Romney and Obama have divergent approaches to mending the economy: Keep taxes low vs. spend on hiring.
The spring economic slowdown has further exposed President Obama's greatest political vulnerability in his re-election campaign and forced him into a more urgent and aggressive debate with Mitt Romney on the central issue of the presidential election.
On Wednesday, Romney not only blamed Obama for failing to turn around the economy but also indicted the central philosophy underlying the president's efforts.
Obama is expected to return fire Thursday in what the White House is calling a major speech that will characterize Romney's economic philosophy as a return to the flawed policies of the Bush years.
The intense exchange represents more than just rhetoric; it lays out in stark terms the divergent approaches the two men propose to take toward mending the economy.
Romney: Keep tax rates low
Some of the frenzy is driven by forecasts that continue to lower expectations for economic growth amid a lull in hiring, weak domestic economic data and new threats from Europe and emerging markets.
Romney has argued against the government taking emergency steps to bolster short-term growth, such as increasing federal spending. He has instead called for policies that he believes would improve the economy structurally over the long term, even if they did little to accelerate economic recovery in coming months.
In broad terms, those policies include keeping tax rates low for all Americans, eliminating Obama's health-care overhaul and scaling back other regulations, and reducing federal spending.
Romney's theory is that keeping tax rates low will spur investment in new businesses, thereby increasing economic growth and perhaps tax revenue itself. He believes that rolling back regulations will reduce the cost of doing business and make America more competitive.
Obama: Use money to hire
Obama has a different policy prescription. In the short term, he wants to do more of what he did at the beginning of his tenure: use taxpayer dollars to hire people to build roads and bridges and give money to states and localities so they can hire more teachers.
"Mitt Romney's plan for the economy is great -- if you're a millionaire like Mitt Romney. He wants to turn back the clock and return to trickle-down economics, which lost private-sector jobs, hurt working families, and got us into this mess in the first place," said Rep. Chris Van Hollen, D-Md., an Obama surrogate. "Moving backwards will do nothing to put Americans back to work."
On Thursday in Cleveland, Obama is expected to promote policies that he believes will sustain economic growth over the long term, such as government investment in energy and education.
Question of taxation
One issue on which the differing philosophies most strongly emerge is taxation. They agree that lower tax rates would be desirable. But Obama believes the government must take in more tax revenue, in particular from the wealthy, to pay for the spending he views as critical to long-term economic growth. Romney argues that raising taxes to spend more is counterproductive.
The problem for Romney is that some economists doubt that it is possible to cut spending enough to match lower levels of tax revenue.
Robert Bixby, head of the Concord Coalition, a nonpartisan group arguing for reducing deficits, said Romney could have trouble capping federal spending, providing the benefits Americans want and avoiding unsustainable budget deficits. "If you can make that work, fine," he said. "Where you run into a problem is when the tax-cut promises are quite specific and the spending-cut promises are kind of vague."