Last week, Tim Pawlenty unveiled a plan to overhaul the tax code that would make Paul Ryan wince. But as radical as his proposal is, it could easily become the baseline for what it takes to pass muster in the GOP presidential primary. And that would carry enormous consequences for the general election and beyond.
We’ll get a first glimpse of how Pawlenty’s GOP rivals react to his proposal at tonight’s debate. Do they embrace the underlying principles of the plan so that Pawlenty doesn’t outflank them on the right? Or do they try to one up him with even more dramatic overhauls of the tax code?
Pawlenty proposes to reduce the top individual income tax rate from 35 percent to 25 percent, cut the top corporate rate from 25 percent to 15 percent, and allow pass-through corporations to pay taxes at the corporate rate. He also wants to completely eliminate capital gains taxes, taxes on dividends and interest, and the estate tax.
Altogether, according to the Tax Policy Center, it would cost the Treasury over $11 trillion over the course of a decade — most of which would benefit the wealthiest Americans. It’s a recipe for either a catastrophic budget crisis, or a fundamental dismantling of the public sector’s role in American life, or both.
No doubt the leading conservatives on stage Monday evening — Rep. Michele Bachmann (R-MN), Herman Cain, etc. — will try to match or surpass Pawlenty’s mark. The question is whether, as time goes on, the entire field will have to genuflect to the Pawlenty plan. If so, this will turn into a defining issue during the general election campaign — and, if Obama is defeated, well beyond then.
There’s recent precedent for this dynamic. Early in the 2008 Democratic presidential primary, John Edwards laid down policy markers early, and thus drove the debate among the leading candidates, particularly on health care reform. Universal health care became a major litmus test for all the top contenders, and eons later, the basic framework they all adopted turned into “ObamaCare.”
This stuff has staying power. So watch tonight to see if Mitt Romney, Newt Gingrich, and the rest all bless the Pawlenty plan.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at email@example.com.