Here's how it's done..

[dude1394]

Dubya, Arnold, any Republican Politician...pay attention. You'll get plenty of cover now for cutting the size of guvment with Barry up there tossing bailouts to all of his pals. Plus Barry's just about raised all of these taxes anyway...

http://online.wsj.com/article/SB124295250785545573.html

Minnesota nice" comes in two forms: the first, gracious hospitality; the second, smiling stubbornness. Republican Gov. Tim Pawlenty this week delivered his spendthrift legislature a humiliating taste of the latter. You betcha. If Republicans are looking to get back their conservative groove, they could do worse than study Minnesota's budget brawl. Mr. Pawlenty deftly (and amusingly) outmaneuvered his Democratic opposition, not only saving his state from huge tax increases but clearing the way to cut government spending. Call it a refreshing break from the financial-crisis norm.

Like most states, Minnesota has been facing a huge budget shortfall -- an estimated $4.6 billion over two years. These dire financial straits didn't deter the DFL-controlled legislature (the DFL is Minnesota's chapter of the Democratic Party), which got to work on big new spending bills. Included were not just the usual increases in appropriations but gems like $1.2 million in grants for TV and film producers and $200,000 for a youth environmental education program. Recession? What recession?

To fill in the hole they'd blown in the upcoming fiscal budget the DFL then proceeded to float every tax hike known to Garrison Keillor. A short list: A new top income tax rate of 9% (the fourth highest in the nation); across-the-board income tax increases; sales taxes on Internet downloads; the end of the local property tax cap (enacted only last year); alcohol taxes; cigarette taxes; eliminating the deduction for an organ donation (no joke); and killing the home mortgage interest deduction.

Throughout this spectacle, Mr. Pawlenty kept voicing three simple principles. "Number one, we must have [because of the constitution] and should have a balanced budget," he told me. "Number two, the state government needs to live within its means, just like everybody else. Number three, we shouldn't raise taxes in the worst recession in 60 years." Minnesota already has one of the highest tax burdens in the nation.

The DFL wasn't listening. As the clock wound down (the session ended at midnight this past Monday), the legislature sent Mr. Pawlenty one large spending bill after another. The assumption was he'd veto them, be forced to call a special session, and then be negotiated into tax hikes. That's when the governor got Minnesota nice.

Upon receiving the last spending bill, he announced that he would exercise the power of "unallotment," which has been on the books since 1939 and which has been used four times. Under it, the governor is allowed to "unallot" (take away) any state spending for which there is no money to pay. Panicked, the DFL passed tax legislation to cover its blowout spending bills, 10 minutes before the session's end. Too late. The governor said he'd veto the bill and would not be calling back the legislature to do any more mischief.

Mr. Pawlenty is now free to strip $2.7 billion from state spending to balance the budget. Tax hikes are dead. He tells me this will be one of the first times in modern Minnesota history that the state will reduce the size of government in real terms, not just slow its rate of growth. "The correlation in recent history has been between job growth and states that have reasonable government cost structures," he says. These cuts, he says, will position Minnesota to take advantage of the recovery when it comes.

A red-faced DFL is lecturing the public to be angry at the governor -- and the governor alone -- for any cuts in government services. Pawlenty critics have accused the governor of grandstanding, readying for a possible presidential run.

And? Voters elsewhere might wish for a little more such show. Mr. Pawlenty's hardball has earned him glowing praise from the state's job creators, in particular small businesses, who are relieved to be spared additional tax burdens in today's economy. The governor's message -- that it is simply "inappropriate" for state legislators to keep spending like lunatics and raise taxes in a recession -- has resonated with cash-strapped voters.

That sort of tax-and-spend governance is precisely what has now pushed California to the brink of insolvency. California voters revolted this week, defeating five budget ballot initiatives. "The sky isn't going to fall," Mr. Pawlenty told reporters on Tuesday, just because Minnesota has to trim 3% to 4% from a $34 billion budget. Oh, to hear such words from a California pol.

The Minnesota episode is also a lesson that leadership inspires. At one point in the session, Mr. Pawlenty did receive a tax bill, which he vetoed. The DFL has an override majority in the Senate and is only three votes shy of that in the House. Yet minority Republicans stuck with their governor to uphold his veto. If they hadn't, the rest of this story would be moot.

Congressional Republicans -- the ones who got tossed because of their embrace of spending and earmarks -- might start looking for a message up north. Fiscal responsibility? "It is the fundamental tenet of our party, and the conservative coalition more broadly," says Mr. Pawlenty, nicely. "If we don't have that, we are nothing."

[dude1394]

Anyone know how I can invest in some sort of Minnesota index?

[Mavdog]

easy....you can buy minnesota bonds!