Republican presidential contender Tim Pawlenty says comprehensive tax reform and a balanced-budget amendment to the Constitution are necessary to accelerate economic growth and to get a handle on Washington’s “out-of-control spending” habits.
In a speech at the University of Chicago on Tuesday, Mr. Pawlenty, a former Minnesota governor, will propose eliminating tax “subsidies and loopholes” to help cover the cost of reducing the business tax rate from 35 percent to 15 percent and also will call for reforming the individual tax code to help out small-business owners.
Taken together, he says, those moves could put the nation on track to reach his “goal” of increasing economic growth from 2 percent to 5 percent.
“Our economy will never grow at 5 percent laboring under a federal tax code that is hostile to business,” he wrote in an op-ed that appeared in Tuesday’s Chicago Tribune, claiming that if his plan reached its goal, it would generate $3.8 trillion in new tax revenues over 10 years. “With that, we would reduce projected deficits by 40 percent — all before we made a single budget cut.”
Arguing that 5 percent growth is not some “pie-in-the-sky number,” Mr. Pawlenty writes that the economy grew by 4.9 percent between 1983 and 1987 under President Reagan and 4.7 percent between 1996 and 1999 under President Clinton. “We’ve done it before, and with the right policies, we can do it again,” he says.
He also plans to call on Congress to pass a constitutional amendment that would require a balanced federal budget, while also capping federal spending as a percentage of our economy, around 18 percent of gross domestic product.
Acknowledging that passing a constitutional amendment won’t happen overnight, Mr. Pawlenty said that in the interim he will push for capping and blocking Medicaid to the states, raising the Social Security retirement age and slowing the rate of growth in defense spending.
With the country facing a $14.3 trillion debt, some conservative lawmakers have sought to pass a balanced-budget amendment, but so far the latest effort has failed.