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RCP Newsmaker Interview With Tim Pawlenty

RCP Newsmaker Interview With Tim Pawlenty

By RealClearPolitics - July 14, 2010

RCP: This year saw just a huge surge all across America in soccer viewership. When is it going to be hockey's turn?

Tim Pawlenty: (Laughs.) I love that question. Well, if you judge hockey by the same excitement standards as soccer, then I would expect it's about to burst onto the scene.

RCP: In your op-ed in the Politico today, you hold up your record as Minnesota governor to Obama's record as president. "During my two terms in Minnesota, we balanced every biennial budget without raising taxes. We set priorities and cut spending," you write. What political difficulties did you have to overcome to balance the budget? Tell us a little bit about the fight over what is called "unallotment."

Pawlenty: We have dramatically changed the spending in Minnesota. From 1960, the year I was born, to the year I became governor, the average increase in Minnesota's general fund budget was 21 percent every two years. Now we have that down to about 1.7 percent per year on average, over my time as governor. And we have now cut spending for the first time, in real terms, in the 150 year history of my state. So I'm proud of that. We have dramatically changed the government spending patterns of my state. But it didn't come easy. We've had special sessions. We've had government shutdowns. We've had lawsuits.

I used my unallotment powers at an unprecedented level. That's the authority the governor has under certain circumstances to cut spending himself or herself. I used that to remove $3 billion out of the budget last year -- I got sued over that, by the way. And I've also used the unallotment authority on numerous other occasions while I've been governor. So that's been a helpful tool.

As we've tried to improve public employee pensions and benefits and pay, we've had strikes and major confrontations with our unions, and many other things. That just gives you a flavor for how it got done. I wish I could tell you it all got done on a cheery bipartisan note but the truth of the matter is, we fought hard, really hard, for its accomplishments.

RCP: Right now, Minnesota is delaying payments to schools and some tax refunds and establishing a significant line of credit to cover possible shortfalls. Do you think next year the state will be able to avoid raising taxes?

Pawlenty: Absolutely. Every two-year budget since I've been governor has been balanced and this one will be as well. We do have cash flow issues like most institutions. So on any given day or week our revenues may be up or down. But we will end this two-year budget cycle, according to our current projections, in the black. We will have actually a surplus.

As for deferring payments to schools, I think that's better than cutting them outright. We've tried to say K-12 schools are going to be a priority. So we've tried to keep their funding neutral or level. In order to make that work, we've had to defer some of the payments. The school districts have squawked a little bit about it but, frankly and bluntly, I just tell them "Hey, it's better than getting cut flat out. And if you keep complaining about it, my proposal would be just to cut you flat out." So I think they'd prefer to have their payments deferred instead of cut.

RCP: How helpful were federal stimulus dollars in balancing the state budget?

Pawlenty: Well, Minnesota, like I think every other state, took stimulus dollars. In Minnesota's case though, it's important to point out that according to the Tax Foundation, we are the fifth largest payer to the federal government in the country. For every dollar Minnesota sends to Washington, D.C., well only get 73 cents back. So Minnesota pays in more than it gets back and is a huge subsidizer of the federal government.

We used the stimulus dollars, as every other state did, but it really just delays the ultimate day of reckoning. The underlying problems in the economy, the underlying problems in most state budgets, can't be resolved through stimulus dollars. And so I have spoken out publicly against the stimulus bill -- both in the past and future stimulus -- as it relates to bailing out state governments. I don't think that's the answer.

RCP: As governor you refused to touch funding for the National Guard, veterans programs, public safety, and, as you said, education, but "cut almost everything else." What federal programs should be spared from cuts?

Pawlenty: We did priority-based budgeting. I think the federal government should do the same. And in this time of heightened concern about national security and terrorism, I think one area of the budged that has to get priority treatment is defense and national security and homeland-security related expenditures. That doesn't mean some of the programs in there can't be changed or improved or modified or modernized. But overall I think we need to maintain and potentially increase our commitment in those areas.

RCP: What federal programs should be eliminated? Should Obamacare be repealed?

Pawlenty: I strongly support the repeal of Obamacare. I think it's one of the most misguided pieces of legislation in the modern history of the country. I think it reflects bait-and-switch marketing by the Obama administration. They said that the healthcare system was broken, and we all agree with that. But the main concern for most Americans is that it's not as affordable as it should be.

Instead of doing things to contain costs, all President Obama and the Democrat-controlled Congress did is expand coverage and access to a broken system. They didn't fix the fundamental problem, which is containing and slowing down costs. In the meantime, they've create a 1940s style, one-size-fits-all, top-down, command-and-control, bureaucratic, government-employee-run healthcare system that is going to cost more, not less. It's going to be a huge drag on the government's finances. And it's going to not work. I think it's also philosophically in the wrong direction.

So I do support the repeal of Obamacare. That's a long-winded way of saying that. If you look at the things the government should get out of, there's many, many examples, but let me give you a leading one. One of the main things that caused the financial calamity we just experienced was the reckless behavior of Fannie and Freddie. The new financial reform legislation that just went through doesn't touch them at all. I think they should be privatized. They should be spun out and become private entities. I don't think the government should be running, managing, and subsidizing them.

RCP: You say that Social Security, Medicare, and other entitlements "are going to have to be changed." How should they be changed?

Pawlenty: In a number of ways. In the case of Medicaid, which provides healthcare for the poor, the program should be block granted to the states. I think the federal government should cap its spending commitment to that program at a level it can reasonably afford and then block grant the program to the states, ask them to use it generally to provide healthcare to the poor but allow the states great flexibility in how they want to do it in a way that works best for their states. Let them innovate, let them experiment, let them try market solutions rather than this one-size-fits-all Washington, D.C., approach.

On Medicare, we need to switch from the current system, which is paying for volumes of procedures performed, to paying for better healthcare outcomes. We should offer incentives for healthcare providers to actually improve the health of people and turn it into a performance pay system, particularly as it relates to the chronic care conditions like cancer and diabetes and obesity and heart disease and others that account for most of the medical expenditures in the system.

On Social Security, I do support giving new entrants into the system the ability to have their own investment choices, private options in their Social Security plan--

RCP: Do you support means testing?

Pawlenty: One of the things I've been proposing is, let's means test the COLA going forward. We should means test the cost of living adjustment so that if you are a high wage, higher income person, you would get a smaller cost of living increase in your Social Security than those who are medium or middle income or low income. If you make a change like that, it could take care of as much as 25 percent or a third of the total unfunded liability of the program. Those are the kinds of reforms that we're going to need to talk about. Entitlement changes have to be on the table. They are a huge part of the spending driver and the deficit driver and the debt driver going forward, and they're going to have to be reformed.

RCP: What did Minnesota do under you to deal with spiraling medical costs?

Pawlenty: We've done a number of things that are market-based reforms, starting with this: Minnesota has one of the highest percentage uses of health savings accounts in the country. They bring significant cost savings. Two, in our state employee healthcare pool, I have implemented a system that incentivizes the employees to go to more efficient, more effective providers. They pay more that go to more expensive providers that aren't as effective and they pay less out pocket if they go to a place that's more efficient and more effective.

That has resulted in phenomenal cost containment results. The premium increases in that program in three of the last five years have been zero percent and two of the other years have been well below market. That has dramatically slowed down costs and resulted in people having financial incentives, having some skin in the game. And I've had to just flat out reduce spending and change eligibility in a number of publicly subsidized healthcare programs to help contain costs as well.

RCP: What do you make of the report by Minnesota Majority that felonious voting may have put Al Franken over the top against Norm Coleman?

Pawlenty: It raises extremely serious concerns. If these [results] are proven out, it would reveal a terrible development. As you know, that election was decided by just a few hundred votes, and if there were that number or more improper ballots cast because people were felons and should not have been voting, it would cast a very tragic light over those election results and that election.

RCP: Can you explain how and why your thinking on some environmental issues has changed while in office?

Pawlenty: Climate change is something that we looked at some years ago. I've come to the conclusion that we should all do what we can to reduce pollution but that we need to do that in a way that is not going to wreck the economy, that is not hamfisted, that is based on good science. When it comes to climate change we have to recognize the climate is always changing. It's a dynamic situation and we have to differentiate between what is man made vs. what's caused by natural causes and natural climatic cycles.

I just don't think that cap-and-trade is the way to go. I have written a letter to Congress opposing their cap-and-trade bill. It is something that we looked at in Minnesota, something we studied. But I have come to the conclusion that it is wrong for the country the way that Congress has proposed it, and in general it's a bad idea.

RCP: Indiana Governor Mitch Daniels has called for a "truce" on social issues such as abortion for the next few years that would allow Americans who agree on fiscal but not social issues to work together to fix the nation's financial problems. Do you support that?

Pawlenty: I'm not sure what Mitch had in mind there but there's a whole coalition of people and interests and issues that comprise the conservative movement and the conservative perspective. I'm a fiscal conservative as well as a social conservative, so I don't think it's an either/or. I think it's both. And right now the economy is a pressing issue for the nation, and we're all primarily focused on that and jobs and the like, but that's not to say there isn't space to discuss other issues.

RCP: You're not running for reelection, so what's next for you?

Pawlenty: I'm the founder of the Freedom First PAC, which is designed to help other candidates in the 2010 election. That's going well. I'm trying to finish up my job as governor of the state of Minnesota, so that requires some time and attention also. I'm the vice chairman of the Republican Governors Association, and we're trying to help get Republican governors elected--

RCP: What do you think of the prospects for that?

Pawlenty: Really good. I don't want to take anything for granted because there's still a lot of time between now and November. But if the elections were held today, the Republican governors would pick up another six or maybe as many as ten or more governorships for Republicans in the country.

RCP: When are you going to make a decision about running for president?

Pawlenty: That's a decision I'll make sometime early next year.

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