Tax Rascal

Herman Cain’s 9-9-9 Plan: Worth More than the Price of a Pizza?

Categories: Economy, Featured, Politics, Tax Policy
Herman Cain’s 9-9-9 Plan: Worth More than the Price of a Pizza?

Tea Party politics buoy Herman Cain’s bid for President, but questions remain

No dearth of material has been published in recent weeks about the bad math in Herman Cain’s 9-9-9 tax plan. It would effectively scrap the current tax system and replace it with a 9% business flat tax, a 9% individual flat tax, and a 9% national sales tax. Did he steal it from Sim City? Is it the price of a pizza? The work of the devil? We can only guess.

What is pretty clear, however, is that Herman Cain’s plan would mean a significant tax increase for the roughly 30 million low-income Americans who pay neither income nor payroll taxes as well as a massive tax windfall for the wealthy, who would enjoy a 9% personal income tax in lieu of the current top rate of 36% and the capital gains tax rate of 15%.

At a time when Republicans in Congress are taking heat for merely suggesting that taxes on the rich should not be raised, it is hard to imagine Herman Cain’s position being politically tenable anywhere outside of the Republican primary.

Cain has risen to front-runner status on the enthusiasm of fiscally conservative Tea Party activists who believe his plan would both simplify and lower federal taxes, so it’s really no surprise that he should come under attack from the left for his ideas not being progressive enough – or, in this case, for being outright regressive. But interestingly, a new line of attack was opened from the right last week by the conservative tax godfather Grover Norquist.

Norquist likened the 9-9-9 plan to three needles draining blood from the arm of America. He especially objected to the proposed national sales tax, which would be an unprecedented new stream of revenue for the federal government. No matter what the original intentions of the new sales tax, over time it could very well swell beyond 9% without any resultant decrease in income or corporate taxes. This, according to Grover Norquist’s take, is the way government works: politicians tend to maximize taxation to the point just before they lose their jobs.

Even in a fairly sympathetic piece, the Wall Street Journal agreed with Grover Norquist on the plan’s grave flaw from a conservative perspective:

The real political defect of the Cain plan is that it imposes a new national sales tax while maintaining the income tax. Mr. Cain’s rates are seductively low, but the current income tax was introduced in 1913 with a top rate of 7% amid promises that it would never exceed 10%. By 1918 the top rate was 77%.

It is a little shocking for a Tea Party darling to receive such outright criticism from Grover Norquist, whose own anti-tax positions are an important foundation of Tea Party politics. Indeed, for Republican candidates running for state or national office, Norquist’s tacit endorsement, in the form of the Taxpayer Protection Pledge, has become almost a prerequisite. 95% of Republicans in Congress have signed it as well as all but one of the Presidential candidates.

The conventional wisdom holds that Herman Cain has gained so much ground in recent weeks because the conservative base doesn’t trust Mitt Romney. According to this view, he’s a blue state establishment Republican, a flip flopper, and his Massachusetts health care reform was the blueprint for Obamacare. In short they don’t believe he’s a true-blue conservative committed to smaller government.

But, in light of Norquist’s recent criticism of the 9-9-9 plan, is Herman Cain the real deal? It’s not inconceivable that his policies could lead to a greater expansion of government than anything Mitt Romney would put in place. A new national sales tax could be the very thing that prevents Grover Norquist from drowning the federal government in the bathtub. And yet the Tea Partiers, and many other Republicans, seem not to care very much.

It suggests that the far right is more concerned with flash than substance, and would rather get excited than educated. How committed are Tea Party politics to the philosophy of small government if the movement is willing to raise so quickly the banner of a new national sales tax?

In some ways the enthusiasm for Herman Cain is understandable, and it points to the stark decision now facing the Republican party. Cain is indeed funny, exciting, and easy to buzz about. Romney is stiff, if less so this time around, arguably boring, and not a little pedantic. It’s the same sort of choice that faced Democratic primary voters in 2008 and we all know how that went.

Herman Cain has made a name for himself by being marketable. His instantly quotable ideas have an appealing simplicity. His debate style is humorous and zingy, polished by years on talk radio. This quality, in fact, is the very one that distinguished him as CEO of Godfather’s Pizza.

An interesting article in the Christian Science Monitor notes that in the pizza business, “marketing is everything – and it appears that Cain’s ability to simplify his message, and communicate it, proves his mettle as a very good marketer.”

Compare this to Mitt Romney, the tortoise candidate betting that the latest hare will go the way of all the other supposed front runners. Romney is the only other candidate besides Cain to achieve success in the private sector. He ran private equity firm Bain Capital which, according to the same CSM article, is a “deal making and operational business… Mr. Romney’s work was data-driven, as he sifted through numbers to turn around failing businesses, or get new ones off the ground.”

This is a difference reflected in the two candidates’ policy prescriptions for the economy as well. Herman Cain’s 9-9-9 plan is catchy and marketable. It promises a bold solution to the current economic crisis without the burden of annoying details.

Romney’s plan on the other hand, consisting of 59 points and 160 pages of documentation, is dense, wonkish, and eminently difficult to sell to a nation that grew anxious over the possibility of the President’s major jobs speech conflicting with the NFL season opener.

Republicans now face a fairly stark choice of approach, experience, and style. One would think that the same conservatives who so strenuously oppose President Obama, and who often blame his failures to govern on his lack of administrative experience, would not be so eager to embrace Donald Trump, Michele Bachmann, and now Herman Cain, all candidates with no public managerial experience.

Rick Perry, for all his debate flubs and his apparent affinity for inappropriately named hunting camps, at least has the experience of being the second longest-serving governor in the country. But just look at his poll numbers – he’s been sinking like a stone. And Jon Huntsman, the only other candidate with comparable experience, has gone nowhere.

This leaves Mitt Romney. His wealth of executive experience is unmatched. Even opponents will admit that his track record as a CEO, successful turnaround artist, savior of the 2002 Salt Lake City Olympics, and governor of one of the larger states in the nation is an impressive one. It would seem that his is the ideal record for the political moment. And yet he can’t manage to garner the support of more than 25% of Republicans in one of the weakest fields in recent memory.

In an age that glorifies ad men and makes celebrities out of Presidents, experience might not matter as much as marketability, thoughtful positions as much as pizazz. Herman Cain’s 9-9-9 plan is the policy equivalent of getting dressed up in colonial garb and dumping bags of Lipton’s tea into the nearest major body of water. It looks good, and it plays well for the cameras, but it’s not a serious answer to our economic problems. The Republican party needs to decide what it wants, a slogan or a credible shot at solutions.

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