Tim Pawlenty introduced his economic plan, a “Better Deal,” in a speech Tuesday at the University of Chicago, setting a goal of five percent economic growth, and outlining the steps that he says make that goal realistic.
The current projection of growth this year is 2 percent, a rate that economists say is simply too slow to cushion the economy from the effects of outside occurrences. Pawlenty calls that rate “anemic.” Despite that projection, Pawlenty says 5 percent is achievable, pointing to Reagan and Clinton as historical precedent.
“Five percent growth is not some pie-in-the-sky number. We’ve done it before, and with the right policies, we can do it again,” he will say, according to his prepared remarks.
The speech comes just days after the May Jobs Report was released, showing minimal growth.
Pawlenty’s economic plan focuses on three areas: reforming the tax code, passing a balanced budget – and freezing spending until that happens, and decreasing regulation.
“American businesses today pay the second highest tax rates in the world,” he said. “That’s a recipe for failure — not adding jobs and economic growth.”
In order to fix that fact, he said, “We should cut the business tax rate by more than half. I propose reducing the current rate from 35% to 15%.”
He also called for the elimination of “special interest handouts, carve-outs, subsidies, and loopholes.”
Pawlenty suggested a total overhaul of the individual tax law as well, as that is the code under which most small businesses are taxed. He proposed two rates of 10 percent and 25 percent.
“Under my plan, those who currently pay no income tax would stay at a zero rate,” he said. “After that, the first $50,000 of income – or $100,000 for married couples – would be taxed at 10 percent.”
Furthermore, he said, “Everything above that would be taxed at 25 percent. That’s it. A one-third cut in the bottom rate to allow younger, middle, and lower-income families to save and build wealth. And a 28 percent cut in the top rate to spur investment and job creation.”
Pawlenty also said that “the capital gains tax, interest income tax, dividends tax, and the death tax” should be eliminated.
“I balanced every budget in my two terms as governor of Minnesota,” he wrote in an op-ed in the Chicago Tribune Tuesday morning. “I know the only reason the Minnesota legislature ever gave me a balanced budget was because, under Minnesota’s Constitution, it had to.”
“That’s why I support a constitutional amendment that not only requires a balanced federal budget, but also caps federal spending as a percentage of our economy, around 18 percent of gross domestic product,” he continued.
In order to reduce government spending and achieve that goal, Pawlenty proposed “The Google Test.”
“If you can find a good or service on the Internet, then the federal government probably doesn’t need to be doing it,” he said. “The post office, the government printing office, Amtrak, Fannie and Freddie, were all built for a time in our country when the private sector did not adequately provide those products. That’s no longer the case.”
Pawlenty called for a government spending freeze until such an amendment could be passed.
“It is no longer enough for government to go on a diet,” he said. “Government needs to hit the gym.”
The former Minnesota governor called government regulation “a hidden tax” and said that, as president, he would “require a sunsetting of all federal regulations, unless specifically sustained by a vote of Congress.”
He held up Dodd-Frank and Obamacare as examples, and also attacked the Environmental Projection Agency, further emphasizing his opposition to cap and trade, a policy he formerly supported at the state level as governor but has since renounced.
“The Environmental Protection Agency is now regulating carbon emissions. A policy rejected by Congress, but putting millions of jobs at risk,” he said.
Pawlenty called for Congress to pass the free trade agreements with South Korea and Colombia and Panama in order “to promote our exports.”
He also attacked the Federal Reserve, saying that the Fed’s policies were resulting in the “continued debasement of the dollar.”
“No more quantitative easing. No more monetizing debt. No more printing money with reckless abandon,” Pawlenty said.
Pawlenty capitalized on the jobs report released Friday to attack Obama as not understanding the economy.
“President Obama has had three years to turn things around,” he said. “And all we have to show for it is 3.7 trillion dollars more debt. Nearly 2 million fewer jobs. A Congress that hasn’t passed a budget in more than 2 years. A health care takeover he pretends we can afford. And a fiscal crisis he pretends we can ignore.”
Pawlenty presented himself as someone who not only understood the economy, but who understood how exceptional America is, something Republicans have repeatedly insisted that President Obama does not recognize.