Cain event stayed on tax-reform track

Herman Cain discusses his 9-9-9 tax plan at AEI, October 31, 2011.

Article Highlights

  • Herman Cain sticks to tax track at AEI event

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  • While the media focuses on Cain's Politico scandal, Ben Zycher takes a look at the real news from AEI's event

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  • 9-9-9 is no half-baked scheme: a proposal with scholarly underpinnings

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Jennifer Rubin, the conservative commentator at the Washington Post’s Right Turn blog, yesterday criticized the American Enterprise Institute for the structure and conduct of an event featuring a Q&A exchange between Herman Cain and AEI’s Kevin Hassett, followed by a panel discussion of Cain’s 9-9-9 tax-reform plan. (Full disclosure: I am a visiting scholar at AEI.) In a nutshell: Rubin believes that AEI should have expanded the announced topic of the event--analysis of the 9-9-9 plan as tax reform--to allow discussion of the sexual-harassment accusations against Cain that emerged on Politico over the weekend; and that Hassett should not have allowed Cain to refer a technical question about 9-9-9 to his staff (about which more below). AEI, she says, rode to Cain’s rescue.

But the topic of the event was announced clearly at the outset, the rule that questions must address that topic was made clear, and Cain said explicitly that he would “take all of the arrows later” at other events that day. AEI is in the public-policy business; it is not a clearinghouse for scandal accusations and does not consume its time and resources, and those of its attendees, in efforts to resolve them.

The event, again, was planned as an opportunity for Cain to discuss his tax reform plan, to demonstrate his mastery of the underlying policy themes (as opposed to highly technical details), and to facilitate a debate about the policy analytics of 9-9-9 among a group of public finance experts in the ensuing panel discussion. Questions about the Politico story obviously would emerge front and center later in the day, at other events and interviews on Cain’s schedule. AEI and Kevin Hassett were fully correct to concentrate this particular event on an actual policy issue attracting enormous attention.

And real news was made:

  • Cain acknowledged that the consumption-tax portion of 9-9-9 is indeed a VAT.
  • In response to a question from Hassett, Cain explicitly endorsed a balanced-budget policy as opposed to a spending limit (a huge mistake, in my view).
  • Cain said explicitly that the Social Security system is in desperate need of reform, endorsed a private-account option for younger workers, and made it clear that benefits only for current “seniors” should be immune from recalculation.
  • Cain proposed that Social Security be brought on budget, a change that would be likely to engender a significant shift in the dynamics of Social Security politics.
  • Cain endorsed a “free-market” approach for resolution of Europe’s economic problems, a vague statement, but one that offers insights with respect to his instincts, always a useful context for the evaluation of aspiring policymakers.
  • Cain argued explicitly that the federal government should not be in the “fairness” business. (Particularly given President Obama’s views on that topic, one would think that the Left would find that position of great interest, but apparently not as much so as harassment accusations both vague and anonymous.)
  • Cain explicitly endorsed the Fair Tax as preferable to 9-9-9, because the former (notionally) leaves consumers in control of their tax liabilities, but has opted for 9-9-9 as a smoother transition vehicle.
  • During the ensuing panel discussion, William Gale of the Brookings Tax Policy Center acknowledged that their analysis of the 9-9-9 plan ignored a central analytic aspect of the sales-tax portion of 9-9-9 that makes the regressivity criticism highly questionable.
  • Cain’s economic expert, Rich Lowrie, was not as rigorous in his explanations as I would have preferred, but nonetheless demonstrated real expertise during the panel discussion, holding his own solidly (again in my view) when responding to Gale’s criticisms of 9-9-9, and showing clearly (this was the technical question that Cain referred to his staff) that 9-9-9 in fact does not tax labor twice but capital only once. (The 9-9-9 proposal would shift the tax burden away from income and toward consumption; moreover, the sales tax portion is a tax on existing wealth.)

More generally, the event demonstrated that 9-9-9 is a serious policy proposal with real scholarly underpinnings, rather than some half-baked scheme devised by an unknown accountant from Ohio.

The Washington Post a while back--well before Ms. Rubin began her work there--was decidedly uninterested in John Edwards’ extracurricular activities. More generally, the Beltway media, in cases of lurid accusations, have displayed a curious and consistent habit of slamming one set of candidates while covering for the other. Questions should be raised about media reporting biases, rather than AEI’s ground rules.

Benjamin Zycher is a visiting scholar at AEI.

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About the Author

 

Benjamin
Zycher
  • Benjamin Zycher is the John G. Searle Chair and a resident scholar at the American Enterprise Institute (AEI), where he works on energy and environmental policy. He is also a senior fellow at the Pacific Research Institute.

    Before joining AEI, Zycher conducted a broad research program in his public policy research firm, and was an intelligence community associate of the Office of Economic Analysis, Bureau of Intelligence and Research, US Department of State.  He is a former senior economist at the RAND Corporation, a former adjunct professor of economics at the University of California, Los Angeles (UCLA) and at the California State University Channel Islands, and is a former senior economist at the Jet Propulsion Laboratory, California Institute of Technology.  He served as a senior staff economist for the President's Council of Economic Advisers, with responsibility for energy and environmental policy issues.

    Zycher has a doctorate in economics from UCLA, a Master in Public Policy from the University of California, Berkeley, and a Bachelor of Arts in political science from UCLA.

  • Email: benjamin.zycher@aei.org
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    Name: Regan Kuchan
    Phone: 202.862.5903
    Email: regan.kuchan@aei.org

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