GOP Economy: Herman Cain's economic plan
Home state: Georgia
Update from the Campaign Trail: On Saturday, December 3, 2011, Herman Cain announced at a rally in Atlanta that he would suspend his run for the Republican presidential nomination. "As of today, with a lot of prayer and soul-searching, I am suspending my presidential campaign,” he said. The former chief executive of Godfather’s Pizza did not officially say he would end his bid, and according to The New York Times, the move allows Cain to continue to accept money "to pay for his campaign so far and potentially to finance the new venture that he called his Plan B: to travel the country promoting his tax and foreign policy plans."
Economic Policy: Herman Cain’s “9-9-9” plan for a radical overhaul of the nation’s tax system has animated his campaign and turned him from an outlier into one of the most popular candidates in the Republican field. The plan “taxes everything once and nothing twice,” according to his website. It would replace the federal tax code with a flat 9 percent corporate tax, a flat 9 percent national sales tax and a flat 9 percent personal income tax.
Republican primary voters have been drawn to the plan’s simplicity and to the plainspoken way in which Cain explains it. But Edward D. Kleinbard, a professor at the University of Southern California Gould School of Law, deemed Cain’s plan a “terrific example of fiscal hocus-pocus” in a recent article for Tax Notes, a tax-issues magazine. Upon closer inspection, the plan would increase taxes on the middle class and working poor while lowering income taxes for the rich, Kleinbard contends.
Recently, the fiscally conservative Club for Growth came out in favor of the plan. Growth Club President Chris Chocola called it “both pro-growth and a good starting point on the way to a flat or fair tax.” The club also considers the plan a “truly revolutionary tax reform that would amount to a massive job creating tax cut on investments, savings and income.”
Cain is right with the rest of the Republican pack when it comes to overhauling or eliminating some entitlement programs and easing government regulations on businesses.
Defense: Cain has been vague on how he would approach the military and defense spending. Although he has agreed to deliver a foreign policy speech in November, he has so far refused to identify his advisers or positions. When asked how he would handle the war in Afghanistan, Cain said he would only produce a plan if he were able to review military information privy to President Obama.
Education: Cain is adamant about “unbundling” education from the influence of teachers’ unions and federal oversight in order to better serve students. To achieve this, he proposes shifting education decisions to the state and local levels, developing charter schools and expanding school vouchers.
Additionally, he aims to increase teacher accountability. Under his plan, teachers with high-performing students would be rewarded and those with struggling ones would be evaluated. To that end, he notes on his website, “performance incentives work in business, and they will work in education, too.”
Health care: Cain approves of the kind of tort reform that would clamp down on malpractice lawsuits, including a “loser pays” provision which requires people who lose civil lawsuits to pay the opposing side’s legal fees. He also champions patient-centered, free-market health care systems but does little to explain how they would work.
He would widen the tax break companies receive for insuring employees to include people who buy insurance on their own. Health-savings accounts, which let taxpayers with high-deductible plans contribute to an untaxed account, should have fewer restrictions, according to Cain. Social Security: Since his 9-9-9 plan eliminates the payroll tax that funds Social Security, Cain needs an alternative to cover those costs. He’s discovered one in Chile’s privatized social security equivalent introduced during Augusto Pinochet’s dictatorship. The system requires workers to open private pension accounts. But the program, which is still in place, drained about 3.1 percent of Chile’s GDP in 2008. And many economists believe transitioning to this system would create large budget deficits in the U.S.