01/22/2012 09:31 am ET Updated Mar 23, 2012

Mitt Romney's Very Bad Week

Former Massachusetts Governor Mitt Romney had a very bad week. His narrow victory in the Iowa primary, on further counting, became a narrow loss to former Senator Rick Santorum. One of the candidates splitting the anti-Romney conservative vote, Texas Governor Rick Perry, dropped out and endorsed former House Speaker Newt Gingrich. If it matters, Sarah Palin said she also would vote for Newt. Then came yesterday's South Carolina primary, where a double-digit Romney lead at the start of the week turned to a double-digit Gingrich win at the end. A very bad week indeed.

The bad week revealed two issues that could not only damage his election chances but also derail his nomination.

The first issue is money in general and Bain Capital in particular. The campaign seemed prepared to defend the private equity firm and its role in taking over and sometimes closing companies. It threw out a figure of 100,000 jobs created by Romney at Bain, a figure quickly questioned and incapable of substantiation. What Romney apparently couldn't admit was the truth: the sole objective of private equity funds such as Bain is to create profits for their investors and they are indifferent as to jobs being created or lost. Ethically run, they can serve a useful capitalist function. But too often they are used to loot companies, destroy pension funds and wipe out jobs while making the investors wealthy. There is no evidence that Bain practiced this kind of "vulture capitalism. But inquiring minds are surely digging.

Romney, in portraying this as an attack on capitalism, missed the point. All but a fringe of Americans support capitalism. Americans do not object to others getting rich -- they want to participate. What Occupy Wall Street and others resent is the system that is skewed toward the wealthy and leaves them without a chance to better their lives. They see private equity funds as wealthy friends getting together to get richer on borrowed money and then paying a 15% tax rate due to their political power and economic clout. This attitude that the system is unfair and stacked against them is corroborated by studies that show that America no longer leads the world in upward mobility. Canada and many European countries have social and economic structures that make achieving "the American Dream" more possible than in America.

Romney's continued obfuscation about when and how many tax returns he will release together with his admission that he pays about a 15% tax rate feeds the suspicion that he is hiding some sweetheart deals. This same impression of entitled elitism has also surfaced online in a photo of Romney marching in support of the draft while having a draft deferment.

The second issue goes to the core of Romney's claim to be qualified for the presidency. That is the notion that his business experience at Bain is relevant to the job. But it is by no means obvious that microeconomic experience gained buying or even running companies is relevant to the macroeconomic tasks of the presidency. Those tasks are to set in place tax, investment, spending and regulatory policies to create an environment where the economy and private sector employment will grow. For this Romney and the other GOP candidates offer lower taxes and fewer regulations. This is the same set of policies that resulted in no net private sector job growth in the eight years of President George W. Bush. However anemic the growth since the depth of the recession that began on Bush's watch, at least 100,000 net private jobs per month has been created for more than a year now. Romney needs to make a better case for the relevance of his experience and the irrelevance of jobs he may have destroyed en route to making himself and his Bain private equity partners rich. And he needs to show he can take a punch.

The conventional wisdom is that the nomination is now a two-person race and by the end of Super Tuesday one will have all but won. Maybe not for this most unconventional of primary seasons. Ron Paul will stay to the end and have a significant number of delegates. Rick Santorum has said he will stay beyond Florida and could pick off delegates in proportional allocation states and perhaps pull a few surprises in the Northeast or industrial Midwest. There is a small chance of a brokered convention and perhaps a new candidate being injected.

Now that would be an appropriate ending for the 2012 Republican presidential primary melodrama.