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Pawlenty and his push for 5% growth
Former Minnesota Governor and Republican presidential aspirant Tim Pawlenty on Tuesday set out his goal for 5%-a-year economic growth.
As goals go, sounds good, but of course the question is how an economy that grew 1.8% last quarter could achieve that. “America’s economy is not even growing at 2% today,” he said, according to a transcript of his remarks prepared for delivery. “And that’s what all projections say we can expect for the next decade.”
Well, not all or even most projections, though Pawlenty is right in saying the expectations aren’t for particularly great growth… On Wall Street, economists are expecting closer to 3% growth this year and next. Longer-term forecasts aren’t easy to come by, but the Congressional Budget Office’s taper down to 2.3% by 2021, from as high as 3.8% in 2015.
His recipe for growth is to cut corporate tax rates to 15% from 35%, while also eliminating unspecified subsidies and loopholes, and to create three tax rates: 0% (as is the case presently), 10% for the first $50,000 of income, and 25% from there. That’s a one-third cut to the bottom rate and a 28% cut to the top rate.
He’d also eliminate the capital gains tax and the estate tax.
As for spending, he’s in favor of a constitutional amendment to cap federal spending around the historical average at 18% of GDP (from roughly 25% now). And he wants to cap and block-grant Medicaid to the states, raise the Social Security retirement age (though not for current seniors) and slow the rate of growth in defense spending.
Pawlenty says Congress can’t be trusted to do all that, so he wants the same lawmakers to give him “temporary and emergency authority” to freeze spending and impound up to 5% of federal spending until the budget is balanced.
He also has a novel way to cut discretionary spending: “the Google test.” The federal government should get out of providing any good or service that can be found on the Internet. He wants GE-style Six Sigma processes to cut spending at all federal agencies, as has been done at the CIA and the Pentagon.
Pawlenty also is a critic of the Federal Reserve, though he doesn’t go as far as rival Ron Paul, who wants to end the central bank. The ex-Minnesota governor wants the central bank to give up the “full employment” mandate to concentrate just on price stability.
Former Minnesota Governor and Republican presidential aspirant Tim Pawlenty on Tuesday set out his goal for 5%-a-year economic growth.
As goals go, sounds good, but of course the question is how an economy that grew 1.8% last quarter could achieve that. “America’s economy is not even growing at 2% today,” he said, according to a transcript of his remarks prepared for delivery. “And that’s what all projections say we can expect for the next decade.”
Well, not all or even most projections, though Pawlenty is right in saying the expectations aren’t for particularly great growth… On Wall Street, economists are expecting closer to 3% growth this year and next. Longer-term forecasts aren’t easy to come by, but the Congressional Budget Office’s taper down to 2.3% by 2021, from as high as 3.8% in 2015.
His recipe for growth is to cut corporate tax rates to 15% from 35%, while also eliminating unspecified subsidies and loopholes, and to create three tax rates: 0% (as is the case presently), 10% for the first $50,000 of income, and 25% from there. That’s a one-third cut to the bottom rate and a 28% cut to the top rate.
He’d also eliminate the capital gains tax and the estate tax.
As for spending, he’s in favor of a constitutional amendment to cap federal spending around the historical average at 18% of GDP (from roughly 25% now). And he wants to cap and block-grant Medicaid to the states, raise the Social Security retirement age (though not for current seniors) and slow the rate of growth in defense spending.
Pawlenty says Congress can’t be trusted to do all that, so he wants the same lawmakers to give him “temporary and emergency authority” to freeze spending and impound up to 5% of federal spending until the budget is balanced.
He also has a novel way to cut discretionary spending: “the Google test.” The federal government should get out of providing any good or service that can be found on the Internet. He wants GE-style Six Sigma processes to cut spending at all federal agencies, as has been done at the CIA and the Pentagon.
Pawlenty also is a critic of the Federal Reserve, though he doesn’t go as far as rival Ron Paul, who wants to end the central bank. The ex-Minnesota governor wants the central bank to give up the “full employment” mandate to concentrate just on price stability.
