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					Herman Cain: Dial 9-9-9 for nonsense | The Economist                                            http://www.economist.com/blogs/democracyinamerica/2011/10/...




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          Herman Cain

          Dial 9-9-9 for nonsense                                                                                  About Democracy in America
          Oct 17th 2011, 20:52 by W.W. | IOWA CITY                           Like   1K              137
                                                                                                                   In this blog, our correspondents share their
          HERMAN CAIN is riding high in                                                                            thoughts and opinions on America's kinetic
          the polls. Among other things, his                                                                       brand of politics and the policy it produces.
          ascent is based upon a charming                                                                          The blog is named after the study of American
          sense of humour, rousing                                                                                 politics and society written by Alexis de
          oratorical skills, a story of                                                                            Tocqueville, a French political scientist, in the
          moderate achievement in
                                                                                                                   1830s
          business, zero experience in
          elected office, which has allowed                                                                        RSS feed
          him to mould a perfectly zeitgest-
          matching conservative platform
          untainted by a record of                                                                                Advertisement

          no-longer zeitgest-matching
          political decisions, and, finally, the bold, clear proposition of the 9-9-9 tax plan.
          Now that Mr Cain is having a moment in the sun, what had seemed a gimmicky
          ploy is undergoing serious scrutiny, and we can expect Mr Cain to get
          hammered on the details of the 9-9-9 plan in tomorrow night's Republican
          debate.

          Mr Cain touts the simplicity of the 9-9-9 plan, but it is anything but simple.
          Even after reading about it on Mr Cain's campaign site, I'm still not sure I
          understand it. I thought I knew that the plan proposed 9% income, sales, and
          corporate tax rates. But the corporate tax is not a simple reduction in the
          corporate tax rate, as I had thought, but a value-added-tax on "Gross income
          less all purchases from other U.S. located businesses, all capital investment,
          and net exports." Anyway, the 9-9-9 plan is not what Mr Cain ultimately has in
          mind for American tax policy. It is but the first step of a two-step process to
          replace most federal taxes with a 30% national sales tax, a version of the
                                                                                                                    Trending topics
          so-called "Fair Tax". Why not go directly to the Fair Tax, then? Why the
                                                                                                                    Read comments on the site's most popular topics
          transitional step? Mr Cain's statement doesn't really say, though it does seem to
          imply that the Fair Tax is at present too unpopular to implement. "Amidst a                               Period:   1 day   1 week      2 weeks    30 days
          backdrop of the economic renewal created by the 9-9-9 Plan," Mr Cain says "I
          will begin the process of educating the American people on the benefits of
          continuing the next step to the Fair Tax."

          Mike Huckabee, a Fox News presenter and former governor of Arkansas,
          plumped for the Fair Tax during the 2008 race for the Republican nomination
          and the plan came in for a lot of abuse by economists and commentators across
          the ideological continuum. Perhaps Mr Huckabee's failure to get far with the Fair
          Tax explains Mr Cain's choice to campaign on an altogether different tax plan.
          Perhaps the idea is that he can capture the allegiance of the Fair Tax's many
          conservative fans while ducking the criticisms of the Fair Tax by pushing a fresh




1 of 7                                                                                                                                                                  10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                     http://www.economist.com/blogs/democracyinamerica/2011/10/...


          plan with a catchy name implying super-low rates. But this can only work if (a)
          the media and Mr Cain's competition let him get away with advocating the Fair
          Tax while running on his transitional plan, and (b) the transitional plan stands
          up to scrutiny better than the Fair Tax has. And this seems unlikely.

          The National Review today ran a blistering critique of Mr Cain's 9-9-9 plan. A
          selection:


             “    This tripartite scheme makes for a succinct slogan but has little else to
             recommend it. In particular Cain’s inability to choose between a sales tax and a
             VAT is puzzling. The two are very similar in their economic effects. The chief
             advantage of the sales tax over a VAT is that the latter is considered easier for
             governments to raise, because it is hidden. The chief advantage of the VAT over
             the sales tax is that it is easier to enforce without stimulating black markets.
             (Another is that it reduces the risk of taxing business-to-business purchases.)
             Opting for both as a transitional step means courting the danger of a VAT with
             none of its rewards: In the first stage, the government would get a new money          View full-sized opinion cloud »
             machine, and in the second it would supposedly destroy that machine and opt
             for something hard to enforce.

             The two-stage scheme is self-defeating in another respect as well. The 30              Economist blogs
             percent national sales tax, whatever its other merits, would be significantly
                                                                                                    Americas view | The Americas
             softer on the poor than the 9-9-9 transitional step, since the larger sales tax
             includes a “prebate” check to all Americans to exempt the basic necessities of         Babbage | Science and technology
             life from being taxed, while 9-9-9 includes no similar provision. Leaving aside        Bagehot's notebook | British politics
             whether a major tax increase on people at the bottom of the income scale is a          Banyan | Asia
             good idea, what is the point of first raising their taxes and then cutting


                      ”
                                                                                                    Baobab | Africa
             them?
                                                                                                    Blighty | Britain

          In the last debate, only Rick Santorum noted that Mr Cain's plan involves the             Buttonwood's notebook | Financial markets
          danger of even temporarily handing the government "a new money machine", a                Charlemagne's notebook | European politics
          point one would expect to resonate with conservative voters. I expect we'll hear          Clausewitz | Defence, security and diplomacy
          a lot more of this line of argument in upcoming debates. More generally, the
                                                                                                    Daily chart | Charts, maps and infographics
          fact that Mr Cain apparently believes it is politically feasible to wipe out the
          entire status-quo federal tax system in order to move to the 9-9-9 scheme, and            Democracy in America | American politics
          then wipe out the entire 9-9-9 scheme in order move to a 30% national sales               Eastern approaches | Ex-communist Europe
          tax seems to me to draw attention to Mr Cain's policy inexperience and dazzling
                                                                                                    Free exchange | Economics
          political naivete.
                                                                                                    Game theory | Sports
          That the 9-9-9 plan would cut taxes on the rich while raising them on the poor            Gulliver | Business travel
          led Bruce Bartlett to call the proposal "a distributional monstrosity", a phrase
                                                                                                    Johnson | Language
          you could imagine Barack Obama using to good effect in a general election.
          Why would you propose to raise taxes on the poor, making yourself vulnerable              Leviathan | Public policy
          to charges of monstrous callousness, when, as the NR editors note, your                   Lexington's notebook | American politics
          ultimate plan would only cut them later? Well, you wouldn't, if you knew what
                                                                                                    Multimedia | Audio, video and videographics
          you were doing. It requires only superficial examination to see that Mr Cain's
          9-9-9/Fair Tax scheme is more an ill-considered, hand-waving improvisation                Newsbook | News analysis
          than a serious plan from a serious policymaker. He's winging it, which I                  Prospero | Books, arts and culture
          supposed makes it all the more impressive that he's been able to wing it all the          Schumpeter | Business and management
          way to preeminence in a few polls. But now he's made himself a target, and an
          easy one at that, so I doubt Mr Cain will wing it all the way to the nomination.
                                                                                                  Most commented        Most recommended
          (Photo credit: AFP)


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2 of 7                                                                                                                                         10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                      http://www.economist.com/blogs/democracyinamerica/2011/10/...


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          More related topics: Tax policy         Herman Cain




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           gooz
           Oct 17th 2011 9:07 GMT

           Cain is just the flavor of the month for the Republicans. Like Bachmann and Perry,         Products & events
           his frontrunner status will recede.
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           HealthySkepticism                                                                              Get e-mail newsletters
           Oct 17th 2011 9:07 GMT
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           Cain is the only one that can replace Obama without unleashing huge amounts of             postings on Twitter
           resentment from Democratic voters.                                                             Follow The Economist on Twitter


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           wyyy                                                                                           Follow The Economist on Facebook
           Oct 17th 2011 9:24 GMT

           Why is that? I'm not clear why Democrats should like Cain more than any other
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           Republican candidate. Wouldn't you think they would lean toward Romney, given his
           track record of pragmatic centrism?

           HealthySkepticism wrote:
           Oct 17th 2011 9:07 GMT

           Cain is the only one that can replace Obama without unleashing huge amounts of




3 of 7                                                                                                                                                10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                        http://www.economist.com/blogs/democracyinamerica/2011/10/...


           resentment from Democratic voters.



           Recommend (83)       Report      Permalink

           k.a.gardner
           Oct 17th 2011 9:25 GMT

           I'll echo what Michelle Bachmann said at last week's debate about the 9-9-9 plan (is
           actually the 6-6-6 plan):

           "The Devil is in the details."

           Recommend (64)       Report      Permalink

           jouris
           Oct 17th 2011 9:26 GMT

           @gooz, I think you are overlooking Cain's big plus compared to Bachmann and Perry.
           Not only does he have no track record that can be attacked, he has minimal policy
           positions on a host of issues. For example, it is clear that he knows little about
           foreign policy and cares less. That allows people with wildly different views on the
           subject to support him. Not only does he not have a position which conflicts with
           theirs, but they can believe that if he wins they will be able mold policy in accordance
           with their desires. After all, he doesn't care, so what is to stop them?

           Obviously they can't all succeed in that. But the dream will allow him to maintain
           their support longer than Bachmann or Perry did.

           so yes, he is the latest fad in the series of not-Romneys. But it may be a fad that
           lasts rather longer than the previous ones. Probably not long enough IMHO to get his
           seriously close to the nomination. But rather longer than a month or two
           nonetheless.

           Recommend (57)       Report      Permalink

           bampbs
           Oct 17th 2011 9:26 GMT

           So long as we fund our elections by open bribery, the tax system is going to stay as
           it is, and the tax code will only grow larger as favors to contributors accumulate. If
           Reagan had to scrap the idea of starting from scratch, does anyone imagine that Cain
           - or any other candidate of either party - would have the power to do it ?

           Recommend (128)        Report     Permalink

           laurenp5
           Oct 17th 2011 9:27 GMT

           The 9-9-9 plan is a plan for fair tax. Cain claims it to be a simple plan but it is
           anything but simple. It is quite complicated and I am still not sure if I fully
           understand it. The whole thing is confusing and I have to agree with
           @healthyskepticism that Cain is the only one that can replace Obama without
           unleashing huge amounts of resentment from Democratic voters.

           Recommend (29)       Report      Permalink

           locke 9000
           Oct 17th 2011 9:28 GMT

           The .rss feed doesn't provide the author's initials for Economist blog posts, but based
           on the headline, I had a pretty good guess (later confirmed).


           Recommend (27)       Report      Permalink

           8Ewgqe792N
           Oct 17th 2011 9:36 GMT

           9-9-9 use to add up before he added about a bajillion deductions




4 of 7                                                                                                                                  10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                        http://www.economist.com/blogs/democracyinamerica/2011/10/...


           Recommend (30)       Report    Permalink

           RestrainedRadical
           Oct 17th 2011 9:38 GMT

           I get aroused by tax talk. Thanks for posting this. Nein-nein-nein to 9-9-9! I will
           disagree that it was naive though. I thought it was a rather ingenious way to disguise
           the FairTax. Of course Cain didn't come up with the idea. Neither did NR's Rich Lowry
           which is who I had originally thought when I heard Cain mention him. It was Rich
           Lowrie, some Ohio bank teller.

           I'll tell you what's naive. Cain doesn't mention any personal exemption! It allows
           liberal pundits like Bruce Bartlett (yes, he's a liberal pundit. He left the conservative
           camp a long time ago) to criticize the plan under the assumption that Cain wants to
           tax even the first dollar of income.

           I commented in the last debate live-blog that Santorum and Bachmann fired the first
           shots that will kill 9-9-9. With even conservative pundits lining up against it now,
           Cain's in big trouble.

           Recommend (28)       Report    Permalink

           Connect The Dots
           Oct 17th 2011 9:40 GMT

           9-9-9: Any Pizza, Any Size, Any Time for just $9.99!

           999 is 666 upside down. The Anti Christ will promise you the world.

           McCain is to Cain, as McMansion is to Mansion

           2008: McCain and Palin. 2012: Cain and Palin 2.0

           Cain is more than the ice cream flavor of the month, he is Black Walnut. Yes he is a
           black nut.

           And that flavor was last popular decades ago during the Nixon Administration. He will
           have a Rocky Road ahead.

           Recommend (73)       Report    Permalink

           LexHumana
           Oct 17th 2011 9:50 GMT

           If you want to see consumption virtually vanish from the U.S., go ahead and
           implement at 30% sales tax. Call it "fair" all you want, but I guarranty you will start
           seeing families grow their own vegetables and sew their own clothing if that
           happens. You might even find people distilling their own alcohol -- purely for use as
           an alternative auto fuel, of course.

           Recommend (103)       Report    Permalink

           Tzimisces
           Oct 17th 2011 9:51 GMT

           Can we please move past the fallacy that an extremely simple tax system is
           possible? No such thing has ever existed, it can certainly be far simpler than the US
           system, but every system on earth has myriad credits and deductions (not to
           mention handling taxation at multiple levels of government). Handling corporate
           taxation, whether an S corp or C corp, is always extremely complicated. Even in
           consumption tax based schemes there always end up being demands that must be
           met for issues such as poverty, children, education, charity, and housing, just to get
           the list started. The case for a consumption tax largely collapses once these
           considerations are taken into account, while a pure consumption tax is definitely
           more efficient than the status quo, a pure consumption vs. a pure income tax are
           neutral in theoretical terms (not having purely empirical issues of pure tax schemes
           to assess).

           Recommend (46)       Report    Permalink

           gooz
           Oct 17th 2011 9:52 GMT




5 of 7                                                                                                                                  10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                     http://www.economist.com/blogs/democracyinamerica/2011/10/...


           @Jouris

           I completely agree. Not only are Cain's economic proposals lacking, but so are his
           credentials in Foreign Policy, as well as domestic law. Herman Cain made a campaign
           promise a while back, most likely to satiate his tea party supporters, that he would
           never appoint a Muslim to the Judiciary, nor to a cabinet position. He has excluded
           that group of Americans solely because of their religion. His knee jerk responses to
           criticism, as well as his lack of real political experience has Obama's team hoping
           that this is the best the Republicans can do.

           Recommend (46)      Report    Permalink

           McGenius
           Oct 17th 2011 9:56 GMT

           "More generally, the fact that Mr Cain apparently believes it is politically feasible to
           wipe out the entire status-quo federal tax system in order to move to the 9-9-9
           scheme, and then wipe out the entire 9-9-9 scheme in order move to a 30% national
           sales tax seems to me to draw attention to Mr Cain's policy inexperience and dazzling
           political naivete."

           It's odd to see the Economist shocked on this point of interim steps. This has been
           done before from the Left. ObamaCare after all was an interim solution to total
           government control of American Health Care. It's why the Left was angry with
           Obama because he didn't clearly make the jump completely to socialised medicine-
           he faked to the center to make it appear politically more palatable.

           I would argue that the tax code is so abysmal that even if we don't get entirely to
           Cain's position, it is in his direction that we ought to be traveling.

           Recommend (41)      Report    Permalink

           HealthySkepticism
           Oct 17th 2011 10:00 GMT

           @ wyyy

           Since Obama took office progressives have worked to drive home one point above all
           others: that evil racist Republicans want to make Obama a one term President
           (reality check: don't all political parties want to win in every election?).

           If Obama is defeated in the 2012 election the new white liberal meme will be "well
           we had a black president but those racist bigots took him away, just as he was about
           to turn it all around." Obama will become a new civil rights martyr. Electing Cain
           might be the only way to shut them up.

           Recommend (30)      Report    Permalink

           Sbq3UxZbGs
           Oct 17th 2011 10:03 GMT

           Was Santorum the only one to call out a new revenue stream? I remember
           Bachmann making a point of it too


           Recommend (23)      Report    Permalink

           HealthySkepticism
           Oct 17th 2011 10:04 GMT

           Technically speaking we have yet to have a black president, certainly an African
           American president. Most American blacks are descended from west African slaves
           that where as Obama is half white and half east African. Cain has more authentic
           American blackness in his pinky than Obama has in his entire body.

           Recommend (40)      Report    Permalink

           RestrainedRadical
           Oct 17th 2011 10:05 GMT

           @LexHumana, "If you want to see consumption virtually vanish from the U.S., go
           ahead and implement at 30% sales tax."




6 of 7                                                                                                                               10/22/11 6:41 PM
Herman Cain: Dial 9-9-9 for nonsense | The Economist                                                   http://www.economist.com/blogs/democracyinamerica/2011/10/...


           We'll have plenty of consumption. It'll just be on a flourishing black market.



           Recommend (58)         Report     Permalink

           Top Hat 001
           Oct 17th 2011 10:05 GMT

           It is very foolish to call the "Fair Tax" and fair tax because sales tax and VAT are
           regressive by nature. The most effective types tax inelastic goods (food, clothes, and
           cigarettes) and most of a poor person’s income goes towards inelastic goods. The
           rich will normally pay more, but the poor will pay a larger part of their income. Even
           if things like food are exempted, it can place some luxury goods out of the reach of
           the lower and lower middle classes.

           Sales taxes are good at raising revenue and I think America needs a sales tax to cut
           the deficit, but it is anything but a fair tax.

           Recommend (42)         Report     Permalink


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