Pawlenty: The man who wasn’t there

What presidential candidate Tim Pawlenty needs from his last year in the Minnesota governor’s office

Since announcing himself a lame duck last June, Gov. Tim Pawlenty has offered the folks back home an almost daily litany of reminders that his eye is on bigger, more verdant pastures. Working the phones and the national media, schlepping his own bags through airport after airport, Pawlenty has taken a yeoman’s approach to building the framework of a 2012 presidential campaign.

The media in Minnesota and elsewhere still observe the cloying habit of deferring to the governor’s claim that he’s only building his party and examining his future options, but that’s the usual sort of too-polite fiction and everyone knows it. When Senate Majority Leader Larry Pogemiller said as much at a mid-January legislative preview breakfast, House Minority Leader Kurt Zellers protested that Pawlenty was jetting around the country merely for the purpose of “sharing his experience.” At this, the crowd of 200 or so lobbyists and government watchers broke into belly laughs.

And let it be noted that Pawlenty is not just another governor with no national profile and a wild notion about being president. At this early hour, he looks to have a good chance at contending for his party’s 2012 nomination. This flummoxes a lot of people in Minnesota, who have watched Pawlenty for years without seeing any intimation of the big-stage presence or overweening ambition a national campaign needs. But he’s always had the latter in spades, and he’s working on the former. (If you doubt it, spend a little time looking back through Pawlenty’s YouTube videos. He’s become a much better stump speaker in the past year.)

Minnesota Democrats like to tweak Pawlenty for his microscopic national name recognition, but they make too much of it. How well known was the governor of Arkansas at the outset of 1990? Pawlenty’s main advantage is the staggering weakness and disarray of the national Republican field. The putative frontrunner in the 2012 scrum is lantern-jawed rich kid Mitt Romney, a well-scrubbed stiff whose Mormonism casts him as an agent of Satan in the eyes of too many in the GOP evangelical base. Sarah Palin is beloved by this element but scares the bejesus out of the D.C. establishment and much of the country.

That leaves Pawlenty in the class of bubbling-under candidates who stand to benefit if neither Romney nor Palin can overcome those contradictions. And for the moment he’s at the head of that class. It will be a while before we know how much money his leadership PAC, Freedom First, raised in 2009, but he has caught the eye of kingmakers and the national media, where he has shrewdly advanced himself as the party’s alpha attack dog on the Obama administration. Chris Cillizza, the influential Washington Post blogger, has placed Pawlenty as high as second on his periodic ranking of national Republican leaders. And two weeks ago the Telegraph of London called him the 10th most influential American conservative.

To get out of the governor’s office with his skin and his presidential momentum intact, Pawlenty needs two things from the 2010 legislative session and the months following. He has to say no to tax increases one more time, and he has to run out the clock on his term before Minnesota’s jerry-rigged, structurally imbalanced budget blows up. In most years past, this was not a particularly tall order, and in fact it describes what has happened in six of the seven years of Pawlenty’s tenure. (The lone exception was 2005, when the state went through a partial government shutdown and Pawlenty was moved to propose a tax hike on cigarette wholesalers.)

But 2010 is unlike any other year of the Pawlenty era. State revenues remain in the toilet in the wake of the 2008 economic collapse, and this time there is no pool of federal money to put off a reckoning. Minnesota enters the year facing a $1.2 billion shortfall for the remainder of the budget period that ends in June 2011, a cash-flow crisis that may force it to borrow money this year or next just to keep the lights on, and the pending appeal of a lawsuit that could unravel another $2.7 billion in cuts that Pawlenty made by himself last year.

In all of this, the only factor entirely in Pawlenty’s control is the no-new-taxes brand he’s built around himself. And since it is also the foundation of his presidential bio (Republican governor holds the line on taxes - for eight years! - in reputedly liberal state), he’ll cling to it unto his dying breath. Legislative Democrats may talk publicly about getting the governor to agree to new revenue, but they know it won’t happen and that their chance of winning any override votes from the ultra-conservative House GOP caucus is practically nil.

Beyond keeping taxes status quo, Pawlenty has to avoid train wrecks of such a magnitude as to make Minnesota stand out from the pack of U.S. states. Here again, the governor’s luck has so far proved exemplary. Despite years of deferring structural deficits to the future, Pawlenty stands relatively unscathed by virtue of the national economy, which has reduced nearly every state to budgetary chaos.

But there are at least three scenarios that could hand Pawlenty’s opponents a potent cudgel for 2012:

The unallotment lawsuit. Pawlenty’s High Noon move to balance the budget by cutting $2.7 billion on his own has been provisionally upended by a judge’s ruling that he unconstitutionally circumvented the Legislature. If the state Supreme Court affirms that finding, there may be a scramble to undo other Pawlenty cuts through court action. And that could mean the mother of all balance-sheet nightmares for Minnesota’s general fund, with some $3-$4 billion of red ink left to resolve in a two-year budget cycle that’s halfway over by then.

Short-term borrowing. Minnesota Management and Budget (MMB) officials have been warning for a couple of months that the state could have to borrow to keep the general fund’s cash flow in the black at some point in 2010 or 2011. MMB Commissioner Tom Hanson has soft-pedaled the risk of a bond rating downgrade in that event, but he was essentially contradicted by the committee testimony of his own credit markets expert.

The administration clearly feels a sense of urgency about avoiding operating loans; their latest idea invloves a possible one-month delay of school aid payments. If the state’s credit took a hit on Pawlenty’s watch, or while his chair is still warm, it would go a long way toward unwinding his role as the national GOP’s poster boy for jeremiads about the federal budget.

The school shift. Tax stonewalling is Pawlenty’s signature stand, but to appear viable outside the confines of the GOP base, he has to maintain his reputation for putting a premium on K-12 education. This is why the governor needs the 2010 Legislature to codify the ad hoc $1.8 billion “payment shift” he cobbled together in 2009, and needs it so badly that he initially wanted to convene a one-day special session before February to get it done.

Pawlenty thought better of that, but he still needs the shift to be made official for cosmetic purposes. (”Cosmetic” because there won’t be any money to repay it in the foreseeable future even if the mechanism for doing so is spelled out in law.) Otherwise schools take a very public whacking and Pawlenty’s resume is tarnished as a result.

But if this has the sound of a DFL legislative bargaining chip, it’s unlikely to play out that way. School officials want the shift, too, and DFL legislators would be loath to deny it to them. One of the most prominent, House Speaker and 2010 gubernatorial candidate Margaret Anderson Kelliher, has already signaled publicly that she wants the shift retroactively enacted as well. This is not the way hard bargains are driven, but since Pawlenty is absolutely resolute on the only point at issue - new revenue - the point is moot.

So Pawlenty’s course for 2010 is as clear as it is fraught. Steady as she goes, and get out before the scat hits the fan. Or, to paraphrase JFK: Ask not what your country can do for you; ask what your state can do for you.