Gov. Tim Pawlenty’s favorite statistic is technically accurate but exaggerated and so out-of-context as to be misleading.
As Pawlenty has taken his political ambitions national, he has developed a shorthand summary of his record in holding down government spending in Minnesota. It goes like this:
From 1960 to 2002, under 10 previous Minnesota governors of three different parties including his own, general fund spending in Minnesota had grown by an average of 21 percent per biennium. Under Pawlenty, state general fund spending has grown by just 2 percent a year.
Pawlenty gives a version of the 21-to-2 boast on many occasions. It has been adopted by his admirers, as in this version from the Wall Street Journal, which called it Pawlenty’s “single favorite statistic” and opines that the number gives Pawlenty “a stark narrative of fiscal restraint” that will be well-received by Republicans searching for a 2012 presidential nominee.
Here’s a workup by Pawlenty’s budget department of the numbers to back up the claim.
PoliGraph, the new joint political fact-checking project of MPR and the Humphrey Institute, turned its microscope on a version of the statistic, as Pawlenty stated it in a recent “Mid-Day” interview with Gary Eichten. PoliGraph deemed the numbers to be “accurate.”
It’s hard to know how tough to be in the fact-checking game, but — based partly on the misleading way Pawlenty generally cites the number, but moreso on the way it is taken out of context — I would call that a too-generous review.
Here are some of the problems with Pawlenty’s claim:
Why compare a one-year Pawlenty average to a two-year average for his predecessors?
Pawlenty routinely compares his average spending growth for one-year to a biennium figure for his 10 predecessors. Here’s the way he put it on MPR:
“From 1960 until 2002, the average two-year spending increase for the state in the general fund was 21 percent. We brought that down during my time to about 2 percent a year.”
I’ve heard him cite the statistic several times, and I never picked up on this until PoliGraph did. They said it “inflated” the extent to which his spending growth rate was less than his predecessors.
Yeah, by 100 percent.
This can’t be an accident. It’s an exaggeration and misleading. I asked Pawlenty’s able spokester Brian McClung why does it. He replied:
“Whether you look at it as 21.1% per biennium prior to Governor Pawlenty’s time in office and 3.9% per biennium during his time in office or 10.55% annually prior and 1.95% annually during, the point remains the same — for more than 40 years Minnesota state government was growing at a rate that rapidly outpaced the growth in the private sector or in people’s paychecks. Governor Pawlenty brought some much needed fiscal discipline to the budget after decades of runaway spending.”
Well that’s true, so far as it goes. But if you compare apples to apples even on so basic a measure as how many years of spending, Pawlenty’s favorite 21-2 ratio is suddenly 21-4. That’s still still a big gap, as McClung noted. But the issue here is one of straightforwardness. Pawlenty and his friends, for starters, need to drop the 21-2.
Inflation, population growth
During periods of high inflation, government dollars buy less in services. As a state’s population grows, just to maintain the same level of services per capita will cost more. I’m no economist, nor do I play one on TV, but I trust these are non-controversial assertions.
In comparing the Pawlenty fiscal record with those of his predecessors, it would be reasonable to take these into account. During the eight-year Pawlenty era, Minnesota probably spent more, and I suspect much more, on National Guardsmen and benefits for National Guard veterans than the United States spent in its eight-year war for independence from George III — in unadjusted dollars. But this is not a fair reflection of Pawlenty’s fiscal management of those functions.
The entire Pawlenty era has been a period of relatively low inflation, especially compared with those of his 10 predecessors, which would include two big inflation spikes, during the Ford and Carter presidencies when inflation topped 10 percent
We won’t know for sure until the 2010 Census numbers are released, but I believe Minnesota’s population growth rate was also significantly higher in the 1960-2000 than it has been in the 20-aughts. If the Pawlenty comparison table had relied on inflation and population adjusted figures, I suspect he would still look good (on the “fiscal restraint” scale), but not nearly as good as he looked by deciding not to adjust. I asked McClung why the guv didn’t adjust. He replied:
“The straightforward look at general fund spending since 1960 is what was prepared by MMB [Minnesota Management and Budget]. You are certainly welcome to do your own analysis adjusting for inflation or other factors if you wish.”
I don’t feel competent to perform the adjustments, although I suspect MMB could do it in about five minutes. I do question which way of expressing the numbers is more straightforward. There’s a common term for statistics that measure growth in inflation-adjusted dollars. It’s called “real growth.” If you ignore inflation, your numbers are less real, less honest. I can’t see into anyone’s motives with confidence, but the problem with failing to make such basic adjustments — when making them would reduce the spending restraint gap between Pawlenty and his predecessors — is that it looks like you did it on purpose.
What government does
This section isn’t really about the accuracy nor even the deeper honesty of Pawlenty’s claim.
From 1960 through 2002, Minnesota government didn’t just spend more, it also did more. My esteemed former Strib colleague Dane Smith compiled a good list of some of the things that the state does that it didn’t used to do.
On a philosophical or ideological basis, a claim like Pawlenty’s assumes less government is better because it equates to lower taxes, but seldom talks honestly about the real tradeoffs, which includes less service.
One of the state spending functions that Pawlenty claims to hold sacred is K-12 education funding. During the 40 years that Pawlenty’s favorite statistic implicitly trashes, the state also got much more involved in education, which used to rely more on local property taxes. Using the state power to redistribute wealth from rich taxpayers to poor school districts was a big part of what was called the Minnesota Miracle.
p.s. Pawlenty’s calculations for the current biennium also don’t count as spending the almost $2 billion that he and the Legislature agreed to “shift” into the next biennium. The money is being spent in fiscal 2011, and the state is theoretically good for it (although I personally don’t see how they will pay it back any time soon), but it isn’t being counted as 2011 spending. The use of such accounting tricks is also a blot on Pawlenty’s self-scorecard for recent spending.
But here’s the big problem
But here’s the biggest problem with Pawlenty’s self-serving 50-year lookback. The Pawlenty Era contains within it the worst economic crash since the Great Depression of the ’30s. I’ll assume, without bothering McClung for a comment on it, that Pawlenty isn’t interested in taking any credit for the collapse of the housing and financial markets (although one could certainly argue that the larger Republican argument about getting government out of the way and letting the free market be free had something to do with it).
Still, the economic meltdown is the single biggest unspoken factor in Pawlenty’s favorite statistic.
Using the numbers from Pawlenty’s own chart, state spending dropped just between fiscal years 2008 and 2009 by more than 12 percent. The negative growth of the last three years is the real reason for Pawlenty’s “average” annual spending growth rate of 1.9 percent.
To a significant degree, state spending shrank because state revenue shrank because the whole U.S. economy shrank.
According to a just released annual study by the non-partisan National Association of State Budget Officers (NASBO, it’s an arm of the National Governors’ Association), states experienced an overall 11.8 decline in combined sales, personal income and corporate income-tax collections between 2008 and 2010. Those taxes make up approximately 80 percent of general fund revenue for all states combined.
Two years of negative growth is unprecedented in the 40 years NASBO has been tracking, according to Brian Sigritz, director of NASBO’s State Fiscal Studies.
I did offer McClung a chance to comment on the notion that Pawlenty’s favorite fact seems to attribute the drop in recent state spending a bit too much to his policies as opposed to national economic conditions and taking a great deal of “credit” that belongs to the recession. On behalf of the governor, McClung replied:
“While many states are cutting their budgets as they deal with decreased revenue, the previous tradition in Minnesota had been to increase taxes and increase government spending, even during economic downturns. It is notable that the 9.3 percent cut in general fund spending is the first time spending has gone down in the history of the state from one biennium to the next. Of course, this is certainly not the first time the state has been through an economic downturn. But past governors chose to raise taxes and keep spending on an unsustainable path. For example, Governor Arne Carlson faced a $2 billion deficit in the early 1990s, but he raised the sales tax and kept the budget growing, rather than cutting spending.”
I suppose this gets to the essence of the issue. I don’t doubt that state spending would be higher this biennium if a DFLer had been governor. The DFL-controlled majority did try to raise taxes so it wouldn’t have to cut as much spending. Pawlenty vetoed those bills.
There’s really no basis for assuming, as McClung seems to, that if they had their way, DFLers would have raised taxes so much that no spending cuts would have been needed. According to NASBO’s Sigritz, 37 states, including many with Democratic governors, reduced overall spending during the recession.
If you think about it, this gets to the problem with the basic methodology that produces the Pawlenty factoid. I suspect that every governor who’s been in office since 2006 — by making the the same decision Pawlenty made to ignore the recessionary context of the past few years — could also demonstrate that he or she is the most fiscally conservative governor of the past 50 years.
But we were talking about the question of whether, without Pawlenty there to stop them, the Minnesota legislators would have just kept raising taxes and refused to make any spending cuts.
At the end of the 2009 session, having already agreed to significant spending cuts and faced with a $2.7 billion gap, the Minnesota Legislature passed a $900 million income-tax hike on the highest-income Minnesotans.
So we have what I’ll assume to be an honest ideological difference about whether, in those circumstances, it’s better to address a deficit with all cuts or with a combination of cuts and new taxes, but not a proposal to balance entirely with higher taxes except in the minds of conservatives when they try to channel their inner liberals.
I think I may be almost finished
I’ve done some fact-checking/truth squadding in my former life at the Strib. It’s a valuable service, but it can be hard, as in the instant case, to figure out what level of truthfulness passes the test. PoliGraph found that Pawlenty’s numbers on 50 years of annual and biennial spending patterns appear to be in order.
But we also know how easy it is to shade and mislead, even using accurate numbers. Pawlenty’s basic point — that his track record shows that he believes in holding the line against new spending ideas and new taxes — is basically correct. But the numbers he used to show that he is more than 10 times less spending than his combined predecessors reminds me of that excellent quote from journalist Gregg Easterbrook that if you torture numbers long enough, they’ll confess to anything.