When consuming Gov. Tim Pawlenty’s economic plan, be sure to take extra time to chew—it’s gag-inducing.
First, a quick look at recent history.
In 2008, Sen. John McCain’s campaign platform included a reduction in the corporate income tax from 35 percent to 25 percent. According to a Wall Street Journal report in March of that year, McCain’s economic advisor, Douglas Holtz-Eakin, was “searching for ways to pay for Sen. McCain’s tax proposals.”
Chief among these was eliminating various corporate tax breaks, amounting to about $45 billion annually—still well shy of the $100 billion that Holtz-Eakin estimated the broad rate reduction would drain from the Treasury.
But at least there was recognition that revenue losses are real and should be budgeted for responsibly.
In the meantime, as we all know, the country experienced a major economic meltdown, the effects of which we’re not close to getting over—including annual budget shortfalls of unprecedented magnitude. President Obama, you may have noticed, has taken quite a bit of heat from Republicans for these far-as-the-eye-can-see shortfalls. [Check out a roundup of political cartoons on the 2012 GOP hopefuls.]
So what does candidate Pawlenty propose?
He matches McCain’s 10 percent reduction in corporate income taxes—and ups the ante another 10 percent. And he's just getting started. The capital gains tax—gone. The estate tax—gone. On top of that, individual rates would be flattened into two brackets: 10 percent on $50,000 for individuals and $100,000 for married couples. Anything, and everything, above that would be taxed at 25 percent.
I haven’t seen an estimate yet of how much these cuts would cost. I’m sure one will be forthcoming in days, if not hours. More importantly, I didn’t hear one from Pawlenty himself.
He simply offered the same old mythical claptrap: “Once we unleash the creative energy of America’s businesses, families, and individuals, as we did in the ’80s and ’90s, a booming job market will reduce demand for government assistance. And rising incomes will increase federal revenues.”
“Five-percent economic growth over 10 years would generate $3.8 trillion dollars in new tax revenues,” he said. “With that, we would reduce projected deficits by 40 percent.”
And the remaining 60 percent would be eliminated through ... what? Entitlement cuts? Troop drawdowns?
Of course not!
Pawlenty favors—you guessed it—a Constitutional amendment requiring a balanced budget.
This, from a candidate who promised “to level with the American people. To look them in the eye. And tell them the truth.” [Read Schlesinger: The Hard Truth Is the GOP Has 2012 Trouble.]
I can hardly get over the sting of Pawlenty’s hard truths: more and deeper tax cuts, no painful budget cuts, and the sunlit uplands of 5 percent annual growth. Please—spare me more of such hard truths! I surrender!
As has already been pointed out elsewhere, Pawlenty conveniently left out the 2000s from his narrative of the success of pro-growth policies. And he also forgot to mention the several tax increases of the ’80s and ’90s.
But I don’t want to re-litigate the Bush tax cuts. It will do now simply to recall that the Bush administration never claimed that the 2001 tax cuts would be self-financing. Indeed, their pre-recession justification was that the federal government was running surpluses—and that The People’s Money should be returned. [Vote now: Is the GOP 2012 field weak or strong?]
If Tim Pawlenty had been president in 2001, I suppose he would have, I don’t know, raised taxes in order to get rid of those pesky surpluses.
There are sane, serious Republican economists. I’m sure many of them will find work on a presidential campaign this season.
But, clearly, none has yet signed onto Team Pawlenty.