Warm Southern Breeze

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Tim Pawlenty uses economic gimmickry as GOP hopeful – UPDATED

Posted by Warm Southern Breeze on Tuesday, June 7, 2011

Official photo of Governor Tim Pawlenty (R-MN).

Tim Pawlenty (R), Governor of Minnesota, official portrait

Tim Pawlenty (R), former two-term Minnesota governor who balanced the state’s budget without raising taxes, and GOP presidential hopeful, is casting stones at the White House.

At the University of Chicago recently, he said, “President Obama is a champion practitioner of class warfare.” While he is the first to level such a charge against President Obama, several critics accused his predecessor – President George W. Bush – of the same thing. However, the one, and perhaps most important, person to validate that assertion against Bush II was none other than Berkshire Hathaway Chairman & CEO Warren Buffett. In his 2003 report to share holders, Buffett wrote,

Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934. Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. (emphasis added) Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%.

Warren Buffett speaking to a group of students...

Berkshire Hathaway Chairman & CEO Warren Buffett speaking to students at Kansas University School of Business

While it seems Pawlenty is disgruntled with national economic performance, he interestingly suggests that lower income tax rates for businesses and individuals – lowering the business tax rate by more than half, to 15 percent, and setting individuals’ rates at 10 percent for married couples earning up to $100,000 and 25 percent for higher wage earner – would stimulate the economy.

He also wants to eliminate “all federal regulations” that Congress does not specifically vote to keep, supports a constitutional amendment to balance the budget, and a cap on federal spending around 18 percent of GDP. His national economic objective is to grow the economy by 5% annually.

Yet economists – those “dreary” scientists – say that while a U.S. growth rate of 5 percent may be achieved at the height of an economic boom, it is neither a realistic, nor long-term sustainable goal, and would very likely cause inflation. The American economy had 7.2% growth in 1984 due in large part to significant increases in defense spending by then-president Reagan. And in 1999, the economy grew 4.8% under President Clinton, for a record-setting 116 continuous months, and added 22.5 Million new jobs, 92% of which were in the private sector.

Most economics experts agree that long-term growth potential for the U.S. economy is in the 2-3% range, while a 5% growth rate is associated more with emerging markets, such as Cambodia, Viet Nam, Honduras, etc.

Jeffrey Frankel, a Harvard economics professor dismissed Pawlenty’s ideas as a political marketing gimmick, saying, “It’s something they always say. But when they get in power, it never works because they don’t actually simplify the tax code and they don’t actually eliminate regulations. They do give away lots of money in terms of tax cuts, because that’s politically easy.”

Further, Pawlenty suggests using what he terms as a “Google test” to  identify spending cuts, by eliminating governmental services that are duplicated in the private sector.

Using Mr. Pawlenty’s rationale, a simple Google search using the terms (without parentheses) “percentage americans pay income tax” shows numerous results that already, nearly half – 47% – of Americans pay no income tax – and not because of fraud, but because of lowered tax rates.

Eventually, using such tactics, taxes would be almost eliminated for a vast majority of Americans, with governmental services drastically reduced, and placed into the private sector, resulting in a corporate-run government. That is the goal of governmental deconstructionists.

*UPDATE* 6/12/11

Pawlenty admits growth target a ‘stretch,’ lauds as ‘big goal’
By Ben Geman – 06/12/11 09:28 AM ET
GOP White House hopeful Tim Pawlenty defended his economic plan Sunday, acknowledging his growth projection is an “aspiration” but casting it as evidence of his optimistic view of the country’s potential.

Pawlenty last week laid out an economic platform that includes a projected five percent annual economic growth rate over a decade, a projection that has been questioned as highly implausible.

“This is an aspiration, it is a big goal, it is a stretch goal,” Pawlenty said on Fox News Sunday, calling his plan “aggressive” and “bold.”

Pawlenty, the former governor of Minnesota, sought to contrast his plan to what he alleges is a “declinist” view of America under President Obama.

“He has run out of ideas, and the ideas he does have for growing the economy are bad,” Pawlenty said. “America should not accept its place as an anemic laggard.”


One Response to “Tim Pawlenty uses economic gimmickry as GOP hopeful – UPDATED”

  1. wordkitty said

    I wonder if Pawlenty is dumb enough to believe his own rhetoric.


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