Dick Morris - Key To Republican Victory

In today's post, Dick Morris makes some interesting points regarding the Republican candidates, the results in New Hampshire and his prescription for a victory in November.   Some points  might be controversial and out of the mainstream, but might be just the ticket for success in the election.
Tell us what you think of his ideas.

Conservative Tom

9-9-9: THE KEY TO REPUBLICAN VICTORY By DICK MORRIS Published on DickMorris.com on January 11, 2012 Printer-Friendly Version Two facts emerge from the New Hampshire Primary with ominous implications for the GOP in 2012: •  Pat Caddell reports that there were 25,000 fewer votes in the New Hampshire Republican Primary this year than in 2008, even though there was a Democratic contest between Obama and Hillary to siphon votes away from the GOP contest that year. •  And exit polls show that Ron Paul won half of the votes of those under 30 in the New Hampshire contest.  It is Ron Paul - with his message of fundamental economic change - not Mitt Romney, Newt Gingrich, or Rick Santorum - with their anti-Obama message that is spreading on American campuses, competing for the very heart of the Obama base. Both data point to an enthusiasm gap for the 2012 Republican nominee that could be dangerous.  As the campaigns descended into negative advertising, a decreased turnout was a predictable consequence.  But the rallying of young people to Ron Paul suggests that the Republicans need more than just an anti-Obama message.  After all, young people understand that the pre-Obama economy was bad and that the recession began before Obama was even running for president. They realize that their future depends on an affirmative program, not just on repeal of the Obama laws and regulations. But, while we need the enthusiasm that Ron Paul ignites, we do not need Ron. Another Ronald -- Reagan - built the Republican majority by baking the three disparate wings of the Republican Party into one political layer cake.  He combined the national security conservatives with the evangelical social populists and the free market economy advocates into a force that won at the polls.  Ron Paul is seeking to deconstruct the Reagan coalition by embracing economic conservatism while shunning the evangelical social agenda and the concerns of the national security voters.  His recipe is one for a massive defeat. But you don't need to embrace Ron Paul's nutty foreign policy and self-flagellation in blaming terrorism on our own policies to get the restructuring that our economy needs. Herman Cain's 9-9-9 program will do the trick.  It can appeal to the young Ron Paul voters offering them the kind of basic economic change that they seek.  By transferring the locus of taxation from production to consumption, 9-9-9 can create jobs by incentivizing the creation of wealth.  The Obama focus on economic stimulus that catalyzes demand for products and services often creates jobs in China more than it does in the United States. Cain is planning a new effort to promote his 9-9-9 plan now that his candidacy is over.  It could not come at a better time for the Republican Party. (Those wishing to join should go to www.cainconnections.com.)  He is doing a bus tour and the rounds of television shows to push his substantive agenda.  And, in the process, can breathe enthusiasm back into Republican ranks. 9-9-9 will satisfy the libertarian impulse that underscores Paul's appeal, particularly to the young.  It will simplify the tax code so that it is a means of raising government revenue, not of promoting social engineering.  Tax laws won't tell us what to buy, where to invest, and how to live.  Instead, it will leave these decisions to each us. 9-9-9 offers an agenda to repair the flaws in the economy that led to the stagnation of the late years of the last decade before Obama even arrived on the scene.  It will make America a land of incredible business opportunity, luring innovators and job creators to the nation with what would then be the lowest maximum personal income tax rate on earth.  The repeal of the capital gains tax will eliminate the barrier that stands between innovation and capital and will encourage the kind of explosion of economic growth that we need. If Mitt Romney is to be the nominee, he needs a better message than his current reliance on his private sector credentials and his desire to oust the current Administration.  His flat tax ideas have not ignited a wave of enthusiasm nor will they.  They are yesterday's ideas.  He needs 9-9-9.  The Republican Party needs it. And America needs it as well.

Dick Morris on 9-9-9

As many of you know who follow this blog, we like Herman Cain's 9-9-9 proposal with reservations. As a service to our readers, we thought the following critique of the plan by Dick Morris is important. Please read it and comment.

9-9-9 CAN SAVE OUR COUNTRY By DICK MORRIS Published on TheHill.com on October 18, 2011 Printer-Friendly Version In 1980, facing a terrible economy, Ronald Reagan called for a new tax program: 10-10-10. Based on the Kemp-Roth bill, he called for 10 percent cuts in income taxes for three years. He got it, and it kindled 20 years of prosperity. Now, Herman Cain understands that we need fundamental reform to get our economy moving. He calls for replacing the current system with just three levies of 9 percent each on personal income, corporate income and consumption. There would be no capital gains tax, inheritance tax, Social Security tax or Medicare tax. Just 9-9-9. His proposal is breathtaking. Currently, the lowest top tax rate is Poland's 18 percent. And Poland is the only European nation that had no recession. If Cain passes 9-9-9, we will thrive and become the destination of choice for every business and businessman. Look at what Reagan's tax cuts achieved, and at the best-performing state economies, where there is no income tax. The proposal, naturally, attracts critics and skeptics. Some worry that it will add to the deficit. But that's not likely. · Americans now earn $12.5 trillion of personal income. Tax it at 9 percent with no deductions and you generate about $1.125 billion. · We spend $10.3 trillion. A 9 percent tax would yield about $927 billion. · Net corporate income (after dividends) is $1.1 trillion. A 9 percent levy would generate $100 billion. · That comes to $2.152 billion, about the same as our actual revenues of $2.162 billion for fiscal 2010. And then, when you factor in the economic growth this plan will engender, the scenario becomes even better. Liberals worry that the tax would shift the burden from the rich to the middle class. No, sir. Americans making $50,000 to $60,000 a year now pay an average of 6 percent of their income in income taxes. But they also pay 6.5 percent in FICA levies and 2.9 percent in Medicare payroll taxes (a total of 15.4 percent). The Cain proposal would replace these with a flat 9 percent, saving them 6.4 percent. Of course, the middle class would also have to pay a 9 percent sales tax, but it would be largely offset by the savings in their payroll taxes. Cain says that competitive pressures would hold down prices and force businesses to eat much of the 9 percent sales tax. Employers would not have to pay their 6.5 percent share of payroll in Social Security taxes, and their corporate taxes would be cut. For commodities with high price elasticity -- like cars -- competition will hold down prices. But for inelastic purchases -- like food and drugs -- some of the tax would probably be passed on. For the middle class? It's a wash. More compelling is the possible impact on the poor. A family making $20,000 to $30,000 a year pays only 3 percent of its income in taxes (much of it more than offset by tax credits). But it still pays 6.5 percent in FICA and 2.9 percent in Medicare taxes. So the requirement that such a family pay 9 percent in personal income taxes would probably be fully offset by the cut in payroll taxes. But the poor might face higher prices. Cain plans to spell out how he can mitigate the impact on the poor through special empowerment zones. We need to see the details. Certainly, the poor would benefit from the increased employment, wages and growth the Cain tax cuts would generate. Conservatives worry that 9-9-9 will open the door to a European Value-Added Tax that starts at 9 percent but goes up each year. Cain proposes that a two-thirds vote be required to raise rates. But a simple act of Congress could change that. The real answer is political. If the Republican Party surges back to power in 2012, captures the Senate, keeps the House and takes the presidency, it can make sure the rates don't go up. Republicans usually can count on 40 votes in the Senate; we just have to use them. The 9-9-9 is a good, good plan that can save our economy.

Kudlow on Cain

Larry Kudlow, in the following post, discusses the pros and cons of Herman Cain. As many of you remember, we are impressed with him as a candidate and we like he innovative approach to the financial problems facing the US. His 9-9-9 plan is the only innovative thinking we are seeing from either party.  Will he win?  At present there is no way to tell, however, his out-of-the-box thinking is attracting a lot of attention. It has also has resulted in money. He raised 3 million in the past quarter. He has no debt but his funding is small compared with Perry or Romney who raised over 15 million.  So he has a way to go.

On the personal side, he has a very easy way about himself. While he was Godfathers Chairman, a video has surfaced (on You Tube, of course) which shows singing and making fun of himself. He seems to be a very real person and answers questions in a forthright manner.  It would be nice to have someone who answers questions.

He does have one issue that will drive the MSM crazy. His wife is missing in action. She remains out of the limelight, opting to keep a normal home for the candidate. Mr. Cain has promised that she will come out later but until then we are sure the media will be hunting to find her and expose anything which can be twisted. 

Here is the article, let us know what you think:





THE CONSERVATIVE REVIEW - October 18, 2011

Cain the Tax-Code Killer
by: Larry Kudlow
Townhall.com

Herman Cain is the only GOP presidential candidate who wants to kill the tax code. That's right. Put a knife in it. Junk the entire system. And people are cheering as he rises in the polls in his quest for the nomination.

Cain's 9-9-9 plan is not perfect. But then again, the good should never be the enemy of the perfect.

Rep. Paul Ryan gives the plan a thumbs-up. Supply-side mentor Art Laffer tells me it would be "far, far better than the current system." And Chris Chocola, president of the free-market Club for Growth, calls it "a truly revolutionary tax reform that would amount to a massive job-creating tax cut on investments, savings and income."

As the world now knows, 9-9-9 translates to a 9 percent income-tax rate, a 9 percent value-added net sales tax rate on business and a 9 percent national sales tax overall. Like many conservatives, I am troubled by the national sales tax piece. It reminds me too much of Europe. It could start low and then build on top of the other taxes. But I totally support the first two nines on personal income and business. In my view, these are vast improvements.

For his part, Cain argues that the sales tax nine would pick up revenue and help to lower the rate for everybody, especially the middle class. His economic adviser Rich Lowrie told me in a CNBC interview that the sales tax is a replacement tax, not an add-on tax like you'd find at the state level. This is a key point. Lowrie said, "All we are doing is pulling out taxes that are invisible. We're cutting the rates. We're putting them back in at lower rates."

Lowrie is referring to the payroll tax, which in the Cain plan will go from 15 to 9 percent. That constitutes a net tax cut and a good deal more transparency regarding costs and prices that are embedded in the current code. I'm not sure I buy into this point entirely, but it's an interesting argument.

Liberals oppose the sales tax because they say its regressivity will hurt middle- and low-income people. But the Cain plan partially deals with this by exempting everybody below the poverty line. Cain also states that sales of existing goods would be exempt. I have no knowledge, however, of the treatment of services, and I am somewhat skeptical about enforcement complexity overall.

Nevertheless, a mammoth drop in marginal tax rates for individuals (35 to 9 percent, or 18 percent including the sales tax) and for businesses (also 35 to 9 percent) would supply an incredibly strong economy-wide growth incentive.

Lowrie argued further that the 9-9-9 plan will add $2 trillion to U.S. gross domestic product, create 6 million jobs, increase business investment by a third and lift wages by 10 percent. "And if you fold all that growth together," said Lowrie, "federal revenues go up by 15 percent."

I'm still a flat-tax guy, and I can't vouch for these numbers. But I can vouch for the proposition that greater marginal incentives will drive economic growth into high gear. I know there are many skeptics on this. But as always, I point to the Harding-Coolidge-Mellon tax cuts of the 1920s, the John F. Kennedy tax cuts of the 1960s and the Ronald Reagan tax cuts of the 1980s.

Remember, too, that the Cain tax plan would eliminate the double-tax on saving and investment by removing capital gains, estates and dividends from the tax code. All this would throw off strong economic incentives.

Given the current economic malaise, which in large part can be traced to the weakened balance sheets and net worths of families suffering from the multi-year slump in stock prices and home values, increasing returns to saving and investment through a much lower marginal tax rate will boost asset values. Just what the doctor ordered.

expensing for new purchases of capital equipment.

Former Treasury hands Gary and Aldona Robbins priced out the Cain plan on a static basis and discovered it to be revenue neutral. Essentially, they found a $26 trillion tax base yielding $2.3 trillion in revenue for a 9.1 percent overall rate. Hence, 9-9-9.

In essence, the Cain plan combines the flat tax (with its single marginal rate) and the fair tax (which uses the national sales tax). I don't know if this is really possible. But in terms of first principles, throwing out the tax code, lowering marginal tax rates, getting rid of the carve-outs and deductions that make the current code impossible to understand, and providing an economic-growth tonic to heal our current funk, it makes a lot of sense.

That Herman Cain is rising in the polls is no surprise

Herman Cain 9-9-9 Plan

Herman Cain has proposed an interesting plan. In the following article Joseph Curl of the Washington Times writes about the proposal. It should be given a good hearing. My biggest concern with this plan is that once you get rates at this level, it won't be long before Congress starts monkeying with them and before you can say Rumpelstiltskin, the rates will go up. I would like to see a guarantee of the rate being X% for Y years.

As I have written before, I would prefer the abolishing the IRS and individual and corporate taxation and in place of that have a sales tax, This would bring some big changes. First it would eliminate the thousands of pages of IRS regulations about which no one can ever tell you they know every one; it would terminate the bureaucracy that is the IRS; and it would cut some government employees.

Secondly, it would hit all taxpayers at an equal rate and would bring into taxation the underground economy that currently goes untaxed. If the drug dealer buys a car, clothes or jewelry, those transactions would be taxed.  We might not be able to get him to pay taxes on his sales but at least the things that he buys will be taxed. The same thing goes for the uber rich who buy the 50 million dollar yacht. They would pay taxes on it. Food and lodging could be excluded but nothing else.

Lastly, it would bring home many of those trillions that are stuck overseas in foreign country bank accounts because America's tax laws are so punitive.

Corporations as well as individuals would be taxed at the same rate which could be 10% and achieve the same results as Cain's plan.


I would like to hear what you have to say about this plan. Please do comment.

CURL: Cain’s ‘9-9-9’ tax plan is fairer share

By Joseph Curl

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The Washington Times

 Sunday, September 25, 2011

• 
  

ANALYSIS/OPINION:

Leave it to a pizza guy to come up with the $9.99 deal. Wait, sorry, that’s the 9-9-9 deal. And former Godfather’s Pizza CEO Herman Cain has made the proposal the centerpiece of his 2012 campaign for president.
Simply put (wait, sorry again, it is simple), the plan calls for setting the personal income tax, including Social Security and Medicare, at 9 percent for everyone; reducing corporate taxes to 9 percent; and establishing a new national sales tax of 9 percent.

That way, says the self-made millionaire and son of a cleaner mother and janitor father, “everybody gets some skin in the game.”

Now, before we crunch Mr. Cain’s numbers, or check that skin quotient, let’s take a look at the current tax situation.

President Obama wants to target “millionaires and billionaires” (although there are only 235,000 of them — and FYI, that’s a lot less than there were before the junior Illinois senator took office). But here’s the problem with that: The top 1 percent of income earners already pay roughly 40 percent of all federal income taxes - the top 5 percent pay some 70 percent (See The Bible: turnip, blood from a).

Meanwhile, the bottom 50 percent of earners pay just 3 percent. About 47 percent of American households pay no federal income tax at all.

According to the Tax Policy Center, the breakdown works like this: The bottom 20 percent pay -3.8 percent (that’s minus 3.8). That means they actually get money from the federal government. The second 20 percent gets even more — they pay -4.3 percent. Thus, the bottom 40 percent not only pay nothing, they get cash back (your cash).

The middle quintile — that 40 to 60 percent zone, which has an average income of $44,000 — pays 3.9 percent of the total federal income-tax revenue. The fourth quintile, with incomes up to $102,000, pays 15.1 percent.

So, 80 percent of American taxpayers combine to pay 10.9 percent of federal income taxes, according to the TPC — about $1 in every $9 of income taxes paid.

Now to those pesky millionaires and billionaires. The highest 0.1 percent of all income-earners (not 1 percent, zero-point-one percent), pay 16.4 percent of all federal income taxes — $1 in every $6 paid. Thus, the top 0.1 percent pay more than the bottom 80 percent, even though that much larger group made more than six times (that’s “6 times”) what the tiny top group makes.

Back to Mr. Cain’s numbers. Using stats compiled by the University of New Mexico’s Bureau of Business and Economic Research, it’s possible to quantify what his plan would bring in. A flat income tax of 9 percent would bring in about $1.12 trillion. Corporate taxes at 9 percent — about $270 billion. A national 9 percent sales tax, about $378 billion.

That’s only (only!) $1.768 trillion, well short of what this year’s tax revenue of $2.16 trillion. But wait. With some hefty growth (and using a projection not far above the Obama administration’s own estimates), the 9 percent income tax would bring in about $1.4 trillion, corporate taxes an estimated $321 billion, and the national sales tax about $450 billion. Boom — $2.17 trillion.

Sure, that’s well short of the $3.8 trillion Mr. Obama wants to spend, but it does at least match up with current revenue. And, hmm, maybe America should spend less, and, this is crazy, try to match its expenditures with its revenues.

With Mr. Cain’s win at the Florida straw poll this weekend, his plans will likely garner much more attention in the coming days. So, he’ll have a chance to explain how the U.S. would be able to dig itself out of a $14 trillion debt while bringing the same amount of revenue as today.

Mr. Obama, former professor and community organizer, had no executive experience whatsoever, which has left him floundering (not to mention relying on aides to tell him what to do).

And it’s becoming more clear that next November, voters won’t like the president’s own 9 percent plan — 9 percent unemployment. Maybe Mr. Cain’s is just a bit better.

• Joseph Curl covered the White House and politics for a decade for The Washington Times. He can be reached at jcurl@washingtontimes.com.

© Copyright 2011 The Washington Times, LLC