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Tim Pawlenty

2012 Presidential White Paper #2

Former Minnesota Governor Tim Pawlenty

INTRODUCTION


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Tim Pawlenty was elected to the Minnesota House of Representatives in 1992. He was re-elected five times and became majority leader in 1998. He was then elected Governor in 2002 and was re-elected in 2006. Since Pawlenty has never served in Congress, he does not have a rating by the Club for Growth. However, the Cato Institute, a free market think tank, produces a biennial scorecard on the nation’s governors based on their tax and spending policies and actions.  Over his two terms, Pawlenty’s scores were:

2010 – “A”
2008 – “B”
2006 – “C”
2004 – “B”

Before that, he was rated by the non-partisan Taxpayers League of Minnesota during his time in the Minnesota Legislature. In 2002, the last year that Pawlenty was in office as a state legislator, he received a 75%. Over the years 1997-2002, his average score was 80% while the average House Republican score over that time period was just over 75%.  


TAXES

The Club for Growth is committed to lower taxes – especially lower tax rates – across the board.  Lower taxes on work, savings, and investments lead to greater levels of these activities, thus encouraging greater economic growth.

Tim Pawlenty’s career as a state legislator started out strong. In 1997, he voted to require a supermajority (three-fifths) vote of legislators to increase taxes, and for an income tax cut.  In 1998, Pawlenty received a perfect 100% on the Taxpayers League scorecard by voting in part for income tax cuts again, eliminating the marriage penalty, and cutting the sales tax by 0.5% to 6.0%.

In 1999, Pawlenty helped pass what at the time was a record tax-relief deal - $2.9 billion in tax relief including a whole 0.5 percentage-point decrease in tax rates across all three income-tax brackets and a large sales tax rebate of $1.3 billion.  He also voted again to require a three-fifths supermajority vote in the legislature in order to pass a bill to raise taxes. 

In March of 2000, the Minnesota House of Representatives adopted a tax cut plan that included permanent annual tax cuts including $551 million in across-the-board income tax cuts and various other tax cuts for Minnesotans.  In May of 2001, then Majority Leader Pawlenty voted for a $1.56 billion tax cut package that included $696 million in property tax cuts. The bill included the repeal of three health care taxes and an $856 million sales tax rebate. Pawlenty called it “the biggest, baddest, most bodacious tax package.”   Pawlenty deserves strong praise for his actions during this time period.

Nevertheless, Pawlenty uncharacteristically supported two small tax increases.  In 2001, he voted in favor of creating the Propane Education and Research Council which was funded by a very minor new tax on propane.  Then, as a candidate for governor, Pawlenty endorsed placing a $16.3 million property tax increase on the ballot of his home school district in Eagan, MN. “There is no question in my mind that this district needs a locally approved levy,” he said at the time.

After his election in 2002, Pawlenty immediately began to push what he now touts as one of his biggest accomplishments: the “JOBZ” program – a market-distorting economic development program that doled out tax exemptions to qualified companies that started up or expanded in targeted areas of the state.

Governor Pawlenty deserves strong criticism for breaking his anti-tax pledge in 2005 by supporting a 75-cent per-pack cigarette tax increase.   He called it a “health impact fee” at the time, but Minnesota radio talk show host Jason Lewis wrote in a 2008 Wall Street Journal piece that “it was obvious that smokers were just being tapped to fund health-care entitlement programs.”

Governor Pawlenty’s 2006-2007 budget maintained alcohol and car rental sales taxes worth $104 million that were set to expire in FY06.  In 2008, Pawlenty joined with state Democrats in signing a $109 million corporate tax increase by changing state laws on the definition of foreign operating corporations.

Special mention needs to be made of Governor Pawlenty’s role, or really, his non-role in the passage of the so-called “Legacy Amendment” to Minnesota’s Constitution in 2008.  The amendment proposed raising the sales tax by 3/8ths of 1 percent and dedicating the revenue to a slush fund controlled by liberals that would finance liberal pet projects, like art and cultural heritage programs.

Constitutional issues don’t go to the governor’s desk for a signature, but Pawlenty was largely silent when this wasteful tax and spending scheme was being considered.  In fact, he gave tacit support for it on a local TV show, while the Taxpayers League, former Sen. Rod Grams, and other fiscal conservatives were actively opposing it. 

The Cato Institute gave Pawlenty mixed reviews in their 2008 Fiscal Policy Report Card on America’s Governors. In addition to Pawlenty’s prior support for increases in cigarette and corporate taxes, they noted his support for “substantial increases in fees and charges.” However, Cato also noted that he “has provided some targeted tax relief and imposed temporary limits on local property taxes.” Pawlenty certainly deserves strong credit for his record in opposing some big tax increases while Governor of Minnesota. Cato noted that he vetoed a gas tax increase, and a hike in the top personal income tax rate.  Governor Pawlenty also vetoed an increase in the top income tax rate from 7.85% to 9.1% in 2010, and he was consistent on opposing increases in the income tax rate.  

Governor Pawlenty claims that, through his two terms as Minnesota’s Governor, he vetoed $7.5 billion in proposed tax increases, an accurate count according to our research.   He also claims that “he cut taxes by nearly $800 million, moving Minnesota out of the top 10 highest taxed states.”  A large portion of these tax reductions are carve outs and special interest giveaways that clutter up the tax code, but that being said, it’s tough to criticize any reduction in taxes considering the liberal Minnesota Legislature.


SPENDING

The Club for Growth is committed to reducing government spending.  Less spending enhances economic growth by enabling lower taxes and diminishing the government’s economically inefficient allocation of resources.

Pawlenty’s record on spending while in the state legislature was both good and bad. For example, Pawlenty voted against raising the pay of lawmakers in 2001,  and in 2002 the Taxpayers League of Minnesota praised him for voting to reduce the budget deficit with spending cuts.

But Pawlenty also voted in 1999 for a final bonding bill that borrowed $60 million to start building a 12-mile light rail line in Minneapolis.   He also voted against rejecting taxpayer subsidies of Public Television in Minnesota in 2002.

Pawlenty’s position on public subsidies to private enterprise is especially confusing when one takes the case of financing a new sports stadium. Pawlenty voted to use taxpayer dollars to finance a new baseball stadium for the Minnesota Twins  in 2001, despite having called professional baseball a “cartel” in 1997.  In that year, he voted against using taxpayer dollars to build the stadium,  claiming that he opposed any public involvement. He blasted “subsidizing billionaires so they can pay millionaires” according to press accounts at the time.  Pawlenty then flip-flopped again on the issue in 2002, voting against the proposed stadium.  By 2006, Pawlenty had flipped for a third time, and signed a bill that funded most of the $522 million new stadium with public dollars, including a 0.15 percent sales tax increase in Hennepin County. 

As Governor, Pawlenty started strongly when it came to opposing spending increases. In 2003, Pawlenty opposed a proposed 14% spending increase over two years over projected revenue increases of just 6%. Pawlenty instead proposed just a 4% increase. “I don’t know many Americans who are enjoying a 14% increase in their paychecks,” Pawlenty boldly said at the time.

Tim Pawlenty also deserves strong praise for his proposal to put a Constitutional Amendment to cap spending at the level of revenue actually received during the previous budget period.   He also is on record in favor of a balanced budget amendment to the U.S. Constitution.

In 2009, Pawlenty boldly used the rarely before used gubernatorial power of “unallotment” to unilaterally reduce Minnesota spending by $2.7 billion in order to balance the state budget. 

Overall, Pawlenty does deserve tremendous praise for his role in keeping increases in spending down as Governor. Pawlenty’s role in general fund spending should take into account that he had a Democratic Senate to deal with his entire eight years as Governor, and a Democratic House during his last term.  Including the pre-Pawlenty Budget year of 2003, Minnesota population plus inflation from 2003 to 2009 increased 18.0%, while total spending increased 20.1%, a modest increase of 2.1% overall.  Put another way, spending grew only 3.4% per year compared to the population plus inflation benchmark of 3.0%.   This is nothing short of remarkable.

Nationally, we must take note of Governor Pawlenty’s comments regarding bailouts and President Obama’s failed Stimulus. When asked about the airlines, banks, and Fannie Mae and Freddie Mac in 2008, Pawlenty said,“[I]n an ideal marketplace, you’d allow those entities to fail,” and that “from a pure marketplace principle, you would not bail them out.” Unfortunately, Pawlenty then continued on to say that “we also have to measure that against the consequences to the rest of the country. And, you know…they are too big, the consequences are too severe for innocent bystanders to allow them to fail.  So it’s an imperfect solution, but you also have to be pragmatic about getting the mess cleaned up.”

Pawlenty has stated that his support for bailouts was only “as a spokesperson for Senator McCain” and that he doesn’t support “bailing out places like Wall Street, General Motors and the like with respect to the federal role of Government.” 

While Governor Pawlenty roundly criticized the Stimulus, calling it a “meandering spending buffet,”  he also defended accepting Stimulus money, saying that “For every dollar we send out…we only get 72 cents back. So, if you’re buying the pizza, it’s OK to have your slice, even if there are some anchovies on it.” 

As Vice Chairman of the National Governors Association in 2007, Pawlenty signed a letter to leaders of Congress urging them to reauthorize SCHIP,  the government-run health care program for children in low-income families, which was largely opposed by fiscal conservatives in both chambers.

Finally, we also note Pawlenty’s 2004 support of direct subsidies for dairy farmers via the Milk Income Loss Contract (MILC) program – added to a 2005 appropriations bill by U.S. Senator Norm Coleman.  


FREE TRADE

Free trade is a vital policy necessary for maximizing economic growth.  In recent decades, America’s commitment to expanding trade has resulted in lower costs for consumers, job growth, and higher levels of productivity and innovation.   

Governor Pawlenty’s stance on free trade could be much improved, but it’s basically the standard position taken by most Republican presidential candidates – he supports free trade, but not all of the time.

In an interview during a trade mission to China in 2010, Pawlenty said that “we all agree from an American perspective that the Chinese manipulation of their currency and pegging of it to the dollar is inappropriate and unfair.”  In later comments, Governor Pawlenty did not rule out imposing tariffs on China.

Also, Pawlenty fought against lower trade barriers on sugar when CAFTA was being considered by Congress,  and he was in favor of retaining the temporary steel tariffs imposed by President Bush.  While we understand the political considerations Pawlenty had in trying to protect his home state sugar beet industry, his support of trade barriers is equivalent to support of higher costs for consumers – both in Minnesota and across the country.

A 2011 MinnPost article described Pawlenty’s attitude towards trade policy this way: “Pass pending free trade deals with Colombia, Panama and South Korea while looking for more. And don’t be afraid to call out trading partners – China by name – when they don’t live up to their end of the bargain. ‘I’m for free trade, but I’m not for being a chump,’ he said to the approval of the crowd.”


ENTITLEMENT REFORM

America’s major middle-class entitlement programs are already insolvent.  The Club for Growth supports entitlement reforms that enable personal ownership of retirement and health care programs, benefit from market returns, and diminish dependency on government.

Governor Pawlenty receives both positive and negative marks on health care reform. One notable pro-growth bill was his “Flexible Benefit Plan.” Pawlenty signed this bill into law which allowed employers “to eliminate mandates they deem unnecessary to cover.” 

Pawlenty’s 2008 Health Care reform gets mixed reviews. For example, it creates new government programs like the “statewide health improvement program” to “reduce the percentage of Minnesotans who are obese or overweight and reduce the use of tobacco.”  It expanded MinnesotaCare, the government-run, subsidized health insurance plan for Minnesota, by increasing the minimum eligibility requirements to 250% of the poverty level and to “parents with incomes up to $57,000 annually.”  It also included new programs to encourage Minnesotans to enroll in government run health care.  However, Pawlenty deserves some credit for offering tax credits to Minnesota small businesses for setting up “Section 125” plans, or a “cafeteria plan”.  The plan allowed Minnesotans to purchase the health insurance plan of their choice with pre-tax dollars, but employers were able to “opt-out” if the administrative burden was too high.

On the federal level, Pawlenty strongly opposed ObamaCare. CBS News reported that Pawlenty, “…criticized the "individual mandate as just one of the "unprecedented federal intrusions into individual liberty" included in the reforms.  Governor Pawlenty also issued an executive order “directing state agencies to turn down any discretionary funding from the legislation.” 

Pawlenty also deserves praise for his strong stand during the 2004 Amalgamated Transit Union Strike.  On March 4th, 2004, Minnesota Transit Employees went on strike for 44 days. According to the Associated Press, “The biggest sticking point was the transit agency's demand to reduce what it pays for health care coverage for retired employees. Some employees could get retiree health benefits at age 55 with as little as 10 years of service. Metro Transit also sought to cut its health care costs for current employees represented by the union, which includes about 2,200 drivers, mechanics, bus cleaners and clerical workers.”  Pawlenty helped negotiate an end to the deal that wound up benefitting Minnesota Taxpayers. For example, “the deal eliminate[d] health care benefits for workers who retire from now on, and employees hired after October 2000 will need to work at least 17 years to qualify for medical benefits in retirement.”

On Social Security, Pawlenty favors means testing as a way to help solve the program’s unfunded liabilities and is willing to consider raising the retirement age.   Back in 2004, Pawlenty was a strong supporter of personal accounts, saying “let people have some discretion, some choice. I think that's a reasonable and fair thing.”

On Medicare, Pawlenty recently said that he plans to break away from Paul Ryan’s pro-growth reform plan that creates private insurance vouchers and instead implement “payment reforms that would direct money to doctors and hospitals for better healthcare outcomes”, a proposal that Ryan dismissed.

In 2003, when Congress was considering the massive new prescription drug benefit, Pawlenty said passage would “help” his cause of trying to get prescription drugs re-imported from Canada.   And recently, Pawlenty said he supported block-granting Medicaid as a way to reduce costs and remove the burden placed on the states.


REGULATION

Excessive government regulation stymies individual and business innovation necessary for strong economic expansion. The Club for Growth supports less and more sensible government regulation as a critical step toward increasing freedom and growth in the marketplace.

Perhaps more so than any other issue, Pawlenty’s record on regulation is deeply troubling.

For starters, Pawlenty showed consistent support for increasing the minimum wage.  In 1997, Pawlenty voted to increase the state’s minimum wage from $4.25 to the federal level of $5.15.   In 2005, Pawlenty signed a $1-an-hour increase in the minimum wage, going beyond the federal level.  But in 2008, Pawlenty vetoed an increase in the minimum wage to $7.75, while also being described as saying that “he would consider a bipartisan minimum wage increase in next year's session if it's reasonable and includes a tip credit.”

In 2001,  and again in 2002,  Pawlenty voted to mandate the addition of vegetable oil to diesel fuel in Minnesota. In 2007, Pawlenty pushed for a regional cap-and-trade plan.  He signed the Next Generation Energy Act of 2007 into law, which required the state to reduce greenhouse gas emissions 15 percent by 2015 and 80 percent by 2050.  In addition, according to the non-partisan fact check St. Petersburg Times’ Politifact.com, Pawlenty “played a leading role in persuading members of the Midwest Governors Association to sign the Midwestern Regional Greenhouse Gas Reduction Accord, an agreement that the states would develop a cap-and-trade mechanism to achieve greenhouse gas reductions in the area.” 

Later, he backed away from his support for cap and trade when it became politically toxic.  He now opposes it, and even wrote to the Minnesota delegation in Washington in 2009 expressing his opposition to the bill being pushed by House Democrats.

Pawlenty also supported ethanol subsidies, with some minor exceptions, throughout his time as Governor. Pawlenty deserves credit for attempting to eliminate $26.8 million in ethanol subsidies in 2003 in order to balance the state budget.  He “defended the cuts…saying that most ethanol plants would continue to be profitable even without the subsidies. ‘We appreciate, respect and support the ethanol industry. We want them to expand, and to grow and to thrive,’ he said.”  But from that point on, Pawlenty’s record is abysmal. In 2004, Pawlenty signed an executive order “requiring state fleets to increase their use of renewable fuels, including ethanol, biodiesel and hydrogen from agricultural products.”  In 2005, Pawlenty signed legislation that required all of the state’s gasoline to contain 20 percent ethanol by 2013, up from 10 percent.  In 2008, the Executive Director of the Minnesota Corn Grower’s Association stated that he was hoping Senator John McCain would pick Pawlenty as his running mate due to his moderate views on ethanol.  In 2009, Pawlenty signed a letter to the U.S. EPA voicing support for raising the limit on ethanol in gasoline. 

Lastly, in Governor Pawlenty’s official list of accomplishments, published by his office in 2010, Pawlenty lists the nanny-state statewide smoking ban that he signed into law in 2007. 

With all of this said, Pawlenty must be credited for opposing the Employee Free Choice Act, otherwise known as “card check”, a bill that would take away an employee’s right to a secret ballot during a union-organizing election.   And he supports expanding oil drilling offshore and in the Arctic National Wildlife Refuge.


SCHOOL CHOICE

The Club for Growth supports broad school choice, including charter schools and voucher programs that create a competitive education market including public, private, religious, and non-religious schools.  More competition in education will lead to higher quality and lower costs.   

According to the National Alliance for Public Charter Schools, the first Charter School was opened in Minnesota in 1992,  so we are pleased that Governor Pawlenty has carried on the tradition of pro-school choice policies.  A 2010 report on state charter school laws by that organization rated Minnesota #1 in the country, and praised pro-charter laws passed while Pawlenty was Governor.

In a 2008 report put out by the Heartland Institute, Minnesota was tied for fifth most pro-school choice state along with Utah and Georgia. Minnesota received high marks for education tax credits, but scored zero on both the voucher and scholarship categories of the report. Minnesota was also the only state to offer a refundable education tax credit to low income families.  In 2010, Pawlenty proposed a strongly pro-school choice education bill which included allowing successful charter schools to open additional sites.  In 2011, he issued a statement praising the U.S. House for passing a bill that reinstated the Washington, D.C. school voucher program opposed by President Obama.


TORT REFORM

The American economy suffers from excessive litigation which increases the cost of doing business and slows economic growth. The Club for Growth supports major reforms to our tort system to restore a more just and less costly balance in tort litigation.   

What we have seen so far on Governor Pawlenty’s record on tort reform is encouraging. For example, in 2003 Pawlenty signed Joint and Several Liability reform that “raised the threshold for the imposition of joint and several liability from 15 percent to greater than 50 percent.”  In 2004, Pawlenty signed appeal bond reform, which capped the amount a defendant can be required to pay to secure an appeal at $100 million.  In 2009, Governor Pawlenty listed tort reform as one of his top 10 ways to drive down health care. “Frivolous lawsuits increase the practice of ‘defensive medicine,’ which increases health care costs. Non-economic damages should also be capped at reasonable levels,” Pawlenty wrote. 

Pawlenty also spoke strongly on the topic in an interview with Fox News in July of 2009. He said “let's get rid of junk lawsuits and make sure we have medical malpractice reform. That will save some money.” 


POLITICAL FREE SPEECH

Maximizing prosperity requires sound government policies.  When government strays from these policies, citizens must be free to exercise their constitutional rights to petition and criticize those policies and the politicians responsible for them.

Tim Pawlenty has an excellent public record on political free speech. Despite being a strong supporter of Senator John McCain (R-AZ), Pawlenty told National Review in 2008 that “I’ve come to the point in my career, watching campaign finance reform, having been involved in it somewhat at a state level, that the premise that government can control this stuff, or should control this stuff, is flawed. No matter what they do to regulate it, it always seeps out somewhere else, so I think a better system would probably have to have full disclosure, real time, online, instant disclosure — but quit pretending, both as a constitutional principle, or as a matter of politics, that government can contain this.”  He told RedState.com that “the McCain-Feingold legislation in my view is flawed and I don’t agree with aspects of it and I think that [there] are potential serious constitutional issues relating to it.”

Pawlenty even used the afore-mentioned powers of unallotment to end Minnesota’s $10 million Political Contribution Refund Program.  Under Minnesota Law, a political candidate that sticks to campaign spending limits is allowed to seek contributions of up to $50 from individuals and $100 from married couples. Under this program, Minnesota reimbursed these contributors the full amount.  Taxpayers should not be financing political campaigns, and Pawlenty deserves recognition for eliminating this program.

In 2010, Pawlenty signed a bill passed by Minnesota’s Legislature that brought the state’s campaign finance laws in line with the pro-free speech case Citizens United v. FEC. 


POLITICAL ACTIVITY & ENDORSEMENTS

Little evidence shows that Pawlenty got involved in primaries in order to advance candidates who supported principles over party.  Instead, he chose a much more cautious approach that is typical with most high-profile Republicans – he mainly supported Republican candidates post-primary.

One notable endorsement happened almost two years ago.  In the November 3, 2009 special election for Congress in New York’s 23rd congressional district, Pawlenty endorsed conservative pro-growth candidate Doug Hoffman on October 26th, 2009, after Hoffman had already been endorsed by former Alaska Governor Sarah Palin and former Pennsylvania Senator Rick Santorum.  In that race, Republican nominee Dede Scozzafava ultimately dropped out and endorsed Democrat Bill Owens.

He also donated to pro-growth South Carolina Congressional candidate Mick Mulvaney in 2010 pre-primary when he faced no primary, while at the same time donated to pro-growth South Carolina Congressional candidate Tim Scott post-primary, when Scott faced a competitive primary.


SUMMATION

It’s clear that Governor Pawlenty is, for the most part, hard to pin down on his exact ideological moorings.  Minnesota is not a conservative state by any means, and Governor Pawlenty did veto tax hikes passed by the liberal legislature and made a relatively strong push to keep a lid on taxes.  Pawlenty deserves tremendous praise for keeping Minnesota’s spending growth remarkably low.  For this, and for his consistent stances on school choice, tort reform, and political free speech, he deserves credit – while his record on health care and entitlement spending is mixed. However, Pawlenty has some simply inexcusable tax hikes in his record, and he made a mistake by taking no clear position on the 2008 Legacy Amendment. His tacit support for bailouts, more job-choking regulations, and various tariffs make it difficult for us to identify his core ideological identity. His support of things like mandatory vegetable oil in gasoline, cap and trade, and a statewide smoking ban make him sound overly eager to support big government proposals to address policy fads of the day.

Given all of this, we struggle to identify the real Tim Pawlenty.  We agree with those who say that Governor Pawlenty did the best he could in a state as liberal as Minnesota. And we believe he would be a stronger pro-growth executive in a more conservative climate, but his “clunkers” as he himself describes them are difficult to ignore.  A President Pawlenty, we suspect, would fight for pro-growth policies, but would be susceptible to adopting “pragmatic” policies that grow government.

 
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