Instant analysis is always dangerous, and moreso when it seeks to be in historical context. But as we begin to focus on the transition from Tim Pawlenty to Mark Dayton (Jan. 3, just as MinnPost returns from vacation), I intrepidly (translation: foolishly) called up a historian of Minnesota, a scholar who is studying the history of the Minnesota economy and a strong anti-tax advocate with legislative experience and asked: From what we know now, how will the eight-year tenure of Gov. Tim Pawlenty fit into the longer story of Minnesota?
All three surprised me, and I must say none of the surprises were flattering to the Pawlenty record.
Hy Berman, the usually avuncular U of M emeritus professor whom every journalist turns to with Minnesota history questions, surprised me by how angry he seemed over Pawlenty. It’s just not the tone you expect from Professor Berman. In answer to the simple question of how Minnesota history will view Pawlenty, Berman said:
“Very simply, one of the few, if not the only governor that got us into the biggest deficit that the state has ever known by refusing to follow what most people call fiscal responsibility, which is to raise revenue when needed.”
It turns out to be more complicated than that. More from Berman later.
Louis Johnston, an economist at College of Saint Benedict/St. John’s University in St. Joseph/Collegeville who is writing a book about the evolution of the Minnesota economy since 1850, surprised me with the seeming precision of his judgment that Pawlentyism had not worked, at least not if working was supposed to be about enhancing prosperity for Minnesotans over the past eight years.
In short, Minnesota prosperity lost ground during the Pawlenty years, not just because of the brutal national and global economy since 2007 but overall when measured relative to the other 49 states that had to deal with the same Great Recession. More from Johnson below.
The most surprising to me was former state Rep. Phil Krinkie, now president of the Taxpayers League of Minnesota. Let’s face it, after hearing such negative reviews of Pawlenty from Berman and Johnston, I called Krinkie as an act of journalistic balance, assuming he would offer a glowing review of Pawlenty, with whom he has in common both Republican credentials and the anti-tax religion. But Krinkie, or someone pretending to be Krinkie, damned TPaw with the faintest praise you’ve ever heard. Take a listen to Krinkie’s answer to my overall how-will history view the Pawlenty governorship question:
“I would describe Governor Pawlenty as a caretaker governor. I don’t know of any great highlights. I don’t know of anything that I would categorize as a big accomplishment that has changed the state one way or the other. A good caretaker.”
The view from Pawlentyland
I did try to get Gov. Pawlenty’s spokester into the loop when I started on this piece, but he was too swamped until after the piece was written to send me the document that TPaw’s staff has prepared describing his accomplishments. I did finally receive it and you can read it here.
When I was still reporting, I turned to the “About Tim Pawlenty” section of “Freedom First,” the PAC that Pawlenty used during 2010 as part of his preparations for a presidential run. It says:
“During his two terms as Governor of Minnesota, Tim Pawlenty has used innovative and conservative leadership to balance the state’s budget, cut spending, reform health care and improve schools without raising taxes. Under his leadership, Minnesota has nation-leading health care, the highest school test scores, and a leading economy.”
Back to Berman
Hy Berman was unabashed in his grim review of the Pawlenty years. He has no sympathy for what has become the conventional Republican view that holding the line against tax increases is the number one key to good governance.
He slammed Pawlenty for using bookkeeping tricks (like the school funding “shift”) to make an unbalanced budget look technically balanced. He accused Pawlenty, as DFLers have done for years, of shifting burdens to local governments so their fingerprints, not his, will be on tax increases. “It’s come to the end of the gimmick time,” Berman said. “Now someone has to be responsible for what was done in the past.”
Berman eventually said that, although Pawlenty didn’t start out that way, he evolved into a transformational figure in the history of Minnesota Republicanism.
From Harold Stassen (governor: 1939-1943) to Arne Carlson (1991-99), Minnesota’s Republican governors have been moderates and at times progressives. Stassen came into office after Farmer-Labor governors (Floyd B. Olson and Elmer Benson) had introduced the state income tax to Minnesota (1934).
“Stassen was a transforming Republican” in Minnesota history,” Berman said. “He didn’t try to get rid of the income tax. He accepted aspects of the New Deal. He saw the role of government as a regulator. He set a tone for Minnesota Republicanism that lasted decades.”
Al Quie (1979-83) seemed pretty conservative at the time, compared to what Minnesota was used to, but he was an old-fashioned fiscal conservative who used all the tools — including tax increases — to deal with a serious deficit, Berman said.
Carlson, the last pre-TPaw Repub guv, was also the last of Stassen’s heirs.
Pawlenty was the first of the new breed Republicans to serve as MN Guv.These new-style Republicans are “supercapitalist anarchists” who believe that all government spending is wasteful and whose goal is to have no taxes and no government, Berman said, hyperbolically.
That analysis at least overstates the suddenness of the transition from Carlson to Pawlenty. Carlson, after all, was elected on a fluke in 1990, when the more conservative, strongly pro-business Repub nominee Jon Grunseth was taken down by scandal. In 1994, the Repubs rejected Carlson, their own incumbent guv for endorsement, in favor of the much more conservative Allen Quist. Carlson came back in the primary and then won reelection by a huge margin. But these events of 1990 and 1994 show that the MNGOP party base had moved away from the Stassen tradition long before Pawlenty.
And then don’t forget that Pawlenty had not risen to statewide prominence as a hard-right conservative, but as an eclectic middle-range conservative and a protégé of then-Speaker Steve Sviggum.
In 2002, when Pawlenty barely won the endorsement in his first race for governor, he was considered the more slightly more moderate alternative to the real darling of the surging Republican right, businessman Brian Sullivan.
Even during his first term, Pawlenty flirted with a more nuanced eclectic brand of the new conservatism. He signed the thinly disguised cigarette tax, supported some mass transit (North Star Rail Line), talked about wanting to end homelessness in Minnesota, staked out a serious green agenda, criticized big oil and big pharma.
I made this case to Berman, and he replied: “You’re right. At that time, Pawlenty was considered somewhat to the right of the old progressive Republicans, but not transformational. He turned out to be that.”
The theory is that as TPaw developed presidential ambitions and as he learned from bloody personal experience that national Republicans demand total devotion to the party line, especially on taxes, Pawlenty stifled his inner moderate. If Pawlenty is the transformational figure Berman calls him, it is based on the second term.
Back to Johnston the economic historian
St. John’s Economist Louis Johnston’s analysis starts from the premise that the best gross measure of the overall economy of a state is the state GDP per capita. And the best way to rate the relative prosperity across state lines is to compare each state’s GDP per capita to the national average, since all the states are operating with the same larger national economy.
It turns out — and this was a surprise to me personally, I’ve only lived here since 1977 — that Minnesota hasn’t been an above-average state, prosperity-wise, nearly as long as I had assumed. It was below average for most of its history. During the World War II era, Minnesota’s GDP lagged the national average by about 15 percent, Johnston says. Our Minnesota’s GDP didn’t poke above the national average until the first half of the 1970s. But once it broke through, Minnesota continued to gain relative to the national average.
This is hard to do — to keep rising after you have broken above the average, Johnston said. Of course, the reasons for it are endlessly debatable, and in our conversations, Johnson made several references to the nature of arguments over economic causes and effects. The conventional liberal interpretation of Minnesota’s rise is that it was at least helped along by public sector investments in areas such as education and infrastructure.
At least this much is unarguably true and is a serious problem for the Republican lower-taxes-less-spending religion: Minnesota rose in prosperity, relative to other states, during a period when it was above average in tax burden and in government spending.
At its peak, which was just about the time Pawlenty took office, Minnesota’s GDP per capita was about 10 percent greater than the national average. Minnesota’s GDP grew, relative to the national average, during the tenure of the three governors who preceded Pawlenty: Jobs-Jobs-Jobs-crazed DFLer Rudy Perpich, moderate Republican Arne Carlson and your-choice-of-adjective-here IP Gov. Jesse Ventura.
But — and you’ve seen this coming for the two fat paragraphs preceding this one — while Minnesota remains above the national average, it has lost ground relative to the national average during the Pawlenty years.
Any Pawlenty dislikers reading this are thinking this is a devastating indictment of the whole Pawlenty record. The point of all of the anti-tax, less government-ism is supposed to be to free up the private sector to produce that famous trickle-down effect.
But, without wanting to rain overmuch on the Pawlenty-bashing parade, this is economic cause and effect we’re talking about here. In other words, nothing is finally proven, and certainly not in the kind of time frame we’re evaluating here. Johnston acknowledges that it will be years or decades before Pawlenty’s impact on the Minnesota economy can be fully analyzed. But the early returns are not good.
Johnston describes the tax-cut-your-way-to-prosperity movement as “faith-based economics.” The general research is pretty clear, he said, that states with lower taxes are not more prosperous than states with higher taxes.
He gave the JobZ program as an example of a Pawlenty stimulus initiative that wasted tax incentives on jobs that would have stayed in Minnesota without the incentives. That money, he said, would’ve been better spent on education, health care and other areas that economists consider “human capital” investments.
Back to Krinkie
Phil Krinkie doesn’t agree with Johnston’s conclusions about the importance of keeping taxes down and he praises Pawlenty, but surprisingly faintly, for his efforts in avoiding tax increases. But, to my surprise, he said that the constant effort of anti-tax conservatives to makes tax cuts the key to efforts to attract business to the state were “pure political rhetoric.”
In his experience, he said, the tax climate is one of many factors in a company’s decision of where to build or expand. He broke into a side anecdote about a CEO who decided to expand in Minnesota. In a candid moment, the CEO told Krinkie that the biggest factor in his decision was that his kids were in high school and he didn’t want to move the family.
Unbidden by me, Krinkie launched into praise of a governor like Rudy Perpich, whom he described as a tireless promoter of Minnesota who would go anywhere and do anything to bring favorable attention to Minnesota and especially to bring jobs. He mentioned the Gorbachev visit, the launching of the Mall of America. He didn’t come up with anything similar to say about Pawlenty.
“The state faced a big shortfall. By challenging and standing up, [Pawlenty] was able to achieve a balanced budget without raising taxes,” Krinkie said. Then he caught himself in the overstatement and went over the various ways that state taxes had increased during the Pawlenty era, although only Pawlenty signed into law only one of them — the sales tax on cigarettes that Pawlenty famously tried to categorize as a “health impact fee” in order to mask the fact that he had signed a tax hike.
The other Pawlenty-era state tax increases were the “Legacy Amendment,” a sales tax hike approved directly by voters for environmental and arts spendings and the famous Legislative override of Pawlenty’s veto on a sales tax hike for transportation projects. By that point, in the second term, Pawlenty was deep into anti-taxism that he vetoed the transportation tax bill even though it was supported by business lobby, (easily the most important Republican interest group). And the few Republican legislators who made the override possible would probably never have done so without business interests arguing that the need for transportation infrastructure improvements was so clear.
When I said that somehow or other, Pawlenty had managed to get Minnesota out of its long-standing membership in the 10 highest tax states club, Krinkie said: “No he didn’t.” The big tax cuts that brought about Minnesota’s decline on those rankings were signed by Gov. Ventura.
I read Krinkie the short summary, listed in full above as “the view from Pawlentyland,” of Pawlenty’s record as governor, featuring the fact that he had the balanced budget each biennium.
Krinkie said that’s what he means about political rhetoric — a governor claiming as an accomplishment that he balanced the budget when he is required by the state Constitution to balance the budget.
Likewise, Krinkie said, with Pawlenty’s claim that he left Minnesota among the national leaders in health care, education and prosperity. Seems like he should have mentioned Minnesota had all those things when Pawlenty took over.