Republican presidential hopeful Tim Pawlenty on Tuesday called for big cuts in business and personal income taxes, along with sweeping changes to federal regulations.
Choosing President Obama's political home turf of Chicago to introduce his economic plan, the former Minnesota governor said the nation can return to robust economic growth through a combination of tax and spending cuts and sweeping regulatory overhauls.
In laying out his plan in a speech at the University of Chicago, Pawlenty referred to "President Obama's big government" which he said was discouraging economic growth.
"The president wrongly thought the stimulus, the bailouts and the takeovers were the solution," Pawlenty said. "He says they worked. They did not. The president is satisfied with a second-rate American economy produced by his third-rate policies. I'm not."
Under Pawlenty's across-the-board tax cuts, businesses would see their rate cut from 35 percent to 15 percent. Individuals would pay either nothing, or one of two flat rates: 10 percent for those earning up to $50,000 or couples earning up to $100,000; and 25 percent for income above that.
"It would represent a one-third cut in the bottom rate and it would allow younger, middle- and lower-income families to save and build wealth," Pawlenty said. "It would represent a 28 percent cut in the top rate and it would spur investment and job creation."
Republicans have long called for personal and business tax cuts. They argue that the more money people and businesses keep, the more they will invest and spend.
But Roberton Williams, a senior fellow at the non-partisan Tax Policy Center, said Pawlenty's plan lacks information about the spending cuts he would make to offer lower tax rates. Without details on what he would do with current tax credits, exemptions and deductions, it's difficult to analyze Pawlenty's plan, Williams said.
"If you lower the rates on everyone else without changing the tax base on which they're being charged, then you're going to lose so much revenue that you'll put yourself in a really much bigger fiscal hole than we are today," Williams said.
He wonders if Pawlenty would cut popular exemptions from the federal tax code, such as the mortgage interest deduction or the child tax credit.
The Pawlenty campaign did not respond to an MPR News request for those specifics.
Williams also said it's clear that well-off Americans would see a bigger tax cut under Pawlenty's plan than the middle class would.
"If you cut the top tax rates to 25 percent the odds are the winners would be the wealthy who will see their top rate dropping from the current 35 percent to 25 percent and not the middle class who will be taxed at 10 percent even though that's a lower rate than they're seeing today."
In addition to the tax cuts, Pawlenty proposes applying what he called "The Google Test," to government. He said if an online search can find a private company doing what any government agency is doing, then the "government probably doesn't need to be doing it."
He cited Amtrak and the U.S. Postal Service as examples.
Pawlenty also called for Congress to grant the president authority to freeze spending at current levels. He seeks an end to all federal regulations, unless Congress votes specifically to keep a regulation in place.
Washington University Political Science Professor Steve Smith said Pawlenty is trying to impress core Republican voters with his plan. Smith said Pawlenty also aims to get his name in the news, because former Massachusetts Gov. Mitt Romney has been dominating the headlines since he announced his campaign last week.
"Pawlenty really needs to break through," Smith said. "I see today's speech as an effort on the part of Pawlenty to demonstrate that he has the strongest commitment to Republican principles and that he has the most detailed plan when it comes to things like taxation, which continues to show up in the polls as number one or number two among Republicans as the most important problem. ''
The head of the Democratic National Committee, U.S. Rep. Debbie Wasserman Schultz of Florida, called Pawlenty's plan "a prescription for economic disaster that would fall squarely on the backs of seniors and working families.
Wasserman Schultz said "no one should be surprised that Pawlenty, who left the state of Minnesota with a massive budget deficit, is now proposing to explode the deficit at the federal level."