility and Reform, chaired by Alan Simpson and Erskine Bowles, and “will under no circumstances raise taxes on the middle class.” But Simpson-Bowles achieves its revenue-neutral goal by gutting three popular middle-class deductions that Romney vows to protect — mortgage interest, charitable donations, and health care expenses. Assuming Romney really does have a plan to pull off this feat of fiscal wizardry, he’s keeping the details to himself.
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That’s basically been the Romney campaign strategy: the less said the better. It makes obvious political sense, and not just because the candidate, as we’ve seen repeatedly, doesn’t do himself any favors when he goes off script. The economy is weak, unemployment is high, consumer confidence is low, and an alarming (for President Obama) nearly two-thirds of the electorate is dissatisfied with the direction the country is going. Maybe all Romney has to do to beat Obama is not be Obama.
I gathered as much during a Romney bus tour in June that wound through half a dozen Northern battleground states. Along the way I did meet some hard-core Romney backers, but they were the exceptions. At a rally in Troy, Ohio, Zelda Hockaday, 75, a retired lab technician and former Newt Gingrich supporter, told me, “I’m not sure yet,” when I asked her why she was supporting Romney. “That’s what I came to find out. The main thing is, he’s opposing Obama.”
Romney has staked his claim to the presidency on a simple pitch: that he knows business, and so knows better than Obama how to turn the economy around. He makes a leadership case too, with reference to the Salt Lake City Olympics, and will sometimes boast (selectively — it’s tricky) about his achievements as governor of liberal Massachusetts. But otherwise he’s all business. “I see businesspeople as friends, not as enemies,” he told Fortune. “The President has embarked on a campaign of demonization of people who work in the private sector.”
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Romney shared a story about an unnamed CEO who had met with a senior member of the Obama administration: “This member of the administration said to him, ‘I notice your balance sheet has a lot of cash. Why aren’t you investing in America?’ And he said, ‘That’s a question you want to ask yourself. We’re not investing in America because you’ve made it less attractive as a place to invest.’ ” Romney’s point: “People who’ve not spent their life in the economy don’t know how their decisions are going to affect the economy at the level of job creation.”
Romney’s pedigree is not quite as pure as he would have voters think. As Gingrich pointed out during one of the Iowa debates, “The only reason you didn’t become a career politician is because you lost to Teddy Kennedy in 1994.” And while Romney formally resigned from his last private sector job at Bain Capital in 2002, he has insisted that he gave up day-to-day control of the company even earlier, when he left for Salt Lake City — a claim that separates him from a string of politically awkward Bain investments after 1999. He likes to chide Obama for never having cashed a private sector paycheck, but the former Senate candidate, former governor, and two-time presidential candidate hasn’t cashed one either for at least 10 years.
That said, there is no denying that Romney would bring to the White House a record of business success unmatched, except maybe by Herbert Hoover, in the annals of the presidency. He was a Baker Scholar (top 5% of his class) at Harvard Business School, a feat he pulled off while simultaneously earning a Harvard law degree. He went to Boston Consulting Group (BCG) because that’s where the top guns went in his day, then to Bain & Co., a consultancy, and finally to Bain Capital in 1984, where he became one of the founding fathers of private equity, made lots of people rich, and amassed a fortune of between $190 million and $220 million.
The problem with this aspect of Romney’s résumé is that, while in some ways it’s his greatest asset, it’s also his greatest liability. He can’t really talk about what he did at Bain — not the way his father, George Romney, for instance, could talk about the turnaround he engineered at American Motors when he ran for President in 1968. To do so would be to invite even more scrutiny of the kind that cost Romney his first election 18 years ago, when the Kennedy campaign bombarded voters with ads featuring displaced workers in an Indiana town, all blaming Bain.
What is Romney’s plan, exactly? He broke it down for Fortune into five categories: (1) Aggressively promote domestic energy development, especially fossil fuels. (2) Expand the market for U.S. goods overseas by negotiating new trade agreements and standing up to China on intellectual-property and currency issues. (3) Improve workforce skills by transferring job-training programs to the states and going after teachers’ unions, which, he says, stand in the way of school choice and better instruction. (4) Attack the deficit through budget cuts, not tax increases. And (5), reshape the regulatory climate to “encourage and promote small business” rather than swamp it. That last item covers his most consistent and passionate campaign pledge, the repeal of the Affordable Care Act — “reshaping health care reform,” he says, “by replacing Obamacare with measures that will bring down the cost of health insurance rather than, as Obamacare does, increasing it.”
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Romney also says he wants to cap federal spending at 20% of GDP (it’s 24% now) and work toward a balanced budget — a worthy goal, but how does he get there? His proposed cuts alone won’t do it, not without a big increase in economic activity, but they’re worth listing: Obamacare, to start (even though the Congressional Budget Office says that its repeal would add $109 billion to the deficit by 2022). Also federal funding for Amtrak, PBS, the National Endowment for the Arts, and the National Endowment for the Humanities. He would shift responsibility for parts of the social safety net to the states, including Medicaid, housing vouchers, and food stamps; reduce federal employment 10% by attrition; and lower wages and benefits for government workers.
Romney says he sees “enormous opportunity for efficiency and cost savings in the military” but has no plans to cut defense spending. Instead he would use the savings to pay for 100,000 additional active-duty personnel and “invest in the coming technologies of warfare.” Finally, on Social Security and Medicare, Romney says he’d leave current and near retirees alone but look at raising the retirement age.
And if he can do all that? Here Romney is willing to be very specific. He says that four years from now if he’s running for reelection, he’ll have created 12 million new jobs, GDP growth will be up around 4%, jobs will be plentiful, house prices will be on the rise, and the country, on track to a balanced budget, will have its AAA credit rating back.
Just how far a Romney administration would get with any of these schemes, given the partisan divide in Washington, is of course unknowable — even in a normal election year, which this one decidedly is not. What does lend itself to useful speculation is our best sense of the candidate’s leanings. Paul Ryan’s presence on the ticket is one clue. But history tells us that vice presidents are more about politics than policy. And what we know about Romney’s closest advisers, with their collective sense of how Washington really works, and how change, when it occurs, is a function of compromise, suggests an altogether different narrative.
This story is from the September 3, 2012 issue of Fortune.