Cain’s 9-9-9 Plan: Terrific Marketing of an Awful Product

Last night, my wife and I attended the North Carolina State Fair.   Aside from all the rides, games, and exhibits, what I find most fascinating is the overwhelming popularity  of the most unnatural and unhealthy foods modern science has ever created.  The most exotic deep-fried items always tend to have the biggest, brightest signage, and likewise…the longest lines.   Now, I have faith that most people realize that a deep-fried Snickers bar can be detrimental to one’s health.  But what fun is going to the fair and eating something “normal”, like say, a plain slice of pizza, right?

Opting to be somewhat nice to my arteries, I ordered a plain slice of pizza, which being a political junkie, got me thinking about former Godfather’s Pizza CEO and current GOP flavor of the month, Herman Cain.  Specifically, I marveled to myself what an amazing job he has done marketing both himself as an outsider and his signature 9-9-9 tax plan.   Let’s be frank.  9-9-9 is about as good for Americans as deep-fried Kool-Aid and Herman Cain knows this.  But you don’t get to be CEO of a national restaurant chain without knowing how to sell your product no matter how good or bad it actually is.  The reality is that our current tax code is a mess, riddled with more loopholes than a block of Swiss cheese.  For the average American, trying to make sense of it all is like trying to listen to an infant recite Shakespeare.    None of the other GOP candidates are offering any solutions we haven’t heard before and frankly just don’t work.  Mitt Romney released his 59-point economic plan back in September.  How many of  those 59 points can you name off the top of your head right now?  Can’t come up with any? Me neither.

Enter 9-9-9 in all it’s deceptive simplicity.    I mean, a flat 9% income tax, 9% corporate tax, and 9% national sales tax. Pretty simple, right? As Cain says himself, “If 10% is good enough for God, then 9% ought to be good enough for the Federal Government.”   10% may very well be good enough for God, but then again God didn’t run up a $14 trillion deficit that is going to require increased revenue to service.  Who wouldn’t love a plan that only requires you to fork over 9% of your paycheck to the federal government?  As the saying goes, if it’s too good to be true, it probably isn’t.

With conservatives running out of time to find the perfect anti-Romney, and dreams of a Chris Christie or Sarah Palin run turned to pixie dust, it was only a matter of time before they turned their attention to the former pizza man.    And once they did, the floodgates opened.  Jon Huntsman, who I believe is the most pragmatic GOP candidate, and therefore has no shot at winning the nomination, had one of the best debate one-liners I’ve heard in while.

“The first time I heard of it, I thought it was the price of a pizza”

Huntsman was close.  Dominoes, a Godfather’s rival,  used to offer a 5-5-5 deal.   Now, even Dominoes will admit that they make a pretty bad pizza, but for $5, at least you weren’t giving up a whole lot of dough.  Cain’s 9-9-9 plan is far worse.  Not only is it a bad idea, but most people will end up paying more in the long run.  It is a brilliant scheme to deliver deeper tax breaks to the wealthy, while punishing low income families.  This is not surprising given Mr. Cain’s recent statements:

“Don’t blame Wall Street. Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”

 ”It took our nation nearly 250 years to end slavery and live up to the self-evident truth that all men are created equal. It should not take us another 250 years to cease the involuntary negative return most working people receive from Social Security, or the involuntary servitude imposed by the oppressive income tax code.”

Under 9-9-9, low income families will end up paying more.  A lot more.  Republicans hate the fact that up to 46% of low income earners pay no federal income tax, and in same cases, even get tax rebates.

When President Obama proposed that his $447 billion American Jobs Act be paid for by imposing a slight increase on taxes for the top 1%, Congressional Republicans demanded that the 46% pay taxes first before their precious millionaires got dinged.

The reality is that low income families do in fact pay some taxes in the form of payroll and other state or local taxes.  The reason they may not pay any federal income tax is due to the deductions they are legally entitled to.  For instance, a couple with 2 children who earn less than $26,400 would pay no income tax after considering the standard deduction of $11,600 and two $3,700 exemptions for the children.   With 9-9-9 in effect, that same family would receive a federal income tax bill of almost $2,400. On top of that, they would also have to pay an additional 9% sales tax on anything they buy, which would be in addition to any state and/or local sales tax already in place.  In a state like Alabama, which has a 10% sales tax, and no exemption for food or clothing, adding a 9% national tax, results in a total sales tax of 19%!    A $200 grocery bill that would normally become $220 with sales tax, would jump to $238 under 9-9-9.   Ultimately this will cause low income families to have less take home pay, which means less money that they are spending on goods and services.  And if people are spending less, then there is less demand, which means less incentive for businesses to hire workers again.

Not surprisingly, New Hampshire, which actually has no sales tax, is the one early voting state, that is not looking good for Cain.  Some of that may have to do with Mitt Romney’s ties to the area, but I suspect people up there don’t like what they see in 9-9-9.  Being the only state in New England without a sales tax, New Hampshire brings in a lot of business from around the region.   If 9-9-9 went into effect, I doubt people would make the same effort.

What’s worse is that 9-9-9 would actually grow the deficit.  In it’s current form, it would not generate the same amount of revenue as today’s tax code does.  An analysis shows that if 9-9-9 existed today, it would have generated $1.7 trillion in revenue, far short of the $2.2 trillion the government will collect this year.  That could potentially threaten entitlement programs like Medicare and Social Security, that an overwhelming majority of Americans support.  But recent history shows that Republicans only care about the deficit when a Democrat occupies the White House.  The debt ceiling debacle that took place over the summer was more about sticking it to President Obama than actually being sincere about fixing the economy.   After all, it’s hard to take people like  House Speaker John Boehner seriously when he voted for the 2001 and 2003 Bush tax cuts, the Iraq war, Medicare Part D, and TARP!

Yet, given all of the debunking of Herman Cain and his 9-9-9 plan, a new University of Iowa poll out today gives him a 10 point lead of Romney.  Cain also placed first in the Western Republican Leadership Conference straw poll in Nevada.

Despite his unimaginable rise, I feel I can say with a fair amount of certainty that Herman Cain will NOT become the GOP nominee for 2012.   Aside from the crippling effect 9-9-9 would have on middle and working class families, Mr. Cain has been aligning himself with the far right of the Republican party, which will not do him any favors in a general election matchup against President Obama.  He is clearly a novice when it comes to foreign policy and national security and would get obliterated in a debate against the sitting president who recently led a few successful operations to take out some guys you may heard of named bin Laden and Qaddahfi.  Additionally, Mr. Cain’s ego will not serve him well either.  I can’t imagine his call to “freshen up” Hail to the Chief  with a more gospel-like feel would sit well with most Americans.

I’m not sure how much longer Herman Cain will stay at the top.    While none of the other candidates have been able to sustain confidence in conservatives’ hearts, I have to believe that at some point they will start to worry about his prospects in a general election matchup.  They may not like Mitt Romney, but if they truly want to win the White House in 2012, they may need to swallow hard.    On the other hand, Herman Cain could continue to overperform an actually win the GOP nomination.  And if that happens, I may just shock myself into eating a deep-fried twinkie at the 2012 state fair.