Ezra Klein: Herman Cain’s 9-9-9 Plan Shows ‘Lack of Policy Seriousness’

Posted on | October 5, 2011 | 44 Comments

On MSNBC’s “Morning Joe,” the Washington Post’s resident Juice Box Mafioso said he doesn’t think Herman Cain’s phenomenal surge will continue because of the Atlanta businessman’s “lack of policy seriousness.” Klein singled out Cain’s 9-9-9 tax plan — 9% personal income tax, 9% national sales tax and 9% corporate tax — by saying “nobody knows how much revenue it would produce.”

It is true that no one has produced an estimate of federal revenue under the Cain plan. However, it is also true that Cain’s proposal for bold reform has been praised by economists including Wall Street Journal senior economics writer Stephen Moore.

And it is furthermore true that Ezra Klein never criticized President Obama for a “lack of policy seriousness,” although the president’s policies have led to economic disaster.

Just sayin’ . . .

Category: Economics, Election 2012, Ezra Klein, Herman Cain, Taxes

Comments

44 Responses to “Ezra Klein: Herman Cain’s 9-9-9 Plan Shows ‘Lack of Policy Seriousness’”

Brian D Paasch
October 5th, 2011 @ 7:54 am

President Obama is very serious about his scorched earth fiscal and economic policies. And he’s doing pretty good with his plans. Which is seriously bad for all of us.
ThePaganTemple
October 5th, 2011 @ 7:55 am

All right, I know how Cain could maximize the impact of 9-9-9. Put simply and concisely, he should implement it all immediately, but gradually, over a seven year period. He could lower the top rates by two or three percent a year, or whatever it takes until at the end of that seventh year it reaches the 9-9-9 level.

BUT-I repeat, BUT!!!-he slashes spending by twice the rate that he cuts taxes, also on a yearly basis. He can accomplish this in part by firing some federal employees, urge others into early retirement, and transferring and retraining the better (and younger) employees for jobs where they might do more useful, like ICE, for example.

And since there will always be a need for a certain percentage of new employees, you simply don’t hire as many new ones as are let go, in fact it should be cut in half.

Then he can look at how many cabinet department can be reduced, slashed, or eliminated.

The reason this will be the best way to implement his plan is it would do the most good, will produce the most revenue while growing the economy at the strong, steady pace, while at the same time minimizing the disruptions, and at the same time holding inflation in check.
Anonymous
October 5th, 2011 @ 8:16 am

You beat me to the punch. I was going to comment that Obama’s economic policies are seriously destructive.
ThePaganTemple
October 5th, 2011 @ 8:18 am

I would also like to point out to Mr. Klein that Herman himself said 9-9-9 was a target, but that it didn’t have to necessarily be a hard and firm number. I heard him out of his own mouth say that once they started working out the details they might decide it would be better if it was 8-8-8, or 10-10-10. The main point to me is reducing the size and scope of the federal government by substantial levels and reducing taxes and regulations also by a very substantial amount. The hard figures can always be negotiable, as long as serious reforms are implemented.

In my opinion, while I’m fine with him eliminating capital gains taxes, sells of stock should definitely fall under the purview of the nine percent (or whatever) sales tax on the sale of stock. That would actually add to revenues under the aegis of a robust and growing stock market.
Anonymous
October 5th, 2011 @ 8:25 am

I think Cain’s answer to criticism on this score could be two words: “Dynamic scoring.”

That is to say, if the 9-9-9 plan ignites an economic boom — as Cain surely believes it would — then the (relatively low) tax rates would be levied on a much larger economic base, so that the Laffer Curve effects would result in a total federal revenue equal to, or even greater than, current revenue.

The other response — as Klein’s plea for “seriousness” can be taken as a reference to the general fiscal situation — is to quote Reagan’s famous saying that the federal budget problem is not because we are taxed too little, but because government spends too much.
smitty
October 5th, 2011 @ 8:29 am

I still hate the federal income tax, and find leaving the 16th Amendment in place a totally Progressive notion.
Is it true that Cain is a friend of the Federal Reserve?
Anonymous
October 5th, 2011 @ 8:53 am

I’m ignorant of economics, so I’ll probably get this all wrong, but . . . .

Might not the 9-9-9 plan, in some respects, be somewhat Austrian-grounded? The 9-percent sales tax, which might incentivize consumers to be more prudent, suggests that the government should not be in the business of generally encouraging, and/or periodically ramping up (“stimulus”), consumer spending. Households with low-to-moderate income under 9-9-9 would figure to do better as long as they spend less, save more.

On the other hand, if savings really did increase under 9-9-9, then perhaps government revenues would suffer, which is just fine as far as I’m concerned, but would be proof of the scheme’s failure in Beltway-land. In that world, the 9-9-9 plan would have to be sold to the “neoliberals” as a means of priming consumerism.
Brendon Carr
October 5th, 2011 @ 8:55 am

It seems that the 9-9-9 Plan would produce about $2.0 trillion in revenue, or just about as much as is collected by the Federal government now. (In 2010 the Federal government collected $2.2 trillion, and spent $3.8 trillion.)

Total personal income 2010: $12.3 trillion
9% of total personal income: $1,107 billion

Total corporate income 2010: $1.65 trillion
9% of total corporate income: $149 billion

Estimated consumer spending: $8.58 trillion (60% of GDP $14.3 trillion)
9% of consumer spending: $772 billion

TOTAL COLLECTIONS: $2.03 trillion

So Herman Cain is correct that his 9-9-9 Plan is “revenue neutral”. And it does seem equitable and balanced against personal income, corporate income, and consumption — treating everyone equally and giving everyone skin in the game for Federal spending.

You’ll note, however, that the corporate-income collection will be only about 7% of total taxation in the economy, with the other 93% falling to individuals. It’s certain that the Occupy Wall Street morons will squeal about this one!

But the 9-9-9 Plan won’t satisfy the redistributive urges of the looters. They want The Rich™ to pay much more because, well, because.
Anonymous
October 5th, 2011 @ 9:00 am

Now that I think about it, though, if household savings rates were to go up under 9-9-9, perhaps that would boost capital-intensive investment, or something? With the economy being on stronger footing, and an increase in savings/investment, revenues from business taxes would soar, even as (or partly because of) the business tax rate is heavily cut. Presumably, the “heavy” economic sectors would benefit, but the more consumerist sectors would experience some contraction (probably beneficial, from a long-term perspective)?

Any economists in the house?
Occupy Wall Street? Grow up « Don Surber
October 5th, 2011 @ 9:02 am

[…] for Ezra Klein, Robert Stacy McCain dices and slices Ezra Klein on another matter: His ignorance on Herman Cain’s tax plan. CommentsPowered by Facebook […]
Joe
October 5th, 2011 @ 9:04 am

Cuting federal spending as you describe is fine and needed, but make no mistake, real cuts (and the reason our budget is…ffffouled up…is due to social security and medicare. Entitlements are killing us.
ThePaganTemple
October 5th, 2011 @ 9:06 am

He was a federal reserve governor in, I think, the Kansas City office.
Anonymous
October 5th, 2011 @ 9:10 am

Any type of flat / Fair tax plan must include repeal of the 16th Amendment as a prerequisite. Otherwise, we’ll get an additional tax, not a replacement.
McGehee
October 5th, 2011 @ 9:13 am

I think a fairly safe assumption on any matter of significant complexity is, if Ezra Klein thinks it can’t work, it’s the right thing to do.
ThePaganTemple
October 5th, 2011 @ 9:26 am

Cain doesn’t want to repeal the 16th, at least not right away. He says the IRS infrastructure is needed to collect the nine percent individual income and corporate tax. But, I think he did also say that 9-9-9 might just be a temporary measure to phase over into an eventual national sales tax as the only source of tax revenue, which would mean an eventual repeal of the 16th, just not right away.
Finrod Felagund
October 5th, 2011 @ 9:26 am

As I understand it, 999 is intended to be a stepping-stone to the FairTax, which would clear the way to repeal of the 16th.
Anonymous
October 5th, 2011 @ 9:40 am

This obsession over medicare and social security is unfortunate, neither of those two programs are bankrupting us next year. Medicaid is bankrupting us right now.
Discretionary spending has increased over 25% in the last three years. If we ever get a handle on Medicare and SS by the time that bruising battle is over the will to tackle another fight on abolishing the EPA etc will be gone.
Abolishing the regulatory structure would be a major boost to the economy and would increase revenue. If we don’t force the government to stop tormenting our economy it doesn’t matter what we do to fix SS and Medicare.
Scott
October 5th, 2011 @ 9:56 am

I am constantly amazed that people actually pay attention to what Klein writes. Most, if not all, 20 somethings are morons, mainly because they think they know everything when they have so few important life experiences to share with us.
ThePaganTemple
October 5th, 2011 @ 10:41 am

Entitlements needs to be reformed, but they aren’t the real problem. The real problem is the governments constant terrorizing of the business community and overall economy through regulation tyranny. Government growth through tax and regulatory reform would cure almost all ills. Bear in mind, Social Security’s biggest problem is the fact that it was raided so often, and so extravagantly, in order to fund other government programs and government growth.

Do away with that crap, and once the economy grows at the pace that it should, then suddenly entitlement spending becomes a much lower percentage of government spending.

I know that’s not a conservative position to take, so call me a RINO if you must, but I’m comfortable with that horn.
ThePaganTemple
October 5th, 2011 @ 10:44 am

By the way Smitty, that’s not necessarily a bad thing. The way the Fed was set up there was a prerequisite equal number of Democrat and Republican Federal Board Governors. If you have somebody there on the order of say “The Oracle of Omaha” wouldn’t you want a counter-balance there like Cain?
Bob Belvedere
October 5th, 2011 @ 11:18 am

And he’s dead serious about doing destruction. It’s Chapter 1 in the Leftist Playbook.
Joe
October 5th, 2011 @ 11:41 am

I meant Medicade too. All entitlements. All need to be scaled back.

And Pagan, over regulation is definitely a problem. I would solve that through sunset laws (I ? sunsets, don’t you?) and electing the right people to Congress and state and local government. But our current fiscal battle, it is mostly entitlements. That is job one.

Social security raided? It was never set up properly to be a trust, the money went into the general treasury and was spent. A terrible decision to be sure, but those “cows” left the barn a long time ago. But we should start the fix now. But social security can be fixed with relatively modest tweaks if we start now. The longer we wait, the worse it will get.

Medicare and Medicade are completely in the weeds. They will never pencil without slashing benefits by about 2/3s or raising taxes enormously. I am all for slashing. Sorry Grandma, you didn’t pay for it anyway so too bad. You are supposed to put the $10 bills in the grandkids’ birthday cards, not expect them to pay through some draconian tax plan. And we as family members are expected to take care of Grandma on our own, not rely on the federal government.
Joe
October 5th, 2011 @ 11:43 am

Pagan, see my response to Adobe above. That was directed to you too. You are right on reform of regulations, but wrong about entitlements. I will not call you a RINO, however, I know you too well to do something like that.
Joe
October 5th, 2011 @ 11:44 am

Totally correct. Even David “I have the vapors for Romney!” Brooks said at least Herman Cain has a plan, no one else does. It is a start.
Joe
October 5th, 2011 @ 11:50 am

Everyone should have skin in the game. Of course they do (sort of). While almost half do not pay any federal income taxes, they do pay social security which of course is a tax because it does not go into a trust but into the general treasury. And it gets spent. So you do not have a “right” to social security becuase a right that belongs to everyone without adequate funding and no accountability is really no right at all. We don’t even have a Bernie Maddoff to put in jail over this.

But I like Cain’s plan for simplying things, making things fairer, but I know when people start having to pay more (the poor and the working class will pay more under Cain’s plan) they will go bullshit. Even though they would probably be better off in the long run doing that, this would be hard to pass. So you know there are going to be big exceptions for certain items and a push to make it escallating for higher wealth. But hey, let’s try.
Joe
October 5th, 2011 @ 11:51 am

SDN, Herman’s plan does not, but I agree that should be part of it. The danger of opening up new taxes is always there.
Anonymous
October 5th, 2011 @ 11:53 am

Ah so you have adult (not the same as grownups) children too.
John LaRosa
October 5th, 2011 @ 12:00 pm

Ezra Klein is to economics as Snooki is to Mensa. #justsaying
Richard Mcenroe
October 5th, 2011 @ 12:00 pm

Ezra Klein? Isn’t he the kid who panicked because he ran out of checks in his checkbook and thought he’d gone broke?
John LaRosa
October 5th, 2011 @ 12:02 pm

9/9/9 is phase one of Cain’s economic plan. Phase 2 is the Fair Tax, which throws everything out, including the IRS and 16th amendment. See HR 25 and fairtax.org. (PS The anti-Cain Fed talk is just nonsense.)
ThePaganTemple
October 5th, 2011 @ 12:03 pm

I don’t allow economists in my house, you never can tell when relatives might stop by for a visit with their kids.
John LaRosa
October 5th, 2011 @ 12:05 pm

Cain’s 9/9/9 plan, which is a short term bridge to the Fair Tax, requires a 2/3 vote for any changes to rates. HR 25 (Fair Tax legislation) requires a repeal of the 16th amendment.
ThePaganTemple
October 5th, 2011 @ 12:08 pm

The best thing about everybody paying the same percentage is it does away with the incentive the poor and working class usually have to support raising taxes on “the rich”. Under this plan they would be raising it on themselves, and that won’t fly. That’s why Democrats and maybe some Republicans will fight this or any similar plan like Cujo on acid.
ThePaganTemple
October 5th, 2011 @ 12:14 pm

Its fair to call me a RINO on this issue. I do believe in reasonable social safety nets, they should just be run a hell of a lot better than they traditionally have been, and there should be firm limits as to who can utilize them for how much and for how long.
steve benton
October 5th, 2011 @ 12:28 pm

Why doesn’t Cain just run on a platform where we stop collecting all taxes, and he could magically issue all his non-racist supporters a free pony? Makes as much sense. I especially love the Pied Piper’s foreign policy- now, that’s where the real genius of a Cain candidacy comes in :

http://www.humblelibertarian.com/2011/05/herman-cains-foreign-policy.html
Thomas Knapp
October 5th, 2011 @ 12:34 pm

For the most part, revenue projections on any substantial change in tax structure are just wild-ass guesses. The economy, and the ways in which substantial tax change can affect it, are just too complex to model.

My wild-ass guess is that we’re still on the right side of the Laffer Curve, and that a substantial reduction in overall tax rate will therefore likely produce increases, not decreases in federal revenue. So 9-9-9 doesn’t sound too bad (except to anarchists like me who greatly prefer 0-0-0; but we’re a tiny minority), especially if there are spending cuts as well.

Now let’s wait for the other candidates to start one-upping Cain. 8-8-8, 7-7-7 … and whoever gets stuck with 6-6-6 gets denounced as the Antichrist and drummed out of the race.
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October 5th, 2011 @ 12:50 pm

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Anonymous
October 5th, 2011 @ 1:06 pm

Dear Robert:

In fact, Herman Cain discussed on Greta last week the revenue his 9-9-9 plan will generate, using regression analysis by him and his economists (remember, he’s a rocket scientist, and knows a thing or two about complicated calculations for naval ballistic missiles!).

I forget the individual numbers, but combined they would generate about $2.1 trillion based on current conditions.

As a small businessman, I would see it as providing both certainty and also a way to lower my overall tax bill, as I would be able to shift my business from sole proprietorship to C-corp, as they would be taxed equally.

Dan Schwartz
Cherry Hill, NJ

PS: I hope you like my latest article in The Telegraph (UK): Herman Cain is NOT suspending his campaign for a book tour

http://my.telegraph.co.uk/disc?pad/brakeshoe/16152676/herman-?cain1
Anonymous
October 5th, 2011 @ 1:09 pm

Snooki is at least honest about what she is. You can’t say that about Lil’ Ezra.
ThePaganTemple
October 5th, 2011 @ 1:19 pm

The economy, and the ways in which substantial tax change can affect it, are just too complex to model.

Exactly right, which is why I’ve long maintained economists are full of shit. And that’s the best ones.
Anamika
October 5th, 2011 @ 3:08 pm

Yeah, I’m sick and tired of merely being part of the lower echelon 99%.

I want to be part of the elite 1% who control 40% of the nations wealth.

I want to be a Job Creator.

But only if you’ll agree to work for less than the minimum wage.
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