Presidential candidate Tim Pawlenty is giving a speech at the University of Chicago this morning, where he will lay out an ambitious economic program, which he calls “The Better Deal.” He published an editorial in the Chicago Tribune this morning to support his agenda. It’s good stuff.
Noting the dismal growth rate under Barack Obama, Pawlenty says, “Let’s grow the economy by 5 percent, instead of an anemic 2 percent.” He says that such growth will never happen “under a federal tax code that is hostile to business,” where American businesses “pay the second highest tax rates in the world.”
Accordingly, Pawlenty wants to cut the corporate tax rate from 35% to 15%, and wipe out the “special interest handouts, carve-outs, subsidies, and loopholes” which serve as the instruments of crony capitalism. He also wants to get rid of taxes on interest income, capital gains, and dying.
I’ve always thought it curious that so many people are willing to believe high estate taxes aren’t a drain on economic growth and productivity. All taxes are. The childish liberal view of the estate tax is that it doesn’t hinder economic growth because it’s being extracted from dead people. What effect does it have on the ambitions of a successful businessman in his twilight years, and those of his family, when they know the government will simply seize the results of their efforts when he dies?
Pawlenty has also called for a flattening of the personal income tax system, reducing it to four rates: zero taxes for the people who do not currently pay income tax, 10% on the first $50,000 of taxable income for singles, 10% on the first $100,000 for married couples, and 25% for all income above that. The Washington Post notes this works out to “a one-third cut in the bottom rate, and a 28% cut in the top rate.”
To offer individuals and businesses this “Better Deal,” Pawlenty will demand a lot of sacrifice from the bloated federal bureaucracy. It’s about time someone asked them to sacrifice, isn’t it?
He wants to start with a spending freeze, and “impound up to 5 percent of Federal spending until such time as the budget is balanced.” Once the federal leviathan has been chained, Pawlenty proposes muzzling it with a spending cap of 18% of GDP, coupled with a balanced budget amendment, a measure he has long advocated on his website.
Pawlenty sees the path to a balanced budget as trimming 1% from federal spending every year over the next six years. That means Uncle Sam will be holding an awesome yard sale. To cut spending and privatize moribund federal bureaucracies, Pawlenty proposes a “Google test”: “If you can find a good or service on the Internet, then the federal government probably doesn’t need to offer the same good or service.”
The Washington Post, mulling over the prepared remarks released in advance of the University of Chicago speech, notes that Pawlenty speaks ominously of “The post office, the government printing office, Amtrak, Fannie and Freddie” as antiques of Big Government “built for a time in our country when the private sector did not adequately provide those products.” In that spirit, I just Googled “private education,” and you won’t believe what came up.
This is pretty bold stuff. It stakes out some aggressive territory for Pawlenty as a visionary. Those who are weary of being told that America’s inevitable future is a moribund economy, high unemployment, and statist collapse will be encouraged to hear someone offering such a detailed Better Deal.