In proclaiming himself as the candidate who is “going to tell the truth,” Tim Pawlenty on Monday laid down a gauntlet to Iowa Republicans. Pawlenty is right.
Many politicians, even ones who trumpet their willingness to make hard choices, dance around hard issues in their campaigns.
They say one thing while campaigning but do other things once in Washington.
Iowans are among the best- educated voters in the country and have a long tradition of clean politics. So it will be interesting to see if caucus attendees respond positively to a candidate who really speaks the truth on hard issues.
Pawlenty needs to realize, however, that by taking this tack he is also challenging himself. Once you proclaim yourself to be the person who is telling the truth, all your opponents and the media are going to go over your positions with a fine-tooth comb, looking for any waffling. And you will be subject to demagoguery from those who think a traditional approach to campaigning still is best.
Pawlenty’s track record isn’t great. A significant fraction of this biennium’s budget deficit is due to his short-term-fix approach to solving the budget deficit in his second term as governor. But people can change.
Let’s take him at his word, however, and judge him on how he fulfills his pledge going forward. Will he not only speak the truth, but the whole truth, on hard issues?
He is honest in recognizing that Social Security benefits must be cut for the program to be sustainable over the long run. And increasing the normal retirement age is one significant benefit cut that will improve the program’s finances.
His second Social Security proposal, means-testing annual cost-of living-adjustment increases in benefits, meets the honesty test. But it has some problems in terms of its costs and benefits as a policy measure. The principal problem is the administrative cost, both to the government and to beneficiaries, of applying an annual means test to the 52 million people who get benefits. This is an enormous task.
Moreover, since there already is a maximum benefit to any person, regardless of income, the savings in outlays will be limited unless the earnings and net-worth ceiling on eligibility for a COLA are very low.
And, depending on the details of its design, such a means test might motivate all sorts of stratagems to somehow book income in one year or another, mimicking all the effort that goes into avoidance of federal income taxes.
So Pawlenty’s Social Security proposals are all right as far as they go. But unless FICA taxes are raised or the retirement age increase large, the two measures he proposes take us only part of the way to long-term financial health.
And he has yet to give us his proposals on reforming Medicare. Given how some other Republicans have hung Paul Ryan out to dry over his suggestion to convert Medicare to a voucher program, coupled with Democrats’ instinctive and instantaneous demagoguery on the subject, it will be interesting to see what Pawlenty dares to propose.
His will to prevent any future bank bailouts may be “true,” but there is much evidence he doesn’t really understand the issue.
George W. Bush did not believe in bank bailouts either, but when his Treasury secretary came to him, amid stock markets crashing, financial institutions failing and credit markets seizing up, to explain that bailouts were needed, Bush somewhat dazedly went along with it. And so would any other president, Republican or Democrat, in those circumstances. By late 2008, bailouts were the least bad among extremely adverse outcomes.
If you don’t want to ever bail out any institution that is so large its failure might bring financial markets to a grinding halt, you need to be willing to break up such mega-firms so as to remove the danger. Leave them big and the day eventually will come when a president will face the choice between a financial abyss and a bailout.
It is one thing to say that you are willing to take the risk of economic disaster for the principle of no government bailouts. It is quite another to say there is no risk of such disaster.
Pawlenty may be entirely truthful about his belief that one can combine a no-bailouts stance with tolerance of large banks, but if so he is highly naive.
Finally, thus far Pawlenty has ignored the fact that for fiscal year 2012, we are going to borrow 47 cents for every dollar of general fund spending. That is with both Social Security and Medicare revenues and spending set apart.
Fiscal sustainability requires facing hard truths on this side of the budget too.
If we just cut Social Security benefits so that the program’s revenue again camouflages large deficits in general accounts, we will perpetuate the worst mistakes of the past 30 years.
All that aside, he should be lauded for the target he has set for his campaign. Let us all hope Iowa Republicans respond positively and bring about a virtuous circle, where candidates become more honest about specific hard choices because doing so gives them an edge with voters. But based on polls showing the degree to which many Americans cling to fiscal wishful thinking, I am not optimistic.
© 2011 Edward Lotterman
Chanarambie Consulting, Inc.