With this post, I continue a short series consisting of my analyses of the Republican candidates for the nomination for President. To recap, I’m limiting my discussions to three candidates: Mitt Romney, Herman Cain, and Rick Perry. The structure of this series consists of a collection of posts concerning what I don’t like about the candidates and then a series of what I do like about them. I’ll conclude with my endorsement of a single candidate. In this post, I’ll talk about what I don’t like about Herman Cain.
Tax Policy: He’s pushing a consumption tax, and this is a mistake. Coupled with the overall rate reductions that are part of his 9-9-9 plan, that might not seem like a big deal, but the fact is a consumption tax is very regressive. There are necessities that we all must buy whether we work or not, and a consumption tax would hit those who are not working especially hard. He defends the tax on the non-working by insisting that his tax policy, coupled with his other plans for improving our economy, will put people back to work. I believe his suite of policies will, in their aggregate, do this, but “putting people back to work” only works to an extent.
Full employment in the US has been, in recent history, in the neighborhood of 4%-4.5% unemployment, not 0% unemployment. What of those remaining 4%-4.5%? They will have no employment-based income with which to pay the taxes on their consumption (of course this elides the lack of funds with which to consume at all, but that’s a different thread). Further, the unemployment rates only concern those who are out of work, but want work. What of those who are out of work because they’re retired? In the context of a consumption tax, these folks are no different from those 4%-4.5% unemployed.
This also misses the total cost of this kind of tax. When coupled with the already in place consumption taxes that many states use as major components of their own funding, total consumption taxes can reach beyond 20%.
The empirical history of consumption taxes is unpromising, also. The various national consumption taxes started low in Europe, too, but it’s too easy to raise such a tax without the taxpayer entirely noticing (“a penny for poverty,” or “a penny for universal health care,” or pick a cause)—and the average European consumption tax now is in the neighborhood of 20%.
Experience: He has no political experience. This often is touted as a positive, and in many respects, it is. Here’s the downside. In order to get legislation through the United States Congress (or any state legislature, come to that), it’s necessary to work with a collection of politicians each of whom has the interest of his own constituency, or even his own interest, at heart and often at the expense of the country (or state). Working through the purely political imperatives of a collection of politicians is not a straightforward task, no matter the depth of good will being brought to the table, by Mr Cain or by any of those politicians. The Congress is not a private enterprise’s executive office, where if push comes to shove, the boss can simply pull rank and issue the relevant binding instruction.
Finally, the nation seems to have had a bellyful, in President Obama, of Presidents with no prior serious political experience. It may be that Mr Cain’s actual working man’s business experience will count for a lot on the national stage, but this still will be a tough row to hoe.