Herman Cain’s opponents in the presidential campaign aren’t the only ones who aren’t on board with his 9-9-9 plan for the economy.
So do many major conservative groups and even — wait for it — one of Cain’s own consultants.
The plan, which would overhaul the tax code with a 9 percent sales tax, a 9 percent income tax, and a 9 percent corporate tax, was the most touched-upon subject at Tuesday night’s Washington Post-Bloomberg News debate.
And Cain’s opponents — from Minnesota Rep. Michele Bachmann to former Massachusetts governor Mitt Romney to former Pennsylvania senator Rick Santorum — sought to invalidate it.
But Bachmann and her cohorts aren’t the first to raise major concerns about a plan which, on the surface at least, is a great political sell.
Conservative groups from the tea party-aligned FreedomWorks to the libertarian-leaning Cato Institute to Grover Norquist’s Americans for Tax Reform have already begun raising questions about the plan, as has the conservative Wall Street Journal editorial board. And one of Cain’s consultants said today that the plan is more of a grand idea than a practicable economic policy.
“You’re trying to go to a system that taxes income once and only once and quits double-taxing savings,” paid Cain consultant Gary Robbins told Politico. “That’s something that can really juice the economy; it’s probably worth 15 percent in growth. … The problem with the big-bang changes like that — the flat tax or the fair tax — is that they are so alien to the current system that it would be a great big shock.”
And Robbins has company.
“We are very, very opposed to that, so we would be very uncomfortable with transitioning business taxes over to a VAT,” said ATR tax policy director Ryan Ellis. “It’s pretty easy to raise that rate of the VAT when you’re in a budget crunch.”
Likewise, FreedomWorks legislative counsel Dean Clancy wrote a blog post last week hitting the plan for its practicality — or lack thereof. Clancy noted that Cain wants to eliminate the income tax too, which Clancy argues would require a 25 percent sales tax to maintain current revenue levels.
Clancy also contends that the sales tax represents the dreaded value-added tax, which many conservatives argue is the worst tax of all.
“It’s the most insidious of all taxes, because it is built into the price of everything and consumers can’t see how much of the price is due to the tax,” Clancy writes.
Asked if Clancy’s position was the official position of the tea party-aligned group, FreedomWorks spokeswoman Jackie Bodnar said, “I think it would be fair to say that’s the consensus around here.”
Added Cato tax policy director studies director Chris Edwards, in an interview with Bloomberg: “The business base would be much broader because businesses don’t get a wage deduction, but then it would be narrower because they get to deduct dividends paid to shareholders,” Edwards said. “That’s a significantly different base.”
“Cain is correct in arguing that fixing our tax system will require fundamental reform,” Lewis writes. “His mistake is in proposing — as Bachmann said — to ‘give Congress another pipeline for revenue.’”
Added Benson: “If you don’t exempt basic staples, the sales tax could amount to a major tax hike on the working poor and middle class -- an obviously problematic outcome.”
Not everyone has been so critical, of course. The fiscally-conservative Club for Growth earlier this year gave Cain generally positive marks for his economic rhetoric, while stressing that it was based only on his words and not on a public record.
The review came out before Cain launched his 9-9-9 plan, though. Club spokesman Barney Keller said the group was reserving judgment on the plan, while praising its ingenuity.
“His 9-9-9 plan is bold, intriguing and appears strongly pro-growth,” Keller said. “We look forward to reviewing it in more detail in the future.”
Now, it’s important to note that these groups and people won’t necessarily turn your average voter off from Cain. That’s because most voters don’t dig far enough into the details of Cain’s plan to read these reviews. (See our piece this morning on the political savvy behind 9-9-9.)
But if a consensus grows among top conservative thinkers that Cain’s plan is not a serious one or that it could lead to trouble down the road -- most likely through that sales tax — it could cause problems for the Republican contender.
Right now, Cain is on the cusp of being considered a legitimate top tier candidate, and if his economic plan isn’t seen as the work of a serious candidate, he may not get the time of day with important donors, activists and opinion-makers.
Cain has already hamstrung himself in that regard by refusing to release his list of economic advisers (he names one: Rich Lowrie). That leads to the perception that the the former chairman of the board of directors of the Kansas City Federal Reserve doesn’t have smart people in his inner circle.
In the end, his plan will be evaluated on its merits; and right now, it’s not getting sterling reviews.
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