Former Minnesota Governor and presidential candidate Tim Pawlenty tells Newsmax he agrees with warnings that if the nation goes over the fiscal cliff for a significant length of time, the country is sure to go back into a recession in 2013.
The Republican lawmaker, now president and CEO of the Financial Services Roundtable, also says what the financial markets want most right now is certainty and stability.
Pawlenty served as Minnesota’s governor from 2003 to 2011, after five terms in the Minnesota House of Representatives. He officially announced his candidacy for the Republican presidential nomination in May 2011, but dropped out in August.
His Financial Services Roundtable is comprised of banks, asset management companies, and other financial services firms.
In an exclusive interview with Newsmax TV, Pawlenty was asked what he sees as the most pressing challenges facing the financial industry in 2013 and beyond.
“For the financial industry and markets more broadly, they want certainty and, hopefully, good certainty,” he says.
“So this overhang of the fiscal cliff and the uncertainty regarding the tax policy and the financial stability of the United States budgeting and deficit and debt issues going forward loom large in the near term.
“And then longer term there are structural issues around — making sure that we have laws and regulations that are protective of consumers and other aspects of the role that financial institutions play but not going so far in that regard that you suffocate lending and the financial activities that people need to conduct their daily lives and to start and grow businesses.”
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As to whether he believes Washington is going to reach a deal to avert the fiscal cliff, Pawlenty states: “I sure hope so. I was pessimistic early on and then I was little optimistic last week when the president and Speaker Boehner started to move closer together and now there are some signs that perhaps they’re not as close as we had all hoped.
“I [compare] it to a plane. If you’re going to fly over the fiscal cliff, the plane has to have two wings. On the revenue side, there’s lots of different ways to have revenues and there’s been a lot of public discussion, specific discussion, on that side of the plane.
“But on the other side of the wing, the spending side, it’s been pretty vague, pretty modest, and the development work on the structural spending changes needed to get a deal done don’t seem to be as ready as on the other side of the plane.
“We said early on in the Financial Services Roundtable that if you can’t get it done by the deadline and you need to extend the deadline a little bit to buy yourself some more time, do that because even though you don’t want to kick the can down the road, that’s better than going into the cliff.
“Keep in mind the non-partisan Congressional Budget Office said if the cliff occurs for any significant length of time, we’re going to have unemployment back over nine percent and we’ll go back into a recession in 2013. Those are consequences we all want to avoid.”
Delving into the specifics of a possible deal in Washington, Pawlenty observes: “They score these packages or deals or legislation over 10 years so people tend to measure what’s going to happen and the impact over the next 10 years. If you look at the possibility of a deal now, most analysts and observers of this want to see something minimally that has an impact of reducing the debt by at least $2 trillion. Most people might say that’s not even close to enough; it should be more like $6 trillion or more.
“You look at the effects on the debt over a decade and it has to be not just a little effect, but something that’s meaningful. As to the week-to-week or month-to-month jockeying that occurs here in Washington, D.C., most people look at that go, tell me when it’s over and you’ve got a deal. They don’t pay attention like we do to these hourly back-and-forths.”
But Americans do “know there’s a big problem. They want it solved. They want bipartisanship. They want it to be balanced. That’s the wisdom of the American people speaking clearly and loudly, and I hope the leaders listen.”
Looking ahead at the financial scene, Pawlenty tells Newsmax that clearing up uncertainty with regulations “is really important because if you’re an investor or a financial institution and you’re uncertain what the rules of the road are going to be, you’re probably going to drive more slowly or not go at all down that road.”
He also says the organization he heads would like to revisit the Dodd-Frank financial reform bill “just to make sure some aspects of it are clear and fair. For example, the Volcker Rule, we can all agree that we shouldn’t use depositor money to engage in speculation but defining clearly what speculation means is important. So those are the kinds of thing that have to be clarified.”
As for the cost of complying with regulations, Pawlenty adds: “Of course, all of the lawyers and advocates and people who you have to hire either inside a financial services company or outside add cost to the process. Every time you do that it has to be passed on to somebody. It could be the consumer, the investors or a combination of both.
“Reasonable regulations are needed but they have to be reasonable both in terms of definition and impact, and also not have the paperwork or the bureaucracy surrounding it be so burdensome that it adds too much cost.”
Asked what made Pawlenty take on his new position after leaving politics, he responds: “A number of things. One is this position allows me to maintain a role in public policy which I really enjoy. I enjoy it even as a hobby and to be able to get paid to be involved in public policy is a treat. So that excited me.
“It has an issue cluster that’s connected to businesses and private sector so the intersection of public policy and business coming together was appealing to me. And I get to do it at a leadership level or a CEO level. So those are some of the positive attributes of the job.
“I had a good run at [politics]. I was in it for 21 years. I was in the state legislature and the majority leader for four and governor for eight and was on a local city council before that. I certainly enjoy public policy. I enjoy service. But you can do that in a lot of different ways, a lot of different contexts. It doesn’t have to be just in elective office.
“I’m focused here, now, in my position with the Financial Services Round Table.”
In his exclusive Newsmax interview, Pawlenty also discusses what the Republican Party needs to do in the future, and his take on the “tedious” presidential debates.
Editor's Note: Read more of the Newsmax interview with Tim Pawlenty:
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