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Herman & Hillary: The Simple Solution vs. The Hard Truth

By       Message Kurt F. Stone     Permalink
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During last week's Washington Post-Bloomberg Republican debate, former Godfather's Pizza CEOHerman Cain unveiled 9-9-9 -- his utterly simple (and utterly simplistic) solution to curing the nation's economic woes. Based on the notion that America's Byzantine tax code must be overhauled, if not totally scrapped, Cain's 9-9-9 -- which both political and economic cognoscenti have proclaimed "Dead On Arrival" -- would eventually repeal and temporarily replace said code with:
  • A 9% tax on income
  • A 9% business transactions tax, and
  • A 9% federal sales (AKA "flat") tax

Regardless of whether or not 9-9-9 has legs, it has propelled Herman Cain to the top of the Republican presidential heap -- at least for now. In a sense, he has become the newest "flavor-of-the-week."

When asked the day after the debate who or what the genesis of 9-9-9 was, Cain (an ardent support of Steve Forbes and his flat tax proposal back in 2000) named Rich Lowrie of Cleveland, whom the charismatic candidate characterized as "my lead economist."

Not so fast, Mr. Cain.

According to Mr. Lowrie's Linkedin profile he has a B.A. in accountancy from Case Western Reserve University, not economics. When questioned by the Washington Post's Glenn Kessler, Lowrie said he did not consider himself to be an economist. In his piece on Cain's 9-9-9, Kessler wryly noted, "It almost sounds like something out of the movie 'Dave,' in which the accidental president [Kevin Klein] enlists his accountant friend. Murray Blum [Charles Grodin], to help him figure out the federal budget."

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According to Lowrie, Cain's 9-9-9 is " . . . an attempt to shift the tax burden away from production and towards consumption to balance the load." He explains that by "ripping out a whole bunch of taxes," prices of goods will fall, U.S. exports will be more competitive and business will thrive. He also claims that once enacted, 9-9-9 will create 6 million new jobs as business becomes more competitive.

Right. And next year's World Series will pit the Houston Astros against the Minnesota Twins . . .

As noted above, the vast majority of economists, business people and political pros have seen Cain's 9-9-9 for what it really is: an easily trumpeted campaign slogan masquerading as a serious solution to the nation's dire straits. To the extent that it is really little more than a campaign slogan, it has worked brilliantly; "Herman Cain" and "9-9-9" have been front page news for nearly a week. Tens of millions of people who are likely unaware of what a 9% national sales tax would mean to their pocketbooks say they support it.

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It is yet another stunning example of how the press can turn its 500,000 megawatt spotlight on an amoeba, thereby making it appear to be a Tyrannosaurus Rex.

The truth is, if ever instituted 9-9-9 would impose new taxes on easily more than half the American public, and, in essence, rob the seriously imperiled Peter to pay the already prosperous Paul. It never ceases to amaze what supposedly serious candidates will do, say or propose in order to get noticed. Don't people like Herman Cain understand that the restoration of America's economic health -- and with it our status in the world -- will require far, far more than "simple solutions" and pithy slogans?

Apparently not.

While the press has been busily turning Herman Cain and 9-9-9 into the latest and greatest symbol of national salvation, it has, sadly, given precious little coverage to a hard truth presented by another person with the initials "H.C." -- Secretary of State Hillary Clinton. In a speech last Friday before the Economic Club of New York, Secretary Clinton said something of surpassing importance which by comparison, makes Herman Cain's 9-9-9 plan even more obviously simpleminded:

"Today our foreign and economic relations remain indivisible. Only now, our great challenge is not deterring any single military foe, but advancing our global leadership at a time when power is more often measured and exercised in economic terms."

In other words, in today's world, economic power counts far more than military punch.

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This is a point that most world leaders have grasped since the end of the Cold War more than 20 years ago. But it does not seem to have registered in Washington. As journalist Leslie Gelb wrote in a piece on Secretary Clinton's speech, "There in the home of the non-sequiteur, the inaccurate fact, the seven-second 'truth bite,' and the economics-challenged, the talk is about how much will be cut from the precious Pentagon budget over the next ten years." The Pentagon budget is all the legislators on Capitol Hill and the media covering them know or understand about America's fiscal house of horrors. Again, to quote Mr. Gelb, "For legislators, it's their political honey pot. For foreign-policy experts, it's their way to show their toughness. For media, the planes and tanks are visual lollipops."

Today, China is the first global power in history not to be a global military power. Its military might is pretty much restricted to its own borders; its money travels everywhere. Today, Brazil, India and Turkey top the list of emerging powers. Why? Not because any of them is a regional military superpower, but because they can carry what economists refer to as "market weight." As Secretary Clinton put it in her speech to the Economic Club, "And everywhere I travel, I see countries gaining influence less because of the size of their armies than because of the growth of their economies. . ."

In concluding her speech, Secretary Clinton noted, "A strong economy has been a quiet pillar of American power in the world. It gives us the leverage we need to exert influence and advance our interests. It gives other countries confidence in our leadership and a great stake in partnering with us."

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http://www.kurtfstone.typepad.com
Kurt Stone is a rabbi, writer, lecturer, political activist, professor, actor, and medical ethicist. A true "Hollywood brat" (born and raised in the film industry), Kurt was educated at the University of California, the Eagleton Institute of (more...)
 

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