2012 GOP candidates have fiscally moderate records

Sven Larson Contributor
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In 2010, fiscal conservatism gained ground in Congress. Republicans like Paul Ryan, Cynthia Lummis and Ron Paul stand firm against House Democrats and the political invertebrates in the Senate. It would be good for the American economy if the next president was also a fiscal conservative.

There is no shortage of credible candidates for the 2012 Republican nomination. However, the field is thin from a fiscally conservative viewpoint, especially when it comes to candidates with executive experience (a desirable resume item these days).

Let’s first sort out the terminology. Fiscal conservatism is not the same as fiscal responsibility. A fiscally responsible government balances its budget. Period. This can be done at any level of spending. The Swedish government, which has balanced its budget for almost two decades now by imposing the world’s highest tax burden on its citizens, is fiscally responsible but not fiscally conservative. Fiscal conservatives want to stop government spending growth over the short term and reduce it over the long term. Fiscal conservatives can also be fiscally responsible, but they have to prioritize; it is tough enough to make Congress agree on either a balanced budget or spending cuts.

Now that we’ve got the terminology straight, let’s look at the records of the declared Republican presidential candidates who are former governors. While they have balanced budgets and shown fiscal responsibility, they lack fiscally conservative street cred.

Frontrunner Mitt Romney has a mixed record. As governor of Massachusetts, he did a fairly good job on taxes. The Tax Foundation reports that state and local taxes in Massachusetts comprised 9.9 percent of total income both when Romney took office in 2003 and when he left office in 2007. Romney’s problem is spending. Massachusetts’s general fund increased 42 percent under Romney. Most of that growth came in his last year: From 2006 to 2007, the state’s general fund grew from $21.7 billion to $27.6 billion. That same year, Romney accepted a 7.5 percent increase in federal money, clear evidence that he’s more of a fiscal moderate than a fiscal conservative.

Tim Pawlenty did a somewhat better job. During the eight years that he governed Minnesota (2003-2011), total state spending increased by an average of 4.1 percent per year. However, just like Romney, Pawlenty allowed his state to become more dependent on the federal government during his tenure. In 2007, federal funds paid for 22 percent of all state spending in Minnesota; by 2010, that share had increased to 33 percent. According to the Tax Foundation, Minnesota went from having the 17th-highest taxes in the nation in 2003 to having the seventh-highest taxes in 2009. Pawlenty’s decision to cut state aid to local governments is part of the reason for that, as local governments compensated for the decreased state aid by increasing property taxes, though it would be unfair to pin those property tax increases on Pawlenty. The choice to raise taxes and not cut spending was made by local governments.

Of the officially declared candidates, former Utah Governor John Huntsman has the weakest credentials as a fiscal conservative. Under his watch, state spending increased by an average of 8.7 percent per year. Furthermore, unlike Romney and Pawlenty, Huntsman presided over a Republican-run state, which should have made it easier for him to build a fiscally conservative record. To make matters worse, the spending increases came primarily through “other funds,” an often-overlooked and less-transparent spending category.

When it comes to fiscal policy, states obviously have their hands tied to some degree. They are forced to spend under programs such as Medicaid and No Child Left Behind. However, any state can choose, at any time, to opt out of these programs and design its own alternatives.

The ex-governors who are running for the GOP nomination come across as fiscal moderates. They have all accepted federal funds at growing rates, which has increased federal spending and added to our debt. The question is: Can they become the staunch fiscal conservatives that the country needs?

Sven R. Larson is a research fellow with Wyoming Liberty Group, a free-market think tank. He has written two books and numerous research papers and articles about economic policy, state budgets, health reform and the welfare state. He is often interviewed by TV, radio and newspapers on his topics of expertise.