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United States News Title: Tim Pawlenty’s dubious economic assertions “Cutting just 1 percent of overall federal spending for six consecutive years would balance the federal budget by 2017.” — Former Minnesota governor Tim Pawlenty (R), June 7, 2011 Tim Pawlenty delivered on Tuesday what was billed a major economic speech, in an apparent effort to burnish his free-market credentials in the race for the GOP presidential nomination. Speaking at the University of Chicago, the former Minnesota governor called for huge cuts in taxes — no income taxes at all for couples making less than $100,000 and no capital gains, dividend or estate taxes. At the same time, he called for cuts in government spending and a goal of achieving 5 percent growth in the gross domestic product — without providing many specifics of his policies to achieve this objective. We will leave to others whether this is good economic policy, but we are interested in making sure the numbers add up or his facts are accurate. On that score, it is a less-than-stellar performance. Let’s look at Pawlenty’s claims in the order he made them. “Our health care system — thanks to Obamacare — is more expensive. And less efficient.” The health care law does not take full effect until 2014, and yet Pawlenty is already blaming it for higher costs? There’s certainly debate about how effective the law will be in reducing costs, but this is really putting the cart before the horse. The administration has not even gotten doctors and hospitals to agree to its draft regulations for getting quality health care at less cost. The Pawlenty campaign cited a recent report on medical cost trends by PricewaterhouseCoopers as support for this statement, since it shows health care costs and premiums are continuing to rise. However, the report does not blame the new health care law, saying, “The law will have minimal effect on the cost trend in 2012” because it has not become fully effective. The PWC report further says: “Health reform is pressuring employers, providers, insurers and drugmakers to be more cost-conscious. They’ll be held more accountable for costs as well as performance while coping with new tax and government payment regulations.” This report certainly does not help make Pawlenty’s case. (The campaign also cited an interpretation of Congressional Budget Office estimates of the bill’s impact on the future federal budget, but Pawlenty was talking about the impact on health costs today.) “Five percent economic growth over 10 years would generate $3.8 trillion in new tax revenues. With that, we would reduce projected deficits by 40 percent. All before we made a single budget cut.” Pawlenty’s goal of 5 percent annual growth in the gross domestic product strikes us as rather ambitious. He essentially admits this when he notes that Ronald Reagan achieved 4.9 percent growth between 1983 and 1987 and that Bill Clinton achieved 4.7 percent growth between 1996 and 1999. Both of those results came after recessions. Pawlenty, who proposes dramatic cuts in taxes, does not note that Clinton’s stellar economic performance was achieved even though he raised taxes on the wealthy. Pawlenty also makes 5 percent growth seem achievable by lumping together the best years. When the individual years during each man’s presidency are examined, this goal seems even less realistic. Reagan’s GDP growth per year: –2.0%, 4.3%, 7.3%, 3.8%, 3.4%, 3.4%, 4.2% and 3.5% (average of 3.5 percent). Clinton’s GDP growth per year: 4.0%, 2.7%, 3.6%, 4.4%, 4.2%, 4.9%, 3.8% and 0.3% (average of 3.5 percent). Indeed, when Bob Dole ran for president as the Republican nominee in 1996, he had a more modest goal than does Pawlenty: “Bob Dole believes the economy can grow at an annual rate of 3.5 percent. And he will implement a plan to achieve this goal.” The last president to achieve consistent growth above 5 percent was John F. Kennedy a half-century ago, when the baby-boom generation was on the verge of entering the workforce. Now, that generation is heading into retirement, leaving fewer workers to carry the burden. Simply on the basis of economics, Dole had what seems like a reasonable objective — and Pawlenty is close to not passing a laugh test, especially if he also proposes to slash the federal budget and taxes. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 3.
#3. To: go65 (#0)
You're not interested in reducing the budget OR lowering taxes... so why post the article? Oh, that's right..... You're attacking anyone who may threaten the current sock-puppet POTUS.
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