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In a speech about a mile from Obama’s Chicago home, Pawlenty said that, if elected, he would slash taxes for businesses and individuals, cut government spending and eliminate burdensome regulations.
He said the goal was to boost US economic growth to an ambitious 5% annual rate - roughly twice that projected by the International Monetary Fund over the next two years and a level not seen since a recovery fuelled by the Reagan-era defence spending boom in 1984.
The former Minnesota governor is viewed by political insiders as a potential front-runner in the race for the Republican presidential nomination to challenge Obama in 2012 despite his underdog status in opinion polls.
Pawlenty blamed Obama for weighing Americans down with “big government and heavy-handed regulations” that he said were stifling entrepreneurs and job growth.
“Regrettably, President Obama is a champion practitioner of class warfare,” Pawlenty told students and professors at the University of Chicago.
“Elected with a call for unity and hope, he has spent three years dividing our nation, fanning the flames of class envy and resentment to deflect attention from his own failures and the economic hardship they have visited on America,” he said.
The economy, job growth and the federal deficit are expected to be the prime domestic issues of next year’s presidential campaign.
Obama is particularly vulnerable on economic growth. A new Washington Post/ABC News poll shows US public disapproval of his performance on the economy at a new high of 59%.
“Let’s start with a big positive goal,” Pawlenty said. “Let’s grow the economy by 5% instead of the anemic 2% envisioned currently.”
Pawlenty, 50, a popular two-term governor from a traditionally Democratic-leaning swing state, attracted national attention by balancing the Minnesota budget without raising taxes.
Yesterday, he pledged to tackle America’s economic and fiscal woes by cutting the business tax rate by more than half, to 15%, and setting individuals rates at 10% for married couples earning up to $100,000 and 25% for higher wage earners.
Congress should grant the president emergency authority to freeze spending and withhold up to 5% of spending until the budget is balanced, Pawlenty said.
He called for a “Google test” for identifying spending cuts, saying the government does not need to provide goods or services that can be found in the private sector by conducting a Google search. He mentioned the US Postal Service, Amtrak, Fannie Mae and Freddie Mac as such government services.
Pawlenty also called for elimination of “all federal regulations” that Congress does not vote specifically to retain, and said he supports a constitutional amendment to balance the budget and a cap on federal spending at about 18% of GDP.
Economists, however, said that while a US growth rate of 5% may be achieved at the height of an economic boom - it reached 7.2% in 1984 and 4.8% in 1999 - it is not sustainable in the long term and likely to spark inflation.
Most put the US long-term growth potential in the 2-3% range.
Harvard economics professor Jeffrey Frankel dismissed Pawlenty’s ideas as a political marketing gimmick.
“It’s something they always say. But when they get in power, it never works because they don’t actually simplify the tax code and they don’t actually eliminate regulations. They do give away lots of money in terms of tax cuts, because that’s politically easy,” he said.