Aug. 28 (Bloomberg) -- Minnesota Governor Tim Pawlenty, a possible 2012 Republican presidential candidate, charged that President Barack Obama’s $787 billion economic stimulus program still isn’t working and that his health-care overhaul proposal would lead to medical rationing.

With only 15 to 20 percent of the money spent, it “would be ludicrous to claim” the stimulus program is “what pivoted” the $14.1 trillion economy “at the so-called bottoming or now a potential beginning of recovery,” Pawlenty said.

Most of the money appropriated by the Democratic-controlled Congress was “misdirected” and “largely wasted” on projects that won’t create jobs, Pawlenty said in an interview taped in St. Paul for Bloomberg Television’s “Political Capital with Al Hunt.” “Only $160 billion of it was stimulative.”

Taxpayers “could have had a bigger bang for the buck” by “reducing the payroll tax, and putting money right into the pockets of individuals or truly focusing on bread-and-butter infrastructure projects,” the Minnesota governor said.

Pawlenty’s views are at odds with statements of his own economic development director, Dan McElroy, who has traveled the state touting the benefits of Minnesota stimulus projects funded by federal money. Some economists also disagree with Pawlenty.

“The stimulus worked in the sense that the economy was rapidly contracting, and is still contracting, but less so than earlier in the year,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Death Panel Debate

Pawlenty said any “fair critique” of Democratic health- care legislation includes the argument that “death panels” would make life-or-death treatment decisions. That’s because Obama’s plan “may lead to a different form of decision- making,” he said.

Obama has accused opponents of his health-care plan of being “dishonest” by arguing that government would “set up death panels to pull the plug on grandma.”

Pawlenty, 46, said Republicans “should be aggressive in criticizing President Obama’s plan” to extend health-care coverage to up to 47 million uninsured people by crafting a government-run insurance company.

Health reform in Massachusetts, instituted by former Governor Mitt Romney, a possible rival for the 2012 Republican presidential nomination, “succeeded in expanding access, but it has not succeeded in controlling costs,” Pawlenty said. The state, which requires all of its citizens to purchase health- care insurance, has “the highest health-care premiums in the nation, amongst the highest health-care costs in the nation,” he said.

Considering Presidential Run

Pawlenty acknowledged he was considering seeking his party’s 2012 presidential nomination. “I’m going to finish out my term as governor” and “try to speak out to how the Republican Party can and should improve,” he said. “If that gets some traction and some momentum, then I would consider” running for president.

As a national candidate, Pawlenty said he would offer “hands-on leadership that can get things done” as a Republican governor in a predominantly Democratic state.

“I think I have been very effective as a reformer, keeping a lid on spending, trying to drive down tax burdens” he said. “I have done that in Minnesota.”

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

Last Updated: August 28, 2009 00:01 EDT