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Cain's False Hope

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Submitted By shaneeichenlaub1
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Shane Eichenlaub
ENGL 1011-11
Dr. Clark
12 December 2011

Cain’s False Hope

With the Republican GOP candidacy in play, many potential candidates are within arm’s reach of being at the top. With the Presidential Elections less than one year away, the question still remains, who can take on Obama? One candidate who has found himself in the mix is Herman Cain. Cain has grabbed the attention of Americans with his plan to attack our current tax code system. He believes that his experience in the business world gives him the best chance at restoring our economy. Cain tells American’s that his 9-9-9 plan will solve all the problems with our current system and America will be as strong as ever. So, can something this big be solved with such a simple plan? The answer is no. Cain’s plan is too simple to work, and many questions still remain unanswered. Although Cain is convinced that he will be the last one standing, the odds are slim to none.
Cain served as CEO of Godfather’s pizza. With the company about to go under he showed his poise and problem solving skills and was able to save the company. “In just 14 months, Herman returned Godfather’s to profitability and he led his management team to a buyout of the company.”(Cain) Cain and his supporters believe this qualifies him to run a country with severe economic problems. After his success Cain became President of the National Restaurant Society as well as the Board of Directors of the Federal Reserve Bank of Kansas City, Where he was elected chairman. Cain now hosts his own radio show and speaks at seminars all around the world.
The most important element of Cain’s campaign is his 9-9-9 plan. He believes this plan is America’s way out of debt. Cain’s website tells us, “It taxes the broadest possible base at the lowest possible rates. It is neutral with respect to savings and consumption, capital and labor, imports and exports and whether companies pay dividends or retain earnings.”(Cain) He believes that if we adopt this, the national debt will slowly melt away. The plan calls for nine percent business flat rate, nine percent individual flat rate and nine percent national sales tax. “Unlike a state sales tax, which is an add-on tax that increases the price of goods and services, this is a replacement tax. It replaces taxes that are already embedded in selling prices. By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.”(Cain)
The second phase of Cain’s plan will be called “The Fair Tax”. It says that “Amidst a backdrop of the economic renewal created by the 9-9-9 Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.”(Cain) Cain’s website says that it will replace individual and corporate income taxes as well as end the IRS as we know it and repeals the 16th Amendment. The sixteenth amendment states that the Constitution gives Congress the power to collect taxes on income without apportioning it among the states. This differs from what Cain is trying to do with his plan. Tyler James, a writer from CBN, says “Cain’s plan would replace the current complicated income tax system, but it would also kill tax deductions that many Americans and businesses like.”(James) The first problem that I have with Cain’s plan is that its initial attraction was its simplicity. At first glance this tax plan promoted only three main policy points. This looked to be an enticing tax idea in theory, but in reality the simplicity of the plan broke down. Cain is quoted from his office website telling us about his plan, “It’s fair, simple, efficient, neutral, and transparent.”(Cain) The problem is that in reality it is not simple. Once the critics started to pick the plan apart, Cain began to change the fundamental premise of its original intention, which was its simplicity. Grover Norquist, who is the President of the Conservative Americans for Tax Reform, told ABC’s television show that the plan is "very dangerous." He also went on to say that "I'm very concerned about three different taxes -- every one of them can grow.”(Norquist) Cain attempts to sell his plan to the American public on the premise of a nine percent tax across the board. When in actuality he cannot guarantee that the nine percent rate will remain constant and not increase. Another problem with Cain’s tax proposal is that he proposes a National Sales Tax of nine percent. This concept sounds okay within itself, but Cain does not go on to explain that the nine percent tax will be added on to the already existing state sales tax. In an article written by Dean Clancy, he goes on to tell us “Cain doesn't get rid of the income tax. Instead, he reforms it. And then he adds a new levy -- a national retail sales tax -- on top of it.”(Clancy) In the state of Pennsylvania a consumer would pay the nine percent national sales tax plus the six percent state tax that is already in effect. Thus making the total sales tax fifteen percent instead of the nine percent Cain tells us it will be.

One of the biggest concerns involved with Cain’s plan is the tax burden that will be placed on the lower class. Zachery Weishar tells us that “There is no doubt that Cain's 999 plan is regressive, in the sense that it places the majority of the tax burden on Americans with the lowest incomes. Under current tax law, Americans earning under $10,000 per year pay 2.6 percent of their income in taxes. Under Cain's plan, they would be paying nearly 22 percent.”(Weishar) Since the majority of the tax burden is being placed on the poor, the class that we see the biggest tax cuts is the upper class. Bruce Bartlett, who worked with Geroge W.H. Bush and Ronald Regan, was quoted in saying
“The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.”(Weishar) A major concern with this plan is that the original 9-9-9 plan was changed to 9-zero-0 by Cain after being criticized. Catalina Camia, reporting with USA TODAY, states that “GOP presidential hopeful Herman Cain tweaked his 9-9-9 tax plan, eliminating the tax burden on people living in poverty and creating "opportunity zones" to boost economically depressed areas.”(Camia) Fox News had exclusively reported “Cain’s opportunity zone proposal is stirring displeasure among leaders of organized labor. Although he did not dwell on this during his appearance in Detroit, Cain insists that those areas that wish to qualify as an opportunity zone must eliminate what the campaign calls “barriers” to economic growth.”
Fox News than went on to give examples of how to eliminate the barriers. “Examples of how to do that, as provided by campaign sources, include a number of steps considered anathema to Big Labor. They include the abolition of the minimum wage; the institution of school choice for parents; and the establishment of “right to work” conditions, which allow workers to refuse to join unions in unionized workplaces. James Hoffa president of the Teamsters Union was quoted in stating: “Herman Cain‘s ’opportunity zones’ appear to be an opportunity for corporate America to exploit workers and turn the United States into a third-world country.”(Hoffa) Hoffa is not the only one in total disagreement with creating opportunity zones. AFL-CIO President, Richard Trumka, spoke with Fox News saying ‘“It’s tough to take anything like that seriously, Look, workers are working hard and their wages have stagnated. To have Herman Cain, a serious contender on the Republican side, make a statement like that – that he wants to further lower wages, he wants to do away with the minimum wage – it’s almost laughable.”(Trumka)
Many economists are giving their option on Cain’s plan, but they are not the only ones who have something to say about it. The opposing GOP candidates have given their options on the plan. Many of the top contenders have taken jabs at Cain’s plan. Mitt Romney, who is very close to Cain in the polls, was quoted in saying to the Associated Press Washington that “Herman Cain's "9-9-9" tax plan still needs a lot of work. And he says that most middle-income Americans would end up paying more if Cain has his way. He warns that senior citizens and those on fixed incomes in particular could face significantly higher taxes under the 9-9-9 proposal.”
Over the past couple of weeks Herman Cain’s status on the GOP ticket has significantly changed. His plan has proved to be something of a joke that cannot be taken seriously in the minds of Americans. There are too many flaws associated with the plan, which lead people to question what Cain was even doing in the first place. With the weak tax plan and current accusations of inappropriate personal behavior lingering in the spot light, Herman Cain’s attempt to become the GOP’s nominee as President of the United States may be short lived.

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