Herman Cain: Good News and Bad News

The Good News: Perhaps he’s been reading Bulldog Pundit or anything else I’ve worked on for the past two years. Most likely, he has an excellent staff who knows how to conduct research. If so, then Herman Cain ought to give them a raise and Cain himself ought to take a bow for demonstrating yet again that he was blessed with a pair of tungsten steel Reagans when he called out New Jersey Governor Chris Christie as the pseudo-conservative RINO he truly is.

Herman Cain won’t be supporting Chris Christie any time soon.

Cain told Chris Wallace on “Fox News Sunday” that the New Jersey governor is too liberal to run as a Republican for president because of past policies on immigration, assault weapons, civil unions and global warming.

“I believe that a lot of conservatives, once they know his positions on those things you delineated, they will not be able to support him,” Cain said. “I think that that is absolutely a liability to him, if he gets in the race.”

“Most of the conservatives believe we should enforce our borders. They do not believe people should be here without documentation. They don’t not believe global warming is a crisis or a threat,” Cain added. “Yes it might be a little bit out there, but they don’t see it as a crisis or a threat. And as you go right down the line, he’s going to turn off a lot of conservatives with those positions.”

For this very reason, Gov. Christie is the darling of the GOP establishment. I have often said that, by the feather you will know the flock; in Der Blimpmeister’s case the moderate pastel hue of his political plumage has attracted the endorsement of George H.W. Bush and Henry Kissinger among other luminaries in the GOP Establishment firmament. Perhaps this is the reason they are so keen on his candidacy and desperately pleading with him to run: they are terrified of the likes of Herman Cain because he has the fulsome support of the Tea Party movement – and the Establishment positively despises the Tea Party movement.

The Bad News: Herman Cain’s “9-9-9 Plan” is a huge mistake. Simply stated, Cain’s proposal for reviving America’s economic greatness involves replacing the income tax, death tax, payroll tax, capital gains taxes, etc. with a flat 9%  tax on business income, a flat 9% tax on household income and a flat 9% national sales tax. Almost all deductions would be eliminated.

So why is this a bad thing? The national sales tax proposed by Mr. Cain is  essentially a VAT tax. And we all know how well the VAT tax has treated the European economy. Ross Kaminsky of the American Spectator explains:

Once a VAT is in place, it is like fiscal heroin to the welfare-staters, earmarkers, and subsidizers. As the Cato Institute’s Dan Mitchell explains, “we run a grave risk if we ever let the crowd in Washington impose any sort of national sales tax without first getting rid of all income taxes.”

If the United States implements a national sales tax without simultaneously eliminating the income tax and eliminating its constitutionality we will be doomed to the persistent lower growth and higher unemployment that has characterized Europe relative the United States for most of the last half century. (It’s true that Europe is doing somewhat better than the U.S. is at the moment but that is because — and these are words I never thought I would write — the U.S. has a more leftist, anti-capitalist government than most western European nations do. Indeed, our current executive branch is less capitalist than the government of Communist China is.)

As Laurence Vance has written in a broader critique of the Fair Tax, a national sales tax will make it easy for Congress to raise taxes. Each tax hike in a multi-generational death by a thousand cuts “will be sold to the American people as ‘a penny for progress,’ or some other deceitful scheme.” Even the people at FairTax.org say that “No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed.” Mr. Cain, are you listening?

When asked in last week’s Republican presidential debate whether there was a risk in his 9-9-9 plan that “some government down the road after President Cain is going to increase three forms of taxation on Americans,” Mr. Cain responded with unusual glibness, “No, there’s no danger in that.” But of course there’s danger in that, and the history of Europe (and other places where national sales taxes have been implemented) proves it. As Kurt Hauser noted in reprising his “law” last year, “Even amoebas learn by trial and error, but some economists and politicians do not.”

I recommend that Mr. Cain overhaul the plan. He can start by dropping the last “9.”

Perhaps he might consider the Bulldog “10-10-5-1 Plan:” a flat 10% tax on business income, a flat 10% tax on all household income over $50,000 per year, a flat 5% tax on all household income between $25,000 and $49,999 and a flat 1% tax on all incomes between $0 and $24,999. No exceptions and no deductions whatsoever. Problem solved.

I figure that if ALL wage earners have skin in the game, then all of them will be less inclined to tolerate a tax increase.

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