Potomac Fever can do strange things to a person. It can turn a mild-mannered center-right politician into an economic crank, with an intermittent southern accent, who wants to return to the gold standard and who claims -- still – to believe in Voodoo Economics. Pawlenty must have slept through the Bush years.
He claims he can achieve 5% growth by using the right-wing's all-purpose economic solution - throw more money at the rich, and hope they do the right thing with it, you know, like give some of it right back to the GOP. So he advocates huge tax cuts, including a massive reduction in the corporate tax rate (from 35% to 15%) and the total elimination of taxes on capital gains, dividends, and estates.
The nonpartisan Tax Policy Center puts the revenue losses from Pawlenty’s plan at $11.6 trillion, which the Pawlenty campaign also assumes.
According to ThinkProgress, Pawlenty’s plan is even more skewed toward the fat cats than the Bush tax cuts:
Taxpayers with incomes in excess of $1 million would enjoy an average cut in personal income taxes of $288,822, a 41.4 percent cut.
Taxpayers with incomes in excess of $10 million would enjoy an average cut in personal income taxes of $2.4 million, or 46.3 percent.
This is a continuation of the Republicans’ class war. Eliminating the capital gains and particularly, the estate taxes, would overwhelmingly benefit the richest Americans, whom the Republicans call “job creators” but those new jobs seem to be mostly in China.
As Ezra Klein, the economics reporter of the Washington Post wrote: “This plan isn’t optimistic. It isn’t a bit vague. It’s a joke. And I don’t know which is worse: The thought that Pawlenty knows that and went forward with this pandering, fantasy-based proposal anyway, or the thought that he doesn’t know it, and he really thinks this could work.”
Pawlenty has been advertised as one of the grown-ups in the race, but he came out in January against raising the debt ceiling, a sure sign he’s gone over the edge into crackpot economics. The world financial system is built on the presumption that U.S. government obligations are the ultimate safe investment. If the U.S. defaulted on its debt, that would destroy confidence – probably forever -- in the dollar’s role as the world's reserve currency, which would lead to higher interest rates. That would slow our economy and make it even harder to pay back the debt, which would in turn send interest rates even higher. It's an economic death spiral.
He has also declared his opposition to “fiat”currencies, which would mean a return to the gold standard, a fact which probably escapes him.
Pawlenty’s run for the White house is premised on the claim he consistently balanced the budget without raising taxes (he doesn’t count the cigarette “health impact fee” as a tax). But, as former Republican governor Arne Carlson wrote of Pawlenty, “Each and every year he was governor, we ran deficits and the deficits kept accruing each and every term.”
What Pawlenty did was kick the problem down the road by borrowing: $1 billion from the tobacco settlement (designated for health care); $1.4 billion from K-12 education funding; and $400 million from the Healthcare Access Fund for low-income families.
He engaged in accounting shifts, advanced payments on taxes, delayed paying bills and pushed spending down to local governments which then raised property taxes by more than $2.5 billion to pay the bills, more than the previous 16 years combined. He also took $2 billion in stimulus funds, despite claiming on Meet the Press that he opposed the stimulus. A 2010 report from the National Conference of State Legislatures shows that Minnesota used one-time budget tricks to close 41 percent of its spending gap in that fiscal year.
When Mark Dayton took over, he faced a $6.2 billion deficit, but Pawlenty claims he bore no responsibility for that.
Moody‘s warned every single year about Minnesota‘s financial mismanagement, and ultimately they lowered our credit rating, which means we now pay millions of dollars more in interest costs than when we had a AAA bond rating.
Now Pawlenty wants to do to the country what he did to Minnesota.
It is no secret that Republican candidates tack hard right for the primary season, but the question with Pawlenty, who has also flip-flopped on climate change and healthcare, is whether he has put his principles in a blind trust for the duration of the primaries, or whether he ever had any principles.
This piece first appeared in the Mankato (MN) Free Press by the author.