05.24.11

Pawlenty's Fiscal Shell Game

The 2012 candidate brags about economic discipline, but he loaded Minnesota with debt, says his GOP predecessor, and presided over a massive tax increase. John Avlon on T-Paw’s dishonest talking points.

Tim Pawlenty unveiled his presidential campaign Monday with a message centered on fiscal discipline and being the self-styled truth-teller in the 2012 race.

It was only a matter of hours before his state's previous Republican governor, Arne Carlson, unveiled a barrage of fiscal data arguing that Pawlenty wasn't telling the truth about his fiscal conservative credentials. Instead, Carlson alleged that Pawlenty had presided over a $2.5 billion increase in property taxes, used one-time payments to balance the budget, and handed his successor an unprecedented $5 billion deficit.

Perhaps most infuriating to Carlson was that Pawlenty had essentially undone his efforts to return Minnesota to a triple-A bond rating in the 1990s, presiding over a decline in the bond rating and a shift to a negative credit rating by Moody's in the last year of his administration because of what was called "ongoing fiscal weakness and heavy reliance on one-shots to balance its books."

In Pawlenty's defense, however, he did receive an "A" ranking from the Cato Institute on its 2010 fiscal policy report card of governors, rooted in his repeated veto of proposed tax increases.

So who's telling the truth when it comes to T-Paw's core claims of fiscal discipline? To get some local perspective on his record in office, I called some Minnesota policy and political experts.

When I asked Mark Haveman of the Minnesota Taxpayers Association whether Pawlenty handed his successor, Democratic Governor Mark Dayton, a $5 billion deficit his answer was simple. "Yes."

"There's no question that Governor Pawlenty held the line on taxes," Haveman continued. "But if you are going to cut or hold the line on taxes, you also better be ready to introduce bold, fresh thinking with new ideas on how to reform government to deliver more value from taxpayer dollars. And I don't think there was much in the way of substantive reform—or for that matter, evidence of risking political capital—to push new ideas through… Unless you address the underlying cost structures of all these programs and the implications that they have on the budget, you're going to continue to have persistent structural budget deficits as far as the eye can see." Of course, the same thing is true on the federal level today.

"There is no doubt that Tim Pawlenty slowed down the growth of state government," attests Chad Hartman, a leading local talk-radio host on WCCO. "But there's equally no doubt if you're a taxpayer, you didn't pay it at the state level but you paid it at the property tax level. Because property taxes went up anywhere between $2.5 billion and $3 billion—and that data has been proven repeatedly."

“He wanted to say that he didn’t increase any taxes. So he called it a fee.”

"Another area where he looks hypocritical is when he said 'I didn't increase any taxes,'" continued Hartman. "Well, he OK'd what he called 'a health impact fee'—which was a 75-cent increase on a pack of cigarettes. That's a cigarette tax increase. We all know that. But he wanted to say that he didn't increase any taxes. So he called it a fee. I have callers who support him today call into my show and say 'Listen, I'm a Republican, I voted for him twice, but he should have just been honest about it. It was a tax increase. It wasn't a fee.' It became kind of a running joke."

"He never honestly balanced a budget when he was governor," recounted John Gunyou, the city manager of Minnetonka who also served as Governor Carlson's finance commissioner. "What I mean by that is ongoing revenues never equaled ongoing costs… And he would paint this picture that was not truthful because it was saying 'I can make these cuts and have no impact on services,' which is not true."

Essentially, Gunyou argued that Pawlenty's state cuts were passed on to local governments, which then raised property taxes to keep basic services in place.

In truth, the debate over Tim Pawlenty's fiscal record goes back to a deeper fault line in Republican philosophy—whether fiscal responsibility and fiscal conservatism are the same thing. It's the difference between believing in the old-fashioned virtues of balanced budgets and believing in the transformational power of tax cuts. The first is a matter of simple math. The second is a matter of theology.

Tim Pawlenty is by all accounts a nice guy who would like very much to be president. But contrary to his 'truth-telling' tag, running for president in today's hyperpartisan primaries encourages would-be candidates to contort their executive records—for example, calling tax hikes "fees" to avoid the wrath of litmus test absolutists. It incentivizes backtracks and flip flops, like running from past support of cap-and-trade legislation (which Pawlenty embraced when aiming to be McCain's vice president in '08) or denying his flirtation with Romney-eqsue individual health-insurance mandates, once Obama backed a similar structure for his national plan.

Any of these positions might have been thoughtful or responsible for the governor of Minnesota to take at one time, but to pass the primary gauntlet of ideological editorial boards and activist groups they must be repudiated. This not only constrains the options open to ambitious but responsible executives, it creates a dishonest presidential debate from the outset.

John Avlon's new book Wingnuts: How the Lunatic Fringe Is Hijacking America is available now by Beast Books both on the Web and in paperback. He is also the author of Independent Nation: How Centrists Can Change American Politics and a CNN contributor. Previously, he served as chief speechwriter for New York City Mayor Rudy Giuliani and was a columnist and associate editor for The New York Sun.