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Monday, October 08, 2012



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.”







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