WASHINGTON -– Republican presidential candidate Tim Pawlenty on Tuesday defended his idea to slash corporate and personal income tax rates by saying that job creation should be the top goal in lieu of “nominal measures of who gets wealthy.”
But while conservatives praised the move to cut taxes, Pawlenty came under criticism from some in his own party for failing to outline spending cuts and for relying on overly optimistic projections.
The former Minnesota governor's remarks were an explicit defense of trickle-down economics, the economic theory decried by liberals but taken by many on the right as self-evident.
“Set aside whether the wealthy benefit or not, the real measure of these proposals is, is it going to generate -– in a transformative, significant way -– more jobs for more people across this country?” Pawlenty said of his plan.
“This isn’t about whether some people are going to get wealthier or not," he said, adding that his proposal would encourage "things that we need to do to make it more likely, not less likely, that businesses are going to start, grow, add employees."
Pawlenty made his remarks during a question and answer session after a major economic speech at the University of Chicago’s Harris School of Public Policy Studies. In the speech, he continued to stake out the most detailed platform of any 2012 GOP hopeful with an aggressive speech on tax reform, spending cuts and overhauling the federal government.
Pawlenty endorsed slashing corporate tax rates by more than half from 35 percent to 15 percent, abolishing taxes on dividends and investments, capital gains and estates, and simplifying personal income tax rates to 25 and 10 percent. (There are currently six rates for personal income taxes, depending on one’s income: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.)
He also endorsed an amendment to the Constitution that would require Congress to balance the federal budget each year. But it was Pawlenty's position on cutting tax rates that drew the most spirited criticism. The Democratic National Committee sent reporters a blog post by a liberal advocacy site, ThinkProgress, that blasted Pawlenty’s position as comprising “massive tax giveaways to the rich and corporations.”
“Pawlenty is basically doubling down on the failed economic policies of the last Republican administration, only going for tax cuts that are much bigger than anything President Bush ever got through Congress,” ThinkProgress said.
Pawlenty said that cutting taxes -- along with reducing government regulation and a "private health care market" -- would produce five percent growth in the economy versus the roughly two percent that is currently forecast. It would, he said, produce $4 trillion in additional revenues and reduce projected deficits by 40 percent before any spending cuts were made.
But the tax cuts championed by former President Bush in 2001 and 2003 turned budget surpluses into budget deficits. Liberals have hammered this point in criticizing the tax cuts, and President Obama has vowed to allow the current rates to go up in 2013 for those making $250,000 or more a year, saying that the wealthy can afford to pay a little more in a time of economic hardship. Conservatives say short-term deficits are acceptable if the tax cuts direct more money into the private economy and less into government coffers, because they believe tax revenues will grow as economic activity increases.
Analysts on the left and right greeted Pawlenty's projections with skepticism.
"I love tax cuts as much as the next conservative, but it takes a leap of imagination to suppose that the huge tax cuts are going to generate such growth as to come close to generating revenue sufficient even for a sharply pruned federal government," said Washington Post conservative blogger Jennifer Rubin. "In sum, this may be an attractive pro-growth plan, but it is not a very serious budget policy."
Rubin also faulted Pawlenty for failing to say in any detail what spending he would cut.
Reuters' Jim Pethokoukis and the Post's Ezra Klein both noted that Pawlenty's forecast of five percent growth over a decade would represent a longer period of such a high rate of growth than has happened in decades if not longer.
"I don’t think the American economy ever managed that in the 20th century," Pethokoukis wrote.
Pawlenty is still well behind former Massachusetts Gov. Mitt Romney and several other candidates in most polls. But many consider him to be the most likely to emerge as the top alternative to Romney in the GOP primary.
Pawlenty’s defense of the tax cuts also took him into unusual -- and scatological -- rhetorical territory. He said that the entrepreneurial class comprised about five percent of the population, and that “if that five percent become six, seven percent, we’ve got a very bright future.”
“And if that five percent becomes four, three, two or one percent, we’re in deep doo doo. We are in deep crap,” he said.
A few moments later he said that to be “pro-jobs and anti-business” is “like being pro-egg and anti-chicken. It doesn’t work.”
In his speech, Pawlenty had harsh words for Obama, who he called “a champion practitioner of class warfare.”
“Elected with a call for unity and hope, he’s spent three years dividing our nation. He’s fanning the flames of class envy and resentment all across this country, to deflect attention from his own failures and the economic hardship they have visited on America,” he said.
The president has faced a rash of bad economic news recently, and admitted in a press conference Tuesday that “obviously we’re experiencing some headwinds.”