The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Althouse on the Cain Train?

Posted on | October 16, 2011 | 72 Comments

“I thought David Gregory really lost his cool early on, as he was questioning Cain about 9-9-9. If you watch the video, you can see he’s agitated and grimacing in a way that really lacks the usual polished journalist quality.”
Ann Althouse, “Herman Cain Nailed Meet the Press”

This is an unexpected but really quite welcome development. Professor Althouse has been critical of Cain previously and (like most in academia) is not generally a fan of the populist style. From the transcript of Meet the Press, she excerpts these examples of David Gregory’s visible frustration:

The reality of the plan is that some people pay more, some people pay less…. You’re saying [prices] actually go down?… This isn’t about behavior, Mr. Cain, this is about whether you pay–if you don’t pay taxes now, and you now have income tax and a sales tax, you pay more in taxes…. Mr. Cain, we talked to independent analysts ourselves…. We’re not just reading newspaper clips here… They tell us, they’ve looked at this, based on what’s available of the plan, and it’s incontrovertible.

I hadn’t really spotted that, but she’s right: Cain stood his ground, and one of the points that flustered David Gregory was this:

MR. GREGORY: The wealthiest Americans would pay less, the poorest Americans and middle class would pay more. You don’t dispute that.
MR. CAIN: I do dispute that. You are making — you and others are making assumptions about what wealthy Americans would do with their money, and you’re making assumptions about what the middle class and the poor. You can’t predict the behavior. If wealthy Americans…
MR. GREGORY: This isn’t about behavior, Mr. Cain, this is about whether you pay — if you don’t pay taxes now, and you now have income tax and a sales tax, you pay more in taxes.
MR. CAIN: More people will pay less in taxes. More people will pay less in taxes when you consider all the taxes.

What Cain was saying is that every system of taxation involves hidden economic incentives, and incentives influence behavior. Cain was correctly saying that the sales tax element of “9-9-9,” which Gregory and others assume would impose higher taxes on the poor, would only cause them to pay more taxes if they do not respond to the incentives, namely to spend less — or buy more secondhand merchandise, which isn’t taxed under his plan.

Cain is likewise correct in saying that “you can’t predict behavior” — i.e., The Law of Unintended Consequences. While this is as good an argument against “9-9-9” as it is in favor of it, Cain is correct that we cannot make easy assumptions about how such a radical alteration of the federal tax system would impact the economic behavior and financial well-being of various classes of people.

We can agree that a flat tax will generally be of most benefit to the wealthy (who pay a much higher percentage of their income under the existing progressive system) without assuming, willy-nilly, that others will be impoverished as a result. And the point of “9-9-9” is not to achieve “social justice,” but rather to unleash capital investment to spur economic growth. It is a supply-side solution to our current economic woes, and as such has been praised by the Club for Growth and by Art Laffer.

Would a man rather be unemployed and paying no taxes, or would he rather have a job and pay taxes? That’s the real choice, and yet David Gregory can’t seem to understand it.

We could update an old joke Ronald Reagan used to tell: “A recession is when your neighbor loses his job. A depression is when you lose your job. And a recovery is when David Gregory loses his job.”

PREVIOUSLY: Remember When David Gregory Raked Obama Over the Coals on ‘Meet the Press’?

Comments

72 Responses to “Althouse on the Cain Train?”

  1. Joe
    October 16th, 2011 @ 6:36 pm

    She is not on the Cain train, but she is recognizing that David Gregory is a friggin biased tool.  And she is noticing that Herman Cain is a more substantial candidate than she first thought. 

  2. Anonymous
    October 16th, 2011 @ 6:43 pm

    “Would a man rather be unemployed and paying no taxes, or would he rather have a job and pay taxes?”

    Aha! I think you may be onto something there. Think about the former. Now think about the Potemkin protesters. And think about Democrat/Progressive policy. Work is their four letter word.

  3. Joe
    October 16th, 2011 @ 6:48 pm

    Cain (and you) are right about behaviors affecting decision making. 

    The 9-9-9 plan is good in that it promotes saving.  It is potentially bad in that it will damper consumption.  The new and used part of the tax worries me.  Would I buy a new car or a used car if there were an additional 9% involved?    Is that necessarily a good thing for promoting growth and stimulating the economy? And a plan that is revenue equivalent/neutral to the current system may not be so if people suddently get wise to how to avoid the tax (it is interesting how many of us figure that math out like Spock when it comes to our money).   But I also recognize this is a starting point in discussion (Herman Cain is unlikely to have Nancy Pelosi and Harry Reid pass it without anyone actually reading or understanding it). 

    I like the fact Cain has a plan. Obama and Romney have no plan. 

  4. Steve in TN
    October 16th, 2011 @ 6:49 pm

    “Buy second hand merchandise” to escape taxes…  Well, screw both of you, Stacy.  999 is a bad plan. Period.

  5. Bob Belvedere
    October 16th, 2011 @ 7:32 pm

    But I also recognize this is a starting point in discussion….

    Exactly.  I think a consumption tax is a bad thing, but Mr. Cain is on the right track in his thinking.  It is a situation ripe for disaster [and we’re starting to see] when a big swarth of the adult population does not pay federal taxes and can still vote themselves more benefits.

    BTW: It’s not the government’s business to promote savings or anything else.  They have no right to tell me that I need to save or to spend more.  That is my business.  [This is why I favor a true flat tax whereby everyone of voting age pays a flat amount, a membership fee if you will.]

  6. Bad Drivers, Bad Radio and Bad Weather | The Lonely Conservative
    October 16th, 2011 @ 7:58 pm

    […] Live reported that President Obama is in trouble in Pennsylvania, and quite a few other states.The Other McCain has more on David Gregory’s Herman Cain interview and how Cain managed to get Gregory all […]

  7. Anonymous
    October 16th, 2011 @ 8:12 pm

    u mad?

  8. Anonymous
    October 16th, 2011 @ 8:15 pm

    The only fact settled in this interview is the fact Mr. Gregory is told what to say and he plants his flag on it without questioning its validity. No retreat, No surrender.

  9. David
    October 16th, 2011 @ 8:16 pm

    Also, ‘soap’.

  10. Joe
    October 16th, 2011 @ 8:27 pm

    So let me guess, you are a new car salesman? 

  11. Anonymous
    October 16th, 2011 @ 8:52 pm

    EVERYONE needs to pay some taxes.  EVERYONE needs to have some skin in the game.  If you don’t pay, you shouldn’t have a say.

    47% pay no federal taxes.  If you are on the dole, you should not be able to vote for politicians who promise you more dole. That is the inevitable end to the Republic.

  12. Joe
    October 16th, 2011 @ 8:55 pm

    Great picture for capturing Gregory’s inner mendouchiness. 

  13. Anonymous
    October 16th, 2011 @ 8:55 pm

    Luckily for the Republic, we have a successful Community Organizer rousing the rabble as we ponder this.

  14. ThePaganTemple
    October 16th, 2011 @ 8:57 pm

    Lowering the corporate tax to 9% in theory will enable the auto companies to lower their prices, thus the 9% sales tax won’t be as much of a bite. You might actually save money, depending on the company and the car. Of course that’s assuming they currently pay the actual 35% rate they are technically supposed to be paying now.

  15. Joe
    October 16th, 2011 @ 8:58 pm

    Dandapani.  Actually most of them do pay taxes.  Payroll taxes.  That is why the working poor may in fact pay less taxes under Cain’s plan.   Now Cain is saying 9-9-9 gets rid of those taxes (so presumably social security and medicare are coming out of the general budget, which of course is the case anyway but Cain gets rid of the fiction of a “trust”).  But they will see it. It won’t be hidden as it is now, with employers paying a big chunk of it before you even get your check.

  16. Dan King
    October 16th, 2011 @ 9:01 pm

    Cain isn’t a coward. Unlike Obama, there is no reason for him to be scared of any journalist. As he told Larry the MSNBC guy – “Larry, I’ll be happy to sit down with you any time.”
    We have a good candidate here. Let’s trust him to make his case cogently, succinctly, and compellingly. Any advice suggesting that he  shun the MSM is just misguided.

  17. kansas
    October 16th, 2011 @ 9:07 pm

    Obama has a plan. To put this country in so much debt and to commit to so many misadventures that we are overwhelmed. His plan is working.

  18. Dianna Deeley
    October 16th, 2011 @ 9:14 pm

    The employers’ portion (right now, anyway) is 6.2%; the employees’ portion is 4.2%. Both pay 1.45% for Medicare. The employee never sees the 6.2%  and 1.45% – but it has a huge impact on his wages, anyway.

    I’m also wondering how aware most people are of the 2% extra in their checks this year, and where it comes from. To say nothing of what will happen (as I am assuming – possibly incorrectly) when the 2% cut is not continued.

  19. Anonymous
    October 16th, 2011 @ 9:21 pm

    I agree, but right now the government promotes (consumer) spending. Thus a move in the right direction would, in certain respects, “promote” savings compared to the default policies.

  20. Anonymous
    October 16th, 2011 @ 9:25 pm

    “So, let me guess, you are [selling] a new [used] car salesman?”

    Fixed it for you. Btw, the car salesman that Steve is selling is Perry, if I remember correctly.

  21. Anonymous
    October 16th, 2011 @ 9:46 pm

    Yes, and a lot of them get those payroll taxes refunded to them through the child care credit, the additional child care credit, and the earned income credit  – plus extra on top that they didn’t pay in  if the last two exceed the FICA and Medicare deductions. Those people shouldn’t be voting themselves more handouts so they can blow their “refunds” on new tattoos, big screen TVs, and the like.

  22. Dianna Deeley
    October 16th, 2011 @ 9:51 pm

    While those workers exist, it’s more the people like my new assistant I’m thinking of, who honestly was unaware of the 2% cut.

    Next year, she’s taking a two percent cut in her take-home (and she isn’t going to get any rebates or refunds on her FICA, either).

  23. Anonymous
    October 16th, 2011 @ 10:12 pm

    The exception on sales tax for used goods will lead to a lot of uneconomic behavior, including straw buyers who then return the item to the seller, so the seller can gain a competitive advantage by selling the same item “used” (maybe to the same buyer)!  Plus the danger of introducing an entirely new revenue stream to the federal government, with no constitutional means of holding the sales tax to 9% (or the income taxes to  9%.)

    999 bites.

    Plus Cain knows jack about foreign policy.  I don’t mean that he doesn’t engage in Romney-esque fancy-talkin’ on the subject; I mean that he never spent 5 minutes thinking about it.

    Go Cain!

  24. Joe
    October 16th, 2011 @ 10:41 pm

    I have nothing against Perry.  I would prefer Rick to Mitt.  Perry’s worst enemy was Perry.  Steve in TN should not be mad at Herman for that. 

  25. Joe
    October 16th, 2011 @ 10:42 pm

    Well, if it is a really cool tattoo…maybe. 

  26. Joe
    October 16th, 2011 @ 10:44 pm

    You are right.  Take them on directly.  But tell them to pound sand at the debates.   Lefties should not be participating in the picking of the GOP candidate.  I have a problem with that. 

  27. Brendon Carr
    October 16th, 2011 @ 10:45 pm

    The true per-head “flat tax” you prefer, Bob, is known as capitation and is unconstitutional — it is barred by Article I, Section 9 of the Constitution and, in its incarnation as a voting-rights tax which has had disparate impact on poor blacks, the 24th Amendment to the Constitution.

    Capitation has a very long history, with records going back to the law of Moses and the Book of Exodus (but probably existing well before that), but unless we change the Constitution it’s not the American way.

    What I love about the 9-9-9 Plan, however, is that it eliminates all loopholes and special concessions to this group or that group. We’re all in it together, and the 9-9-9 Plan does much more to make that clear.

    Also, it puts the tax lawyers out of work. (I’m a lawyer myself, but the complexity of our tax code is an unnecessary burden on the economy.)

  28. Joe
    October 16th, 2011 @ 10:52 pm

    Althouse may be on the Cain Train (I think she is on the platform still), but Allahpundit is down spiking the tracks around the bend.  http://hotair.com/archives/2011/10/16/quotes-of-the-day-833/

  29. Ohio Vietnam Vet
    October 16th, 2011 @ 11:01 pm

    [Hey, you just said the magic word and won yourself a free trip out of here!]

  30. Ohio Vietnam Vet
    October 16th, 2011 @ 11:10 pm

    Good thinking.  I think Cain ate too many of his pizzas and they must have cooked his brain.  The whole 9-9-9 thing will never go into law because the Ultra-Rich love the status quo—they hide their incomes in places like the Cayman Islands and don’t pay anything.  If we had a “everyone has to pay” 9 percent tax, the Ultra-Rich tax dodgers wouldn’t be able to dodge it UNLESS they pulled the “new-used” scam you mentioned OR who knows what?  Bottom line is that the Ultra-Rich will have their accountants find ways around the 9-9-9 and Joe Average won’t.  Ultra-Rich get the elevator, Joe Average gets the shaft!   History repeats itself!  

  31. Anonymous
    October 16th, 2011 @ 11:11 pm

    I don’t have (much of) anything against Perry, either. I’m just needling Steve in TN because most of his comments are devoted to putting down Cain.  

  32. Anonymous
    October 16th, 2011 @ 11:18 pm

    How much stupid can you pack into one paragraph? I wouldn’t even know where to start, as every sentence is illogical rubbish.

    Then again, this p-o-s doesn’t deserve a serious rebutal, as the fifth word (above) is a disgusting obscenity.  Hey, bub, GFY!  

  33. Anonymous
    October 16th, 2011 @ 11:21 pm

    You left out the bit about drinking the blood of the poor.

  34. Anonymous
    October 16th, 2011 @ 11:22 pm

    Howard Zinn’s intepretation of the America Dream + copious amounts of LSD + PTSD +  a 7th grade education + working class hero = Ohio Vietnam Vet.  

  35. Anonymous
    October 16th, 2011 @ 11:25 pm

    We hide our cash in William Jefferson’s (D-Convicted) freezer and with Charlie Rangel’s (D-TheBigHouse) tax shelter in Bermuda.

  36. Dianna Deeley
    October 16th, 2011 @ 11:29 pm

    Your rant is a fascinating exercise in what I refer to as populist conspiracist thinking.

    It should be saved for posterity, and placed in a museum, reverently preserved in a hermetic case with a non-oxidized atmosphere.

  37. Anonymous
    October 16th, 2011 @ 11:41 pm

    In the early 1980s, me and my cronies from the Yale class of 1962 engineered the crack cocaine epidemic. We cooked up the idea during a wild party on JR Ewing’s yacht. 

  38. Anonymous
    October 16th, 2011 @ 11:46 pm

    OK after reading your leftist hate/drivel, I changed my mind.  Forget what I said above.  I love Cain and his 999 plan. 

  39. Onibar1
    October 16th, 2011 @ 11:55 pm

    [Include a link next time so we know you’re not just hallucinating.]

  40. ThePaganTemple
    October 17th, 2011 @ 12:08 am

    What I want to know is, where do all these leftist fucktards come from with names they think make them look patriotic or conservative. In another thread we had OkieMan and Patriot1, and now we’ve got a “Vietnam Vet” from Ohio. What is this shit about, do you guys think that lends some kind of weight to your leftist bullshit?

  41. Anonymous
    October 17th, 2011 @ 12:15 am

    I like the Koch Brothers because they’re incredibly productive; they have a created great wealth & a great number of jobs.  Don’t much like this Onibari character because he’s not productive, living in his mother’s basement.

  42. Herman Cain Nailed “Meet the Press” « Standing on a Corner
    October 17th, 2011 @ 12:31 am

    […] Stacy McCain weighs in with “Althouse on the Cain Train”: This is an unexpected but really quite welcome development. Professor Althouse has been critical of Cain previously and (like most in academia) is not generally a fan of the populist style. […]

  43. Adjoran
    October 17th, 2011 @ 12:50 am

    I’d wager the closest you ever got to a real Vietnam Vet might have been servicing one in a truck stop men’s room.

    They have meds to deal with your sort of problem, Sparky.  If the first dose doesn’t work, just take the whole bottle.

  44. Adjoran
    October 17th, 2011 @ 12:58 am

    Those are the temporary rates because of the “payroll tax cut” which is scheduled to expire (Obama’s Tax bill does extend them and Republicans might agree to it as a stand-alone).

    It’s not very significant as a break – if gross wage is $500, it’s $10 more, not exactly making or breaking many people.  I think there is an upper limit on the break, too, but I can’t remember where the cut-0ff is.

    I’ve always spoken of the payroll tax as 15.3%, because people need to understand their employers don’t take their half out of profits, it’s out of the money they would have paid you if there was no tax on them.

  45. Adjoran
    October 17th, 2011 @ 12:59 am

    There should be an ironclad rule that tax credits beyond your tax liability in a given year are lost.  No one should get a “tax refund” check who paid no taxes in the first place.

  46. Adjoran
    October 17th, 2011 @ 1:05 am

    Amen. 

    Debates should be about the candidates and their proposals and takes on the major issues.  Panelists and moderators should not be a part of the show at all, except a neutral timekeeper who only enforces time rules and keeps record of who speaks next in multi-candidate debates.

    It makes no sense at all to give the Democratic media half the stage and control of the rules at Republican debates.  All they do is try to earn points among their colleagues by making Republicans look bad.  The truth AND our process are always casualties.

  47. Anonymous
    October 17th, 2011 @ 1:21 am

    The Harvard University head of Disturbing Research just called.

    He says your claims are unproven, since his lab has patents pending on both the crack formula and the AIDS virus.  And some guy in the background was overheard asking Dr. Leary which drawer had the “bad acid” from Woodstock.

  48. Anonymous
    October 17th, 2011 @ 1:30 am

    Unless Rick Perry learns how to debate like Mark Levin, or Sarah Palin somehow materializes magically back into the race, or Zombie Reagan does come to save us, Cain is my man, terrible tax plan and all.

    I’m thinkin’ of sending him money.  I bet he spends it better than anyone else in campaign history since 1920.

    Time to “occupy” prosperity.

  49. Adjoran
    October 17th, 2011 @ 1:33 am

    I should note that Cain’s 999 plan has also gained a qualified endorsement from Larry Kudlow, whose opinion I value on economic policy.  I believe his description was that it is “flawed, but a vast improvement over the current system.”

    One problem with the numbers he mentions, though: 

    Former Treasury hands Gary and Aldona Robbins priced out the Cain plan on a static basis and discovered it to be revenue neutral. Essentially they found a $26 trillion tax base yielding $2.3 trillion in revenue for a 9.1 percent overall rate

    http://tinyurl.com/65smo9p – on the second page.

    To get a $26 trillion tax base when we have a $15 trillion GDP requires either assuming the economy will grow by 60% in a year, taxing property, or taxing some money multiple times.

    I suspect it’s the latter, since it’s already been reported that the 9% business tax would not allow for deductibility of salaries, one of the largest expenses for most business and THE largest by far for service industries.  Perhaps capital expenditures are deductible, but apparently most general expenses would not be, and if that includes the cost of materials for manufacture or finishing and/or product for resale, then those are taxed at every stage from raw material to delivered product.  A true VAT only assesses the increase in value of purchased goods, but you can’t get to a $26 trillion tax base by doing that.

  50. Steve in TN
    October 17th, 2011 @ 2:09 am

    Nope.  I was hopeful for Perry, as I was Bachmann and Santorum, but I don’t like any of the dogs in this race.