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The
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Monday, October 08, 2012
News
Published October 14, 2011-Updated October
18, 2011
“Herman Cain to Mitt Romney-‘That Dog
Won’t Hunt’”
by Nathan’ette
Burdine-Follow on
Twitter@nbnylemagazine
The economy is the central theme of the 2012
presidential election. Mitt Romney
is using his executive background in the boardroom and the governor’s office
in order to promote himself as the Republican presidential candidate who will be
able to defeat President Obama. However,
Herman Cain doesn’t believe Romney’s experiences as an executive in the
boardroom and governor’s office will translate into positive results.
During the FOX NEWS Republican Presidential debate held in
Orlando, FL, a question was asked
about the current tax code and Romney’s economic plan. Herman Cain said, “Unlike
Governor Romney’s plan, my plan throws out the entire tax code.
He’s still hooked to the current tax code, and that dog won’t
hunt.”
According to Cain, the current tax code is keeping the economy weak by
preventing businesses from growing. So
he prefers throwing out the current tax code and replacing it with his 9-9-9
plan, which is a flat tax on corporations, personal income, and national sales. Unlike Cain, Romney’s plan focuses on the middle class,
those making below $200,000.00/yr. Due
to the recession, the middle class has shrunk.
According to Romney, the middle class will pay zero tax on interests
earned, dividends, capital gains, and savings.
Thus, Romney’s plan involves finding a way to restore the middle class
in order to get the economy functioning again.
However, some of the other presidential candidates are also skeptical
about Romney’s economic plan.
They noted how Romney’s creation of jobs was a result of him accepting money
from the federal government, and not a result of his experiences as an executive
in the boardroom and the governor’s office.
Rick Perry has been the leader in pointing out how he believes Romney’s
idea of creating jobs is adding more financial burden onto the taxpayers by
accepting federal dollars without having a plan to bring in private businesses
that can generate and keep jobs. Romney
has countered Perry’s argument by pointing out how he was able to cut
Massachusetts’ unemployment to 4.7%, which was well below the national
average. Kevin Madden, Romney’s
former campaign adviser, stated that Romney has a history of turning big
companies and governments around. On
CNN’s “Anderson Cooper,” Madden pointed to how sometimes the
executive needs to make the economy leaner by cutting jobs.
This is keen to a body being able to function better if it doesn’t have
much weight on it. In this case,
the weight would be the extra debt. Romney
has also stated that it is true he has had to make hard decisions, such as job
cuts, but in the long run those cuts have resulted into a stable economy.
However, Cain disagrees with Romney’s approach to fixing the economy.
Specifically, Cain believes accepting government money heightens the
problem by adding an extra debt that will lead to an increase in taxes. Cain believes the best approach to fixing the economy is to
have common sense solutions to common sense problems. He believes his 9-9-9 plan is a common sense solution that
will stabilize and strengthen the economy.
The plan will replace the current tax code and will consist of a 9% flat tax
rate on corporate profits, personal income, and national sales.
With this plan, Cain wants to place everyone on an even playing field by
having everyone pay the same tax rate. Cain
believes that his “dog will hunt” if there is a flat rate keeping everything
consistent. But like Romney,
Cain’s plan has been given some unfavorable reviews.
This is understandable considering that at a flat rate everything stays
just that flat. A concern some
economists have is that Cain’s plan will only produce half the revenue in
order to keep the country functioning. And
if the U.S. has its entire tax code change and the revenue is not there to cover
the debts, this could lead to another global financial crisis due to the
country’s role as an economic leader in the global community.
The U.S. has a leading role as a member of the G8 and leader over the World
Bank. The U.S.’s vote is critical
in determining which nations receive financial assistance, as was evident with
Egypt receiving $3 billion in aide after the uprising and the assistance Libya
has received during the fall of Moammar Gadhafi’s regime.
However, the U.S.’s voice in the international community could be
reduced if it doesn’t have the revenue to meet its debt obligations.
Due to the market system, the international economies are intertwined.
Whenever there is an economic crisis, it affects other nations as well
because there is revenue loss when any of these countries are not able to meet
their debt obligations. This was
evident during the debt-ceiling debate that caused pause amongst the EU’s
nations, and it’s also evident in the European debt crisis that has gotten the
U.S.’s attention.
The economic crisis in Greece has resulted in the European Union scrambling to
lend money to Greece in order to prevent it from defaulting on its loans and
going into bankruptcy. And just as high debt vs. low revenue has resulted in the
economic crisis in Europe, the same is true if Cain’s plan only produces half
the revenue needed to keep the U.S. functioning. If a country doesn’t have the revenue to meet its debt
obligations, then the country will most likely receive a lower credit rating and
higher interest rates. Hence,
Cain’s plan could also have a negative affect on the U.S.’s borrowing power.
The dollar could be depreciated and the country’s borrowing power
limited to the point whereby the U.S. has a difficult time meeting its debt
obligation. A ripple effect will
result if this occurs. Businesses will close or move overseas and unemployment will
increase.
Another problem Cain’s plan has is it doesn’t take into consideration the
“other” factors. These are
factors that did not receive full consideration.
If Cain’s plan was put into effect, there is still the question of how
the plan will pay for past debts. The
tax rate will be lower and therefore produce lower revenue.
According to some economist, the plan will produce half the revenue.
The revenue will most likely not be made up with the lower tax because
there will be companies that are too far gone to recover.
There will also be cases whereby a company or individual’s debt is so
high that a lower tax will not be sufficient.
These are cases whereby companies or individuals may have to borrow more
money, add an extra debt, and will not be able to spend and place money back
into the economy. Whenever spending
is low, the economy doesn’t grow. This
will result in some companies’ CEOs becoming skeptical and deciding that
it’s best to save and look into other ventures over seas.
Cain will also have to determine what he will do about American
companies, as well as some foreign companies, deciding that it’s best to keep
their companies over seas in a country like China or India.
Basically, Cain’s 9% tax may not be enough to entice these companies
back to the U.S. And with little to
no growth, Cain will have to do the very thing he doesn’t want to do, raise
taxes in order to make up for the lost revenue.
Balancing the economy is something every president must do and how well he does
this depends upon his experience and knowledge about government.
Unlike Romney, Cain is not part of the political circle.
Cain has never won political office and doesn’t know how the inside
dealings of politics work. Bold
solutions are mostly good in theory, but they tend to fall short when placed in
reality. Yet, this hasn’t
prevented Cain from doubting that Romney’s experience will translate into the
economy working, or as Cain puts it, “A dog that will hunt.” Although Cain raises some credible questions about Romney’s
ability to turn the economy around, Cain’s credibility is in serious doubt due
to him not having any government experience at the executive or legislative
levels. Unlike Romney, Cain’s
experiences are limited to the private sector.
This limitation gives him a narrower perspective that cannot be applied
to the public sector. The questions
raised concerning the revenue his plan will produce and replacing the entire tax
code punches holes in his argument. These
questions place Cain’s 9-9-9 plan in the same category as he places Romney’s
economic plan in, “ A dog that won’t hunt.”
Email-nathanette.burdine@thenylemagazine.com
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