The most interesting aspect of the release of Tuesday’s budget forecast — yes, we’re still in the hole, but it’s not so deep as it was — is the vastly different views held by Gov. Tim Pawlenty and the state’s longtime economist, Tom Stinson, on the effectiveness of federal stimulus programs.
In recent months, Pawlenty, perceived as a presidential aspirant, has been buzzing around the country, attacking almost everything the Obama administration has done to attempt to get the economy moving again.
While the governor has been in attack mode, Stinson has been nodding his head in approval over what Washington has done. Even Pawlenty’s commissioner of the Office of Budget and Management, Tom Hanson, seems to think that the feds’ stimulus money has had a positive impact in putting signs of life in Minnesota’s economy.
The role of stimulus funds first was raised with Stinson at a Tuesday news conference announcing the state’s latest economic forecast, which shows a deficit of $994 million, rather than the earlier $1.2 billion shortfall.
Economic signs improving
Although the improvement was small, Stinson noted that economic signs now are far better than those seen last summer.
Federal stimulus “spending has had a big impact on turning the economy around,” he said.
Simple and straightforward. The only debate over the importance of the stimulus programs, he said, centers on which portions were most effective, and that’s a debate that will rage on for years.
But there was more straight talk from the man who has served governors dating to Rudy Perpich, a job Stinson holds, by the way, always at the pleasure of those governors.
“Without federal action,”he went on to say, “we’d be losing jobs big time. The recession would have been extended for a year, at least.”
These viewpoints would seem to put Stinson as far from Pawlenty as you can get on any economic measuring stick.
So, Stinson was asked, do you and the governor ever sit down over a cup of coffee and just talk about economics?
“I don’t drink coffee,” said Stinson.
It was at about this time that Hanson, a Pawlenty appointee, did sort of a hip check on Stinson, edging him away from the microphone.
“Dr. Stinson speaks his mind,” Hanson said. But he wanted to make sure that people understand that Pawlenty and Stinson have long, friendly conversations about economics.
But, of course, this put Hanson at center stage. So reporters asked him about whether the federal stimulus money that Pawlenty so often attacks but eagerly accepts has been helpful to Minnesota.
‘Breathing room’ for budget
“We look at the money we have received as giving us breathing room,” Hanson said.
In fact, DFLers note, that even in the governor’s revised budget, needed to erase the current shortfall, there is an expectation of the state receiving another $400 million from the feds.
Stinson eventually got back to the microphone and was asked about the deeper economic meaning of such programs as the federal cash-for-appliances program, which was launched Monday and led to overloaded phone lines and website slowdowns as eager Minnesotans tried to grab a piece of a $300 million program.
The popularity, Stinson said, proves “Minnesotans and U.S. residents look for a good deal.”
What’s not clear, he added, is if the program will hurt appliance sales down the line.
But then he added that the cash-for-clunkers program the feds ran a year ago was hugely successful and that long-term “auto sales held up better than expected.”
This assessment of cash for clunkers was again directly at odds with the views of Pawlenty, who has ridiculed the program on the campaign trail.
Stinson also seems to disagree with his boss on the importance of getting a bonding bill completed quickly. Pawlenty vetoed the DFL’s $1 billion bonding bill, and the two sides apparently have not had meaningful discussions on reaching agreement on a replacement bill.
DFLers have said it’s important to move quickly on a bonding bill to fund shovel-ready projects before the fast-approaching construction season.
“We’ve lost 25,000 construction jobs,” Stinson said. “The sooner we get them back to work, the sooner they start purchasing things and paying sales tax and paying income tax.”
Again, Hanson stepped in.
“He’s the soon-to-be Nobel Prize winner,” Hanson said of Stinson. “The sooner you bond, the better it is, BUT . . .”
Hanson went on to defend the governor’s veto, saying that context of the overall budget and project priorities are important, too.
So what does Pawlenty think of the state economist who doesn’t seem to agree with the sorts of things potential candidate Pawlenty is saying?
“I had coffee with him this morning,” said Pawlenty at his news conference regarding the budget forecast. “He’s well regarded in Minnesota and beyond.”
Pawlenty’s take on the stimulus
But governor, what of your rather strong differences of opinion on the effectiveness of the stimulus programs?
“My critique of stimulus spending is that it should have been focused differently,” said Pawlenty, sounding just a little defensive. “. . . I’ve said many times that it should have been focused much tighter on infrastructure . . . roads and bridges.”
The no-new-taxes governor was quick to add that the best stimulus of all would have been a cut in taxes.
“A bigger bang for the buck,” said Pawlenty of a tax cut that he believes people would have pushed into the collapsing economy.
He suggested it was foolish of reporters to think there was any real difference of opinion between him and Stinson. You only need to “expand your horizons” to see how he and Stinson agree on the big picture, the governor said.
So, what of cash for clunkers, a favorite target of Pawlenty early in his national campaigning?
Apparently, no amount of horizon expansion brings the governor and the economist together on that program.
“We can get you reams of data” on how that program was a dismal failure, Pawlenty said. He argued that most of the people who bought cars during the cash-for-clunker program “would have bought cars anyhow.”
He noted, too, that cash for clunkers had a negative economic impact on junkyards and charities.
How about all of those federal stimulus dollars that have been used to balance Minnesota’s budget?
Without enthusiasm, the governor replied, “Temporarily, it’s helped Minnesota’s budget numbers.”
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.