Friday, October 14, 2011

Here's why I distrust 9-9-9. Herman Cain has it the centerpiece of his economic plan, but the third 9 is a national sales tax. He promises he'll tear up the tax code, but we have had experience with promises regarding taxes. When the income tax was passed Americans were told it would never exceed one or two per cent. Social Security and Medicare/Medicaid are both headed for bankruptcy (if that were possible) without huge increases in the payroll tax rates. Cain is a powerful speaker and you can't help liking him, but it's just politically naive to think you can introduce a new federal tax and expect it to stay at the level you set it at. I don't doubt Cain's sincerity, but his inexperience in politics is showing here. When Neal Cavuto brought that up to him today, he gave the old "They said it couldn't be done" answer, but he's got to have more than his own confidence to persuade me. True believers in the Fair Tax which is the basis for this scheme have been around for years, and a consumption tax make some sense to encourage saving and investing, but it's not clear how to switch over in two or three steps without causing more shocks to the economy. Whoever the candidate is, nobody should believe that the President is King. He can't pass laws by fiat. And promises seldom get kept completely. That's why I respect Romney's reluctance to make absolute predictions.

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