Nein, Nein, Nein?
Now that Michele Bachmann has self-destructed and Rick Perry has four times stumbled over his tongue, Herman Cain has inherited the spot reserved, in this electoral cycle, for a conservative Presidential contender who is not the godfather of Obamacare. In the polls, he either leads the Republican field or is tied with Mitt Romney. In the latest Rasmussen match-up, he is the only Republican who leads Barack Obama.
None of this means much. Given the way that Barack Obama is running his campaign – as a nasty, divisive attempt to pit the poor, the shiftless, and their enablers against the rich – and given his incompetence at actually governing, he is likely to lose to almost anyone the Republicans nominate. BHO is the Democratic Party’s answer to Herbert Hoover. He has taken a severe economic downturn and prolonged it, and he is now intent on raising taxes on the investing class in the midst of that downturn. Come November 1012 all that the Republican nominee will have to do is ask: “How would you like four more years like the last four?”
Cain’s surge in the polls guarantees only two things – that his proposals will be closely examined and severely criticized by liberals and conservatives alike, and that, in the next debate, Romney’s proxies – Bachmann and Rick Santorum – will go after him as they went after Perry. Romney’s plans will, I think, escape close scrutiny and criticism for the simple reason that an economic plan consisting of fifty-nine different items cannot be described, much less attacked, in a soundbite. What no one can understand, no one can neatly summarize. It says something about Romney’s competence as a candidate that – except with regard to repealing Obamacare – he has engineered things so that no one can really say what he would do if he were elected.
Cain has chosen the opposite tack. His proposal is simple and straightforward and has a catchy title. His is a high-risk strategy – appropriate for a candidate who would ordinarily be marginal, appropriate for a candidate who cannot afford to sail under the radar.
The 9-9-9 proposal is radical. Regarding that, there can be no doubt. We now find ourselves with a choice between a candidate who is by instinct a social engineer, who does not regard the individual mandate as tyrannical, who is prepared to embrace the administrative entitlements state, and who thinks it more or less sufficient to take us back to 2006 – and a candidate who believes that we need to rethink the entire progressive project.
Cain’s proposal is radical, as I said. The real question is whether it is not also mad. Michele Bachmann argues that it is a mistake to add a national sales tax. This would open up an entirely new revenue stream for the federal government, and in time Congress would be apt to increase the tax. She has a point. The income tax started out small, and it grew and grew.
The other mode of attack, found in a piece published by the editors of National Review Online, is to carp. And carp one can. Retirees – at least those whose incomes are modest – will find the sales tax an annoyance, if not a burden.
I am, nonetheless, inclined to side with Paul Ryan and the mysterious economist at Stanford with whom Peter Robinson recently had lunch (my bet is that he was an advisor to Sarah Palin and is already being touted as Ben Bernanke’s successor at the Fed) in welcoming the proposal. It has three great virtues. It broadens the tax base. It encourages investment. And it shifts some (but not all) of the tax burden from personal income to consumption.
In the end, I do not find Bachmann’s criticism compelling. I very much doubt that the sales tax component would be increased. Taxes that we feel every time that we go to the store tend not to go up dramatically. What we notice we resent. Hidden taxes – such as the old corporate tax – are another matter.
In any case, we got into the mess we are now in at least in part because we borrowed too much and spent it. Cain’s proposal would not discourage savings and investment. If it were enacted, we would have the lowest corporate tax rate in the world. Multinationals based in the US would repatriate their profits and pay taxes here. The United States would again be a place where people wanted to do business; there would, I think, be a boom; and unemployed Americans would soon find work.
I am inclined to think that, even if we could somehow claw our way back to 2006, it would just be kicking the can down the road. The entitlements state is bankrupt, and tinkering with it will only put off the day of reckoning and make that day more of a disaster. It would be comparable to rearranging the deck chairs on the Titanic. We need to point our ship of state in a different direction – away from its inexorable drift towards soft despotism. What Cain is suggesting would be a start.
I wish that I could be confident regarding Herman Cain’s competence in other spheres. The Republican Party has let us down. Think of what we had to choose from in 2008 – Mike Huckabee, Rudy Giuliani, Fred Thompson, John McCain, and Mitt Romney. Then think about the choices we have this year. There really is no excuse.
We will have to see what Herman Cain is made of. Helping us sort out that question may not be what comes first to the minds of Bachmann and Santorum, but they will help us nonetheless.
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Comments:
Aug '11
Re: Nein, Nein, Nein?
Paul A. Rahe
Romney’s plans will, I think, escape close scrutiny and criticism for the simple reason that an economic plan consisting of fifty-nine different items cannot be described, much less attacked, in a soundbite. What no one can understand, no one can neatly summarize.
I think you have aptly explained how ObamaCare managed to escape scrutiny. "We have to pass it to find out what's in it" indeed.
Jun '10
Re: Nein, Nein, Nein?
I beg to differ on the claim that sales taxes don't go up. In 2003 the rate for the goods and services tax in Santa Fe went from 5.875% to 6.125%. Today the rate is 8.0625%. The trick, as our politicians well know, is to move the rate up in increments so small that the increase at the cash register is barely noticeable. But up it goes as sure as the sun rises in the east.
Edited on October 18, 2011 at 3:23amMay '10
Re: Nein, Nein, Nein?
I am in Cain's camp again. I was there when he announced. Perry sounded good, but dropped the ball. Cain is not part of the establishment, and I think we are too the point that is what we need.
And I am tired of hearing about his "lack of experience". As if somehow, the private sector teaches you nothing about leadership. Please. I guess Generals get more political training than CEO's? That is the sort of statement of someone that has never had to be a CEO, and see all the politics of it.
May '10
Re: Nein, Nein, Nein?
Unlike many other Republican voters, I'm not interested in Republican government if it means merely slowing government expansion. None of our current candidates are strong, but I will vote for whoever seems most likely to dismantle the federal government... meaning taxes, agencies, regulatory bodies, Congressional committees, etc.
Toward that end, an inept but values-driven President would be better than a competent shell.
In other words, Cain is still on my list of possibilities.
Re: Nein, Nein, Nein?
Bryan G. Stephens: I am in Cain's camp again. I was there when he announced. Perry sounded good, but dropped the ball. Cain is not part of the establishment, and I think we are too the point that is what we need.
And I am tired of hearing about his "lack of experience". As if somehow, the private sector teaches you nothing about leadership. Please. I guess Generals get more political training than CEO's? That is the sort of statement of someone that has never had to be a CEO, and see all the politics of it. · Oct 17 at 6:23pm
Alas, generals do get more political training than CEOs. Soldiers in the higher ranks -- colonels on up -- interact with the politicians all the time. They attend to foreign affairs and to defense; they know quite a bit about the federal budget.
If Cain is the real deal, he will have to show us more than 9-9-9. I hope that he does.
Re: Nein, Nein, Nein?
~Paules: I beg to differ on the claim that sales taxes don't go up. In 2003 the rate for the goods and services tax in Santa Fe went from 5.875% to 6.125%. Today the rate is 8.0625%. The trick, as our politicians well know, is to move the rate up in increments so small that the increase at the cash register is barely noticeable. But up it goes as sure as the sun rises in the east. · Oct 17 at 6:22pm
Edited on Oct 17 at 06:23 pm
You have a point, but I suspect that there is a limit. Your problem in Santa Fe is that there are too many rich people there, and they do not much care.
May '10
Re: Nein, Nein, Nein?
The only way we will be able to replace the national income tax, as is ultimately necessary for lasting spending reform, is if the economy slides to such an extent that no one flinches from calling it a depression, rather than a recession. We might get that chance.
Re: Nein, Nein, Nein?
Indeed.
Jan '11
Re: Nein, Nein, Nein?
Well reasoned, but much of it depends on stability of historical trends, and we are in a time of great and unusual social and economic flux. Precedents should be appealed to with caution when projecting probable outcomes. We've gotten into trouble too many times by looking behind for guidance ahead, Social Security, Medicare, and The Great Society being chief among them.
Sure, the 9,9,9 plan has too many new variables to be reliably predictive, but so have all of the other proposed fixes, including, e.g., CBO scoring. So, what the heck, why not go with something that's new rather than keep fiddling with what predictably fails?
Re: Nein, Nein, Nein?
Anon: Well reasoned, but much of it depends on stability of historical trends, and we are in a time of great and unusual social and economic flux. Precedents should be appealed to with caution when projecting probable outcomes. We've gotten into trouble too many times by looking behind for guidance ahead, Social Security, Medicare, and The Great Society being chief among them.
Sure, the 9,9,9 plan has too many new variables to be reliably predictive, but so have all of the other proposed fixes, including, e.g., CBO scoring. So, what the heck, why not go with something that's new rather than keep fiddling with what predictably fails? · Oct 17 at 6:56pm
My sentiments exactly.
Mar '11
Re: Nein, Nein, Nein?
Michelle Bachmann does have a point about revenue streams. The government will attempt to raise it at every opportunity, and actually closing one off is impossible. The Illinois Tollways were supposed to start becoming free in 1984. That's not going to happen; in fact, they are raising the tolls to pay for expansion of the system.
I hope Herman weathers the storm. The thing that bothers me most about Mitt is his "versatility of conviction" as George Will so aptly put it.
May '10
Re: Nein, Nein, Nein?
Wouldn't a flat tax have been even simpler? And less exposed to the various criticisms we're hearing?
Oct '11
Re: Nein, Nein, Nein?
Hello Paul, I've loved your writing, but let me offer a different point of view. You wrote:"Romney’s plans will, I think, escape close scrutiny and criticism for the simple reason that an economic plan consisting of fifty-nine different items cannot be described, much less attacked, in a soundbite. What no one can understand, no one can neatly summarize."
I don't see why a competitor couldn't take one of Romney's fifty-nine items that has a easily explained weakness and challenge him on it. If Romney's thinking is unsound it would add to the credibility of the challenger, and that would dent Romney's primary appeal. The challenger doesn't need to cover all fifty-nine points, just do a very good job on one.
Mar '11
Re: Nein, Nein, Nein?
Paul A. Rahe
Alas, generals do get more political training than CEOs. Soldiers in the higher ranks -- colonels on up -- interact with the politicians all the time. They attend to foreign affairs and to defense; they know quite a bit about the federal budget.
Ask around and you'll find that quite many officers and retired officers below the O5 and O6 level think most general and flag officers are nothing but politicians in uniform. It often seems to be a requirement to get that star. Rock the political boat, and you'll find yourself retired, stat.
Dec '10
Re: Nein, Nein, Nein?
In time, Congress is apt to increase any tax. Those who argue against 999 on this basis act as if there isn't already a push to increase taxes under the current code. This is a fight that will have to be fought under any tax code at all times.
I take it as a given that the sales tax component will be increased. However, the fight is a bit easier when the code is simpler and more transparent, and that's a strong argument for the plan even if it turns out not to perform exactly as promised.
Jul '10
Re: Nein, Nein, Nein?
There's one problem with this analogy: no one will be running to Barry's left.
That would be the easy sell: Get the fatcats, it's not your fault you saved a grand total of twelve cents when you earned 200k a year America. None of it is your fault, the economy is unicorns all the way down.
Fortunately, there is no FDR. Okay, I know that statement is begging for a Romney joke.
Regardless, this election is not even close to a done deal professor.
Edited on October 18, 2011 at 4:39amAug '10
Re: Nein, Nein, Nein?
Canada has no problem with the GST creeping up. In fact, the GST has been reduced from 7% to 5%.
It's simple enough to prevent a national sales tax from creeping upwards:
- Make the tax transparent. Canada's GST shows up at the cash register as a line item on your goods. It's a very in-your-face tax, which is a feature.
- Write the tax law so that it can only be increased in whole number increments. You can justify it as a simplification to make calculations easy (It's easy to figure out what 9% of a price is - not so much if it's 9.736%). The main benefit is that the only way you can increase the tax is to take it from 9% to 10%, and that will generate a backlash.
A consumption tax is much more efficient than a tax on producers. It's flat, it rewards exports and punishes domestic consumption. It's exactly what America needs right now.
Edited on October 18, 2011 at 4:38amMay '10
Re: Nein, Nein, Nein?
Prof. Rahe: When you have time, could you clarify what you mean by "prepared to embrace the administrative entitlements state"?
Isn't even our man Paul Ryan prepared to do the same, since he's looking only to make SS, Medicare and Medicaid more efficient, more individual-centered, more affordable -- that is, make "the new and improved" entitlement state?
I don't fault him -- he's aware of our realities more than anyone -- but his fantastic arguments are always in the context of "saving" these programs, not ridding us of them, and I strongly suspect Cain and Perry will end up at this same spot, notwithstanding their early rhetoric.
Mar '11
Re: Nein, Nein, Nein?
I come from the UK, which has (very roughly speaking - it's complicated) a 40-25-20 tax plan. So I am very reluctant to see a Federal sales tax introduced in the US.
I'd like to see Mr Cain's advisers re-run their recursion analysis to see what X would be in XX0.
But I'll vote for him, anyway :-)
Dec '10
Re: Nein, Nein, Nein?
I think Gingrich did just that in the last debate, challenging Romney on the level of his proposed capital gains tax. Gingrich made the point effectively, I think, but when it's one point in a huge proposal, it's not a decisive blow. An effective attack against a single plank of Cain's 999 plan, on the other hand, can undermine the whole thing.