Republican presidential hopeful Tim Pawlenty recently laid out his plan to grow the economy, which relies heavily on tax and spending cuts.
"Cutting just 1 percent of overall federal spending for 6 consecutive years would balance the federal budget by 2017."
Pawlenty is right on the spending side of the equation. Cutting spending would help balance the budget. But his plan to cut taxes makes a balanced budget unlikely.
Pawlenty spokesman Alex Conant says cuts would be made starting with a "base year" and spending would be reduced 1 percent each year going forward. During that time, spending would be frozen.
In the current fiscal year, the nation spent about $3.6 trillion, according to the Congressional Budget Office (CBO). One percent of that is $36 billion, leaving a fiscal year 2012 budget of roughly 3.59 trillion.
If the 1 percent spending cuts continued, by 2017 total federal spending would be around $3.4 trillion - about $1.26 trillion less than what the federal government would spend without the cuts. Assuming the Congressional Budget Office's 2017 revenue projection of about $4.07 trillion is in the ballpark, the nation would have a surplus of about $670 billion.
The math works out, but it doesn't tell the whole story of Pawlenty's vision for the budget. Along with the 1 percent cuts, Pawlenty is proposing big tax cuts, which would make it much harder to balance the budget in the future.
Specifically, he wants to lower the corporate tax rate from 15 percent to 35 percent and create only two individual income tax rates of 10 percent for the first $50,000 of income and 25 percent for the rest. Further, he wants to ax the capital gains tax, interest income tax, dividends tax and the estate tax.
In his speech, Pawlenty suggested that 5 percent economic growth over the next 10 years and the elimination of tax loopholes would help offset the tax cuts. But many economists have said that the goal is unrealistic; 5 percent economic growth is difficult to achieve even in good years.
Based on current law and CBO growth projections, Pawlenty's plan could cost upwards of $11.6 trillion over the next 10 years, according to an analysis done by the Tax Policy Center.
In 2017, that could mean nearly $1.3 trillion in revenue lost to the federal budget, according to a separate analysis conducted by Michael Linden, director of budget and tax policy for the left-leaning Center for American Progress. If so that means the 1 percent cuts wouldn't balance the budget after all.
Furthermore, budget experts are quick to point out that, while 1 percent may seem small, Pawlenty's cuts would be difficult to achieve without cuts to Medicare, Social Security and military spending, which dominate federal spending and account for much of the nation's projected spending increases.
Pawlenty's claim is correct: cutting 1 percent of spending annually would balance the budget by 2017.
But that assumes no changes in the tax code, and that's an unlikely scenario. While it's difficult to say precisely how Pawlenty's tax changes will affect the nation's coffers, initial estimates show that it could result in significant revenue losses.
So, Pawlenty's claim that a 1 percent cut in federal spending would balance the budget is accurate - but only if the government does not enact the tax cuts he proposes. Otherwise, it is unlikely.
Tim Pawlenty, A Better Deal: Governor Tim Pawlenty's Economic Policy Remarks, June 7, 2011
The Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2012, accessed June 9, 2011
The Congressional Budget Office, Budget Projections, January 2011
The Washington Post, Tim Pawlenty's Dubious Economic Assertions, June 8, 2011
The Washington Post, Pawlenty's magical economic plan, by Ruth Marcus, June 9, 2011
Interview, Alex Conant, spokesman, Gov. Tim Pawlenty, June 9, 2011
Interview, Michael Linden, Director of Tax and Budget Policy, The Center for American Progress, June 9, 2011
Interview, Gene Steuerle, the Urban Institute, June 9, 2011
Interview, Isabel Sawhill, The Brookings Institution, June 9, 2011
Interview, Eric Toder, the Urban Institute, June 10, 2011(2 Comments)
There's a cardinal rule of presidential primary politics: don't knock ethanol in corn-state Iowa.
But that didn't stop former Gov. Tim Pawlenty from telling an audience there he'd phase-out ethanol subsidies if elected president.
"Even in Minnesota, when we faced fiscal challenges, we reduced ethanol subsidies," he said during his announcement Monday that he's running for president. "That's where we are now in Washington, but on a much, much larger scale."
Pawlenty cut state ethanol subsidies - but he left out that he also promised to pay them back later.
Minnesota ethanol producers have been enjoying subsidies since 1987. For a long time, they got 20 cents from the government for every gallon of fuel they produced. The subsidy was meant to jumpstart small, farmer-owned operations.
When Pawlenty took office in 2003, the state was facing a budget shortfall. Pawlenty cut $20 million in ethanol subsidies that year - roughly three-fourths of the $26.8 million in payments slated to go out - and followed-up with a plan to reduce the payments to 10 cents per gallon in the coming biennium.
Pawlenty's plan didn't fly with rural lawmakers. Ultimately, he and the Legislature agreed to draw down the subsidy to 13 cents per gallon through fiscal year 2007, and pay producers the difference later on. According to a Legislative Auditor's report, the state paid out $50.5 million in so-called deficiency payments during the last biennium.
Furthermore, the program was always slated to end in 2010, so the ethanol subsidies would have halted regardless of Pawlenty's actions (though deficiency payments are still trickling out.)
Though Pawlenty wanted to cut ethanol subsidies, he also pushed to expand the state's requirement that every gallon of gasoline be blended with 10 percent ethanol. In 2005, the state approved Pawlenty's plan to require gas be mixed with 20 percent ethanol by 2013, a government mandate that's bolstered the market for the corn-based fuel.
It is true Pawlenty cut Minnesota ethanol subsidies, but he glosses over the fact that ethanol producers eventually got their money anyway.
That's enough to make this claim misleading.
YouTube.com, Tim Pawlenty in Des Moines - 2012 Announcement Speech, May 23, 2011
Minnesota Public Radio News, Lawmakers resist Pawlenty's proposal to cut ethanol subsidies, January 16, 2003
Minnesota Public Radio News, Ethanol bill nears crucial test, by Laura McCallum, March 16, 2005
Minnesota Department of Energy, Gasoline Pricing Facts for Consumers, accessed May 25, 2011
Office of the Legislative Auditor, Biofuel Policies and Programs, April 2009
The Minneapolis Star Tribune, Cuts in the pipeline: Subsidies keep ethanol industry from fizzling, by Joy Powell, March 11, 2003
The St. Paul Pioneer Press, Session out but not over, by Patrick Sweeney and Bill Salisbury, May 20, 2003
Interview, Ralph Groschen, Senior Marketing Specialists, Minnesota Department of Agriculture, May 24, 2005
The Humphrey School
MPR News is hosting an online debate about ethanol. Find it here.(2 Comments)
During the first Republican presidential debate of the 2012 campaign, former Gov. Tim Pawlenty reminded viewers that President Barack Obama was against a requirement that everyone buy health insurance before he was for it.
Just a few years ago, Obama "promised the nation he would do health care reform focused on cost containment, he opposed the individual mandate," Pawlenty said on
May 5, 2011.
Pawlenty got this one right.
While campaigning for the White House, then-Sen. Barack Obama wanted everyone in the country to have health care - he just didn't want to require people to buy it.
In fact, Obama and former Sen. Hillary Clinton frequently traded barbs over the issue: Clinton highlighted the so-called individual mandate in her plan, claiming her strategy would cover more Americans than Obama's would. Obama would counter that not everyone could afford health insurance.
"If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house," he told CNN in 2008. "The reason they don't have a house is because they don't have the money."
In 2009, just as debate over the health care bill was starting to heat up, a CBS News interviewer asked Obama, "Do you believe that each individual American should be required to have health insurance?"
"I have come to that conclusion," Obama responded. "During the campaign I was opposed to this idea because my general attitude was the reason people don't have health insurance is not because they don't want it, it's because they can't afford it."
Ultimately, the individual mandate became a focal point in the health care debate. The final law requires that everyone have health insurance by 2014. Those who don't will pay a fine.
It's true that Obama once opposed the individual mandate. Pawlenty's claim is accurate.
Fox News, Republican Presidential Debate, May 5, 2011
PolitiFact.com, Obama flip-flops on requiring people to buy health care, by Angie Drobnic Holan, July 20, 2009
FactCheck.org, They've Got You Covered?, by Lori Robertson and Jess Henig, February 14, 2008
CBS News, The Future of Health Care Reform, July 15, 2009
The New York Times, transcript of the Democratic debate in South Carolina, Jan. 21, 2008
The Cato Institute, Obama Flip-Flops on the Individual Mandate (Again), by Michael Cannon, July 19, 2010
The Kaiser Family Foundation, Summary of Coverage Provisions in the Patient Protection and Affordable Care Act, April 14, 2011
The Humphrey School
On the campaign trail, former Gov. Tim Pawlenty likes to tout Q Comp, a program that pays teachers more when their students perform well.
"We were the first state to go statewide in the country to have performance pay for teachers to pay them other than just on seniority but on performance," Pawlenty said in a speech in Iowa last month.
Pawlenty's claim needs a lot of context.
Q Comp is a voluntary program that the state approved in 2005. Any school district in the state can apply, but must meet five criteria to be accepted. Among those requirements are regular teacher evaluations, teacher skill development, and school and classroom-wide performance standards; there's a lot of flexibility in what standards or goals schools choose.
To get paid more, teachers must meet those standards.
Minnesota wasn't the first to adopt a plan that pays teachers based on performance as Pawlenty said, though it's fair to say that the state has been among the earlier adopters.
According to Vanderbilt University's National Center on Performance Incentives, which keeps a database of all current federal, state and local programs, Arizona launched a statewide form of merit pay in the 1980s that allowed teachers to advance in salary if they gained new teaching skills and their students did better in class. No new funding has been approved since the mid-90s, but the program still serves a handful of Arizona school districts that enrolled early on. In 2000, the state approved an education sales tax to fund district pay-for-performance plans.
Meanwhile, North Carolina has been giving high-performing teachers annual bonuses since 1996 as part of a statewide program to improve school performance, though funding for those bonuses has been frozen for the last three years.
Pawlenty also said that the program is statewide. It's a phrase Pawlenty uses to distinguish Q Comp from regional or local programs in other states, said his spokesman Alex Conant. While it's true the program is available across the state, it's important to point out that only 50 school districts - or about 15 percent of the state's 339 districts - are participating in the 2010-2011 school year. Roughly 40 percent of the state's charter schools are involved.
Pawlenty walks a fine-line with this claim. Minnesota wasn't the very first state to adopt a statewide merit pay program, but it was one of the earlier adopters. Furthermore, Pawlenty's distinction that the program is statewide can be confusing to those listening to his speeches. It's available statewide, but only a fraction of schools are enrolled.
For both those reasons, Pawlenty's claim is misleading.
Minnesota Department of Education, Quality Compensation for Teachers (Q Comp), accessed April 21, 2011
Minnesota Office of the Revisor of Statutes, 122A.414 Alternative Teacher Pay, accessed April 21, 2011
Office of the Legislative Auditor, State of Minnesota, Q Comp: Quality Compensation for Teachers, Feb. 2009
The Minnesota Secretary of State, School Districts in Minnesota, accessed April 21, 2011
National Center on Performance Incentives, State-By-State Resources, accessed April 21, 2011
National Center on Performance Incentives, Arizona State Incentives, accessed April 21, 2011
Education Commission of the States, Pay for Performance Proposals in Race to the Top Round II Applications, By Stephanie Rose, July 20, 2010
Education Commission of the States, Classroom Site Fund (CSF), accessed April 21, 2011
Arizona Department of Education, Career Ladder, accessed April 21, 2011
Education Commission of the States, Teaching Quality--Compensation and Diversified Pay--Pay-for-Performance, accessed April 21, 2011
Interview, Steve Dibb, Acting Director, Q Comp, Minnesota Department of Education
Interview, Student Performance Improvement Program Coordinator, Independent School District 15-St. Francis, April 21, 2011
Interview, Susan Burns, program manager, National Center on Performance Incentives, April 21, 2011
Interview, Kathy Christie, Chief of Staff, Education Commission of the States, April 21, 2011(5 Comments)
Once upon a time, former Gov. Tim Pawlenty supported a cap-and-trade plan to lower greenhouse gas emissions. Cap-and-trade sets an overall limit on pollution and lets businesses bid for the right to continue emissions.
Now, Pawlenty says his support for cap-and-trade was "a mistake." But he's also pointed out that he's not the only potential Republican candidate who has a mixed record on the issue.
"Everybody in the race - at least the big names in the race - embraced climate change or cap-and-trade at one point or another," he said on the March 28, 2011, episode of the Laura Ingraham radio show. "Every one of us."
Not every GOP hopeful has tried to tackle climate change, but many of them did.
Pawlenty's spokesman did not respond to questions about who the "big names in the race" are, but it's clear that a number of Republicans who are frequently mentioned as potential candidates have changed their position on climate change.
• Sarah Palin: As governor of Alaska, Palin formed a subcabinet to tackle climate change, and she became involved in the Western Climate Initiative, a group with the goal of lowering greenhouse gas emissions. She also supported capping emissions as Sen. John McCain's running mate in the 2008 presidential election. But just months after McCain lost, she wrote in an op-ed that President Barack Obama's cap-and-trade plan was a "threat to our economy."
• Newt Gingrich: In 2007, the former House Speaker said that "mandatory carbon caps combined with a trading system" is something he would "strongly support," and in 2008, he made an ad with Rep. Nancy Pelosi saying that the country, "must take action to address climate change." Since then, Gingrich has blasted legislation to cap emissions.
• Mitt Romney: As Massachusetts governor, Romney first supported a regional plan to curb greenhouse gas emissions, but ultimately backed-off because he feared it would be too expensive for consumers. More recently, he's said that cap-and-trade would have a "devastating impact" on the economy.
• Mike Huckabee: The former Arkansas governor has also sent mixed messages about his stance on climate change.
Still, there are three potential candidates in the field who have not changed their position on climate change.
Former Utah Gov. Jon Huntsman has been a leading GOP advocate for climate action, setting a goal to bring Utah's emissions down to 2005 levels by 2020. So far, it appears he's not wavered on the issue.
Meanwhile, it appears former Mississippi Gov. Haley Barbour, who once lobbied for energy companies, and U.S. Rep. Michele Bachmann have never flirted with the idea of supporting cap-and-trade.
Minus Barbour and Bachmann, Pawlenty is right that most potential GOP candidates have "embraced climate change or cap-and-trade at one point or another."
Pawlenty isn't precise on this one, and it's also tough to say just who is and who isn't a big name in the race right now. He's close enough that his claim passes the PoliGraph test.
YouTube, The Laura Ingraham Show, March 28, 2011
Minnesota Public Radio, Pawlenty, Doyle and other Midwest governors sign on to global warming pact, by Stephanie Hemphill, Nov. 15, 2011
Minnesota Public Radio, Pawlenty's current climate change stance differs from past , by Tom Scheck, Sept. 23, 2009
PolitiFact.com, Palin flips on her support of cap-and-trade, by Catharine Richert, July 20, 2009
The Washington Post, The 'Cap And Tax' Dead End , by Gov. Sarah Palin, July 14, 2009
Time.com, On Global Warming, No Clear Skies For Most 2012 GOP Contenders, by Michael Scherer, March 24, 2011
YouTube, Nancy Pelosi and Newt Gingrich Commercial on Climate Change, accessed March 31, 2011
Frontline, Interview with Newt Gingrich, February 15, 2007
Atlanta Journal Constitution, Newt Gingrich: Cap-and-trade is 'an energy tax' and a job-killer, by Jim Galloway, April 24, 2009
ABC News, Gingrich Rips Obama Budget's 'Energy Tax'; OMB Says Higher Costs Offset by Tax Credit, by Teddy Davis, February 27, 2009
YouTube, Mitt Romney on Cap and Trade, October 7, 2009
Grist, Is Jon Huntsman the greenest GOP presidential hopeful?, by Lisa Hymas, February 2, 2011
The Associated Press, The 2008 Democratic and Republican presidential candidates' positions on the issues, by Calvin Woodward, Dec. 18, 2007
The Boston Herald, Romney OK with plan on emissions, July 24, 2003
The Star Tribune, Michele Bachmann: 'Cap and trade'? More like 'tax and spend', by Rep. Michele Bachmann, June 9, 2008
The Humphrey School(1 Comments)