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Photograph by Ben Baker/Redux Photograph by Ben Baker/Redux

On his way to a fundraiser in Chicago on Aug. 7, Governor Romney talked with Bloomberg Businessweek Editor Josh Tyrangiel about his father, what he learned at Bain, and why the controversy over his tax returns is a nonissue.

Much of the case you make to voters is that you’re a successful entrepreneur and a successful executive, and thus you’ll make a successful president. Why were you so successful as a businessman?

Well, I had the privilege of growing up in a home with a Dad that was a leader. And because I was the baby of the family, he was kind enough to take me along with him and I got a chance to see real leadership in action. I watched him at American Motors as he interacted with not only executives, but workers there. I remember going to Milwaukee as he addressed UAW employees at the Milwaukee stadium and described to them the new profit-sharing program that he and the head of the UAW had put in place. I later saw him work on policy that related to the state of Michigan, particularly its education system. He also helped to create a new constitution for Michigan. I would attend the meetings where he interacted with people of various backgrounds to find solutions and ultimately make changes. So I learned something about leadership from a man who was an extraordinary leader.

I also had the occasion to go to work in a business, a consulting firm which provided advice to businesses that faced challenges of various kinds. I learned through that process, through the people who taught me in the consulting firm as well as the people I learned from who were clients. Ultimately, I was able to be the leader of that company and led it through a challenging turnaround. I also had the occasion of starting up a business and saw it become one of the world’s leaders. And then, of course, I became the head of the [Salt Lake City] Olympics and with a great team helped turn it around. And finally, served as the governor of a state and found that the leadership principles I’d applied in business and in the not-for-profit world applied extraordinarily well in government as well. Aug. 13 (Bloomberg) -- Bloomberg Businessweek editor Josh Tyrangiel talks about the magazine's interview with presumptive Republican presidential candidate Mitt Romney. He speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

What was the best part of working at Bain? The thing that got you excited to get to the office each morning?

I’m not sure people would think of me in this light, but frankly what I enjoyed most about Bain & Company, the consulting firm, was the analytical process of solving tough problems. If a client invites you in and is ready to pay a lot of money for your counsel, it is not because you know their business better than they do. Of course, they know their business better than I ever would. But they’re looking for someone to understand their business challenges in a new light. And that presents an analytical challenge which is steep and exciting. And I love the thinking and the analyzing as much as anything. I also enjoyed working with a team of people to arrive at ideas and solutions, and also to see ideas and solutions implemented. The experience at Bain Capital was similarly analytical, to decide which business ideas really had economic merit and which did not. And then to do your best to make sure that the team was in place to execute its vision.

When you look at it now, does that photo of you and your Bain colleagues posing with money in your pinstripe suits make you laugh or make you cringe?

Oh, that was a moment of humor as we had just done what we thought was impossible. We had raised $37 million from other people and institutions who entrusted us with their funds, and we thought it was a miracle that our group had been able to be so successful in fundraising. And ultimately we were able to yield for them a very attractive return by such investments as Staples, which was in our very first fund.

So it’s a happy memory.

We had a great group of people, each one of whom I think of fondly.

On the subject of leadership, why does Mormonism produce such a disproportionate number of political and business leaders?

I don’t know that I have an answer for you on that. I believe that people of faith by and large have a great interest in the institution of family and that a family is a great place to learn leadership skills. I’m sure I benefited by having a Mom and Dad, both of whom were actively involved in the community and in various enterprises. And by watching them interact with other people, I learned the kinds of lessons which serve me well. I presume that’s true for people of faith, if their faith, like mine, draws you to your family.

Great executives often say that early failure is essential to their eventual success. Aside from not winning a Senate seat in 1994, your record seems almost unblemished. Have you ever massively, embarrassingly failed at anything?

Well, I can say that the investments we made at Bain Capital did not all succeed. There were occasions when after long study and analysis, we concluded that the idea was good, that the management team was the right team. We invested in the business with hopes that it would grow and be successful, and despite our best preparation, we were disappointed with the result. And those results being typically: You lose your money and people can lose jobs. That’s always devastating. And I learned that not every business will be successful, even those that have been carefully selected and thoroughly evaluated.

Was that personally humbling?

I have never believed in my own ability to succeed at everything. I recognize I’m a human being like everybody else and I make mistakes, and fall short time and again. That being said, I will work as hard as I can to deliver the results which people entrust me to achieve.

You’ve signed Grover Norquist’s pledge to veto any tax increase as president. You’ve also pledged to get America on the road to a balanced budget. Since you’ve promised not to cut defense or Social Security, where specifically is the money going to come from?

Well, mathematically there are three ways of balancing a budget. One is by cutting spending; one is by growing the economy; and the last is by raising taxes.

The challenge of raising taxes is that it depresses growth. And so like a dog chasing its tail, you can’t get to a balanced budget by simply raising taxes. As a matter of fact, it is ultimately counterproductive. So my plan is based upon reducing spending and putting in place a program of policies that put more people to work and raise wages. So specifically, places that I would reduce spending: First, I will eliminate programs that are not absolutely essential. Obamacare is one of the easiest to eliminate from my standpoint and that saves approximately $100 billion a year. There are also programs I would return to the states where their growth can be managed and where they will be carried out with less fraud, inefficiency, and abuse. So for example, Medicaid, housing vouchers, food stamps, and other programs of that nature, I believe, can best be administered by the states. And finally I will cut the number of federal employees through attrition by at least 10 percent, and I will link their compensation with that which exists in the private sector. The plan that my team and I put in place achieves a balanced budget within eight years and does so without raising taxes.

One thing that distinguishes this recovery is that public sector jobs, government jobs, have already fallen by 650,000. Given the conservative goal of shrinking government, is this a positive development or a negative one?

Well, clearly you don’t like to hear [about] anyone losing a job. At the same time, government is the least productive—the federal government is the least productive of our economic sectors. The most productive is the private sector. The next most productive is the not-for-profit sector, then comes state and local governments, and finally the federal government. And so moving responsibilities from the federal government to the states or to the private sector will increase productivity. And higher productivity means higher wages for the American worker. All right? America is the highest productivity nation of major nations in the world, and that results in our having, for instance, an average compensation about 30 percent higher than the average compensation in Europe. A government that becomes more productive, that does more with less, is good for the earnings of the American worker, and ultimately it will mean that our taxes don’t have to go up, that small businesses will find it easier to start and grow, and we will be able to add more private sector jobs. Don’t forget! It’s the private sector jobs that pay for government workers. So if you have fewer government workers doing work more and more productively, that means private sector work will grow.

What you’re speaking about is a fairly dramatic overhaul in the domestic economy in which workers are transferred from the government rolls to other jobs. Those other jobs may not come open immediately. Is this a transition? How do you expect to prepare the American people for that kind of fundamental shift?

Well, I’m not suggesting that we’re going to have a mass exodus of people from one industry or one sector to another. But in response to your question as to whether government becoming smaller is a good thing, the answer is decidedly “Yes.” I do recognize that there are businesses that unfortunately go out of business and there are jobs that become obsolete. These are the [realities] of an economy like our own. And the way to make sure that people who unfortunately lose a job can find another one quickly, and one with better pay and benefits, is by having a growing economy that is starting new businesses, is highly productive, and is able to sell goods around the world competitively. Any nation that wants to have good jobs and rising wages knows that the answer is to have, if you will, a strategy based on the five principles that form the basis of my economic policy. First, take advantage of our energy resources; two, provide the skills that our workers need through adult education and great schools; three, get trade to work for us by clamping down on cheaters like China and also opening up new markets for goods, like Latin America; four, taking steps to get America to a balanced budget; and five, being a champion of small business by holding down taxes on small business, getting regulation to work for small business, and getting health-care costs under control.

Speaking of small business …

I’ve got to leave and go to work here …

[Romney adviser informs the governor that the campaign had agreed to a longer interview.]

Ask one question. But I’m holding up traffic in Chicago trying to—I’ve got the Secret Service and all the press and we’re stopped in front of a place of business. So shoot.

Let’s frame the issue around your tax returns in a slightly different way. If you’re an investor and you’re looking at a company, and that company says that its great strength is wise management and fiscal know-how, wouldn’t you want to see the previous, say, five years’ worth of its financials?

I’m not a business. We have a process in this country, which was established by law, which provides for the transparency which candidates are required to meet. I have met with that requirement with full financial disclosure of all my investments, but in addition have provided and will provide a full two years of tax returns. This happens to be exactly the same as with John McCain when he ran for office four years ago. And the Obama team had no difficulty with that circumstance. The difference between then and now is that President Obama has a failed economic record and is trying to find any issue he can to deflect from the failure of his record. Thanks, guys. Goodbye.