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The Spectacle Blog
At City Journal, Josh Barro crunches the numbers of the economic plan that Tim Pawlenty sketched out in his speech on Tuesday. He finds that the plan, which the Wall Street Journal and others praised for setting rapid, 5 percent economic growth as a goal, is over-optimistic:
…Pawlenty’s speech reflects what Republican primary voters are demanding: detachment from reality on fiscal issues. In case anybody has forgotten, the federal budget deficit is massive — dangerously, destabilizingly massive. A huge reduction in federal tax revenues overall, the inevitable outcome of Pawlenty’s budget proposal, would obviously not improve our worsening deficit crisis.
We do need economic growth to secure our future, but we shouldn’t overestimate our ability to foster growth through tax and fiscal policy. Ultimately, we need a fiscal policy that involves figuring out what we can’t afford to do or don’t want to do, and levying sufficient taxes to pay for the rest.
Politicians on the campaign trail are going to pander, but Pawlenty’s overpromising on fiscal issues is a bit of a letdown for two reasons. The first is that he has a record of real fiscal stewardship, as a conservative governor in a blue state. The second is that so far he’s been upfront about tough choices to be made, in other contexts. For example, the best part of that same speech was when he summed up his “truth-telling” campaign:
I promised to level with the American people. To look them in the eye. And tell them the truth.
I went to Iowa. And said we need to phase out federal ethanol subsidies. I went to Florida. And said we need to raise the retirement age for the next generation. And means-test cost-of-living adjustments for Social Security. I went to New York City. And told Wall Street that the era of bailouts — carve-outs — and handouts had to end.
The worst part of the speech was this:
5% economic growth over 10 years would generate 3.8 trillion dollars in new tax revenues. With that — we would reduce projected deficits by 40%. All before we made a single budget cut.
The next part of my plan deals with that other 60%.
As Barro demonstrates, 5 percent economic growth over 10 years is simply wildly optimistic. Even if President Pawlenty were freed of the constraints of the legislative process, 10 years of record growth would be a huge stretch. Pawlenty’s plan relies on more rosy scenarios than the Obama budget plan that was defeated 0-97 in the Senate.
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More Blog Posts by Joseph Lawler
http://spectator.org/blog/2011/06/10/the-need-to-avoid-wishful-thin
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Jeff| 6.10.11 @ 1:27PM
The difference between Pawlenty's plan and Obama's plan is TPAW has tax breaks and de-regulation ideas that can allow for growth ... 5% per year, maybe not ... but far and away better than Obama ...
Obama claims growth with no reduction in taxes and regs ... now that is over promising ...
You should work for the DNC ...
David T| 6.10.11 @ 2:02PM
Sounds like right-wing social engineering to me.
WL| 6.10.11 @ 2:42PM
Mr. Lawler....
Do you really think hacking up Republicans about a little bit of overpromising is the best way you can spend your time?
Did you read the article about our current president considering telling the Russians some of our defense secrets? Did you read about the the current president's EPA trying to smash the coal industry?
You are not "disappointed" in Tim Pawlenty are you? No, you just want to criticize our side to be Mr. "I am the most fair person in the world"...
Jeff has it right....Please go be a democrat. Mealy mouth buffoons have gotten us here (with Obama) and mealy mouth buffoons are content with business as usual.
You should quit and go see if Ed Rollins will hire you.
ncatty| 6.10.11 @ 3:16PM
All we need is 3.5% DGP growth.
Rob| 6.10.11 @ 6:07PM
Pawlenty is not promising 5% economic growth in GDP over ten years, but setting this as a goal, with the result that he wants to eliminate or reduce any obstacle that might impede attaining this goal. So long as this goal is not misunderstood to be a promise, why should anyone object to aiming high?
c. j. acworth| 6.10.11 @ 6:33PM
Excellent point, Rob. My mom always said that if you aim at nothing you are sure to hit it. I remember the gasps of horror that came from the political cognoscenti when Reagan, speaking about the Soviets, said "How's this for a plan. We win, they lose." But America understood that we could do anything we set our minds to and backed him up. Dustbin of History!
martin j smith| 6.11.11 @ 8:16AM
In the political climate we live in there is no sure thing. For one thing even if Republicans win big in 2012 you can be sure that the Socialists and the MSM will do their very best to sabotage everything without question and will definitely block in any way they can an kind of solution.
That is reality we live in today. Having said that, I think the sniping of Ryan's plqan or Pawlenty's Plan are a total waiste of time plan. I think the thing to do is to challenge the Socialists as to what is YOUR PLAN or YOUR BUDGET ? That is what should be done. All of this other stuff is not helpful and destructive.
Conservative View| 6.11.11 @ 11:02AM
NOT WITH SCISSORS, BUT WITH A CHAIN SAW.
As long as our government continues to spend far more than we can pay, our nation will be in debt. Raising taxes has its' limits. We have reached those limits now. Raising taxes even more will actually bring in less money to the national treasury. Cutting the Federal budget must occur.
Cutting the budget with scissors is far too little far too late. We need to approach federal spening with a hockey mask and chain saw. We need to look hard at each and every department and ask a simple question, "Where in the Constitution does it say we can do that?!" If the reply is, "The Constitution doesn't." then we must butcher the department.
Examples, OSHA; Does the Constitution allow the Federal Government to dictate safety standards for all of America? That was never the intent of the Commerce clause. How about the EPA? Not by the wildest stretch is the EPA a matter of commerce. NPR, where did it come from? And on it goes.
The problem with fixing the budget isn't one of finance, it is one of Philosophy. Americans have somehow aquired the idea that it is the provence of the Federal Government to solve all ills, fix all problems. To now tell Americans that the Federal Government does not exist to insure they have a job, insurance, free education, or the protection of little lizzards is far more than Americans can accept. We are so inchained by our own desire to have the Federal Government solve everything that only now are we discovering that the Federal Government can't solve the problems it has created, or better, that we ourselves have created.
We need to grab the chain saw. We need to put on the hockey mask. But that wont happen until we look at ourselves hard in the mirror. Does this nation sink at the weight of it's own foolishness, or does it survive with butchered departments on the congressional floor, a shattered philosophy in the hearts of so many? Which ever way it goes one thing is for certain - - - It is really going to hurt, and hurt alot. But this is a pain we have bought upon ourselves. Afterall, we were the ones in the voteing booth. We voted these members into office. We were the ones who came to the belief that the Federal Government was the only institution that could or would solve our problems. As Pogo said, we have met the enemy, and they are us.
Oldefarte| 6.11.11 @ 12:34PM
Good article and comments, especially Rob's thought that ITS A PLAN or a projection/goal, not an actuality set in stone. I mostly agree and like Pawlenty's ideas, except those concerning tax reductions [which I think are unnecessary and counter-productive at this time]. The vital issue facing our economy is that urgent need for substantial governmental spending reductions NOW, which would free up banking/corporation capital to be unleached into the PRIVATE sector and to grow the economy. Tax receipts/rates etc should stay as is for the time being [if/when the economy is substantially gaining strength, then that would become the time to consider tax increases]. I do however like mostly what Pawlenty is saying, and his demonstrated record of fiscal conservativeship as Minnesota's governor should be considered highly by voters!!!!!!!!!!
Oldefarte| 6.11.11 @ 3:21PM
PS-mistake: Meant TAX DECREASES not tax increases within brackets above!!!!