Greg Palast, Truthout Thursday, February 9, 2012
The Plan is working.
Mitt Romney's biggest backer didn't want him to win.
We know that Paul "The Vulture" Singer, Romney's Daddy Warbucks, organized the "grassroots" campaign to replace Romney with Gov. Chris Christie back in September.
That flopped, so Singer and the billionaire boys' club that courted Christie moved over to Romney. Not that they had a choice. They knew Moonrocks Gingrich, who thinks he's running for Master Jedi, and Saint Santorum who thinks he's running for pope, would end up road kill in November.
But despite their million-dollar checks for Romney's campaign, the billionaires are handling the ex-governor with very long and slippery tweezers. The fact that Singer and the Koch brothers went on bended knee to Christie means they are just nauseated over Romney, a man losing a war with the English language and his own tax returns, carrying their standard against President Obama.
These billionaires are smart men. Devious men. I've followed them for years, and they do nothing in a straight line. The super PAC that Singer and the gang control, Restore Our Future, is supposed to be for Romney. But it's not; it's for Singer and Bill Koch. The future they want to restore is their own, not yours or mine - or Romney's.
Now, if your ultimate goal is to beat Obama and you need Christie to do it, you want the GOP race to end in a brokered convention. Then, the billionaires become the brokers. In the best of all worlds for these super PAC men, no candidate gets the 1,144 delegates needed to win. Restore Our Future can then restore the nomination to Christie (or, say, Sen. Marco Rubio, or both), someone who can win.
So, think about it. The Singer-Koch super PAC has access to more money than Fort Knox. It has raised over $30 million and has left as much as half sitting unspent. Yet, they didn't bother to run major ads in cheap media markets like Grand Junction, letting Romney go down in Colorado by less than 4,000 votes.
For a few bucks, they could have sealed it for Governor Romney this week. But they chose not to. Why?
By moving money in and out of selected primaries like a piston, Restore Our Future can shoo Santorum and Gingrich away from the nomination - and, with a bit of luck, the Romney campaign ends up in Tampa dead on arrival.
Then the Vulture and the Richie Rich Club can gnaw at Romney's political corpse and regurgitate the nomination for the cat's paw of their choice.
Greg Palast is the author of Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates and High-Finance Carnivores, released in the US and Canada by Penguin.
Support the Palast Investigative Fund and keep our work alive.
GregPalast.com
Showing posts with label GOP. Show all posts
Showing posts with label GOP. Show all posts
Wednesday, February 29, 2012
Friday, January 6, 2012
Vote Obama – if you want a centrist Republican for US president
Because Barack Obama has adopted so many core Republican beliefs, the US opposition race is a shambles
Glenn Greenwald
guardian.co.uk, Tuesday 27 December 2011
http://www.guardian.co.uk/commentisfree/2011/dec/27/vote-obama-centrist-republican
American presidential elections are increasingly indistinguishable from the reality TV competitions drowning the nation's airwaves. Both are vapid, personality-driven and painfully protracted affairs, with the winners crowned by virtue of their ability to appear slightly more tolerable than the cast of annoying rejects whom the public eliminates one by one. When, earlier this year, America's tawdriest (and one of its most-watched) reality TV show hosts, Donald Trump, inserted himself into the campaign circus as a threatened contestant, he fitted right in, immediately catapulting to the top of audience polls before announcing he would not join the show.
The Republican presidential primaries – shortly to determine who will be the finalist to face off, and likely lose, against Barack Obama next November – has been a particularly base spectacle. That the contest has devolved into an embarrassing clown show has many causes, beginning with the fact that GOP voters loathe Mitt Romney, their belief-free, anointed-by-Wall-Street frontrunner who clearly has the best chance of defeating the president.
In a desperate attempt to find someone less slithery and soulless (not to mention less Mormon), party members have lurched manically from one ludicrous candidate to the next, only to watch in horror as each wilted the moment they were subjected to scrutiny. Incessant pleas to the party's ostensibly more respectable conservatives to enter the race have been repeatedly rebuffed. Now, only Romney remains viable. Republican voters are thus slowly resigning themselves to marching behind a vacant, supremely malleable technocrat whom they plainly detest.
In fairness to the much-maligned GOP field, they face a formidable hurdle: how to credibly attack Obama when he has adopted so many of their party's defining beliefs. Depicting the other party's president as a radical menace is one of the chief requirements for a candidate seeking to convince his party to crown him as the chosen challenger. Because Obama has governed as a centrist Republican, these GOP candidates are able to attack him as a leftist radical only by moving so far to the right in their rhetoric and policy prescriptions that they fall over the cliff of mainstream acceptability, or even basic sanity.
In July, the nation's most influential progressive domestic policy pundit, New York Times columnist Paul Krugman, declared that Obama is a "moderate conservative in practical terms". Last October, he wrote that "progressives who had their hearts set on Obama were engaged in a huge act of self-delusion", because the president – "once you get past the soaring rhetoric" – has "largely accepted the conservative storyline".
Krugman also pointed out that even the policy Democratic loyalists point to as proof of the president's progressive bona fides – his healthcare plan, which mandates the purchase of policies from the private health insurance industry – was designed by the Heritage Foundation, one of the nation's most rightwing thinktanks, and was advocated by conservative ideologues for many years (it also happens to be the same plan Romney implemented when he was governor of Massachusetts and which Newt Gingrich once promoted, underscoring the difficulty for the GOP in drawing real contrasts with Obama).
How do you scorn a president as a far-left socialist when he has stuffed his administration with Wall Street executives, had his last campaign funded by them, governed as a "centrist Republican", and presided over booming corporate profits even while the rest of the nation suffered economically?
But as slim as the pickings are for GOP candidates on the domestic policy front, at least there are some actual differences in that realm. The president's 2009 stimulus spending and Wall Street "reform" package – tepid and inadequate though they were – are genuinely at odds with rightwing dogma, as are Obama's progressive (albeit inconsistent) positions on social issues, such as equality for gay people and protecting a woman's right to choose. And the supreme court, perpetually plagued by a 5-4 partisan split, would be significantly affected by the outcome of the 2012 election.
It is in the realm of foreign policy, terrorism and civil liberties where Republicans encounter an insurmountable roadblock. A staple of GOP politics has long been to accuse Democratic presidents of coddling America's enemies (both real and imagined), being afraid to use violence, and subordinating US security to international bodies and leftwing conceptions of civil liberties.
But how can a GOP candidate invoke this time-tested caricature when Obama has embraced the vast bulk of George Bush's terrorism policies; waged a war against government whistleblowers as part of a campaign of obsessive secrecy; led efforts to overturn a global ban on cluster bombs; extinguished the lives not only of accused terrorists but of huge numbers of innocent civilians with cluster bombs and drones in Muslim countries; engineered a covert war against Iran; tried to extend the Iraq war; ignored Congress and the constitution to prosecute an unauthorised war in Libya; adopted the defining Bush/Cheney policy of indefinite detention without trial for accused terrorists; and even claimed and exercised the power to assassinate US citizens far from any battlefield and without due process?
Reflecting this difficulty for the GOP field is the fact that former Bush officials, including Dick Cheney, have taken to lavishing Obama with public praise for continuing his predecessor's once-controversial terrorism polices. In the last GOP foreign policy debate, the leading candidates found themselves issuing recommendations on the most contentious foreign policy question (Iran) that perfectly tracked what Obama is already doing, while issuing ringing endorsements of the president when asked about one of his most controversial civil liberties assaults (the due-process-free assassination of the American-Yemeni cleric Anwar Awlaki). Indeed, when it comes to the foreign policy and civil liberties values Democrats spent the Bush years claiming to defend, the only candidate in either party now touting them is the libertarian Ron Paul, who vehemently condemns Obama's policies of drone killings without oversight, covert wars, whistleblower persecutions, and civil liberties assaults in the name of terrorism.
In sum, how do you demonise Obama as a terrorist-loving secret Muslim intent on empowering US enemies when he has adopted, and in some cases extended, what was rightwing orthodoxy for the last decade? The core problem for GOP challengers is that they cannot be respectable Republicans because, as Krugman pointed out, Obama has that position occupied. They are forced to move so far to the right that they render themselves inherently absurd.
Glenn Greenwald
guardian.co.uk, Tuesday 27 December 2011
http://www.guardian.co.uk/commentisfree/2011/dec/27/vote-obama-centrist-republican
American presidential elections are increasingly indistinguishable from the reality TV competitions drowning the nation's airwaves. Both are vapid, personality-driven and painfully protracted affairs, with the winners crowned by virtue of their ability to appear slightly more tolerable than the cast of annoying rejects whom the public eliminates one by one. When, earlier this year, America's tawdriest (and one of its most-watched) reality TV show hosts, Donald Trump, inserted himself into the campaign circus as a threatened contestant, he fitted right in, immediately catapulting to the top of audience polls before announcing he would not join the show.
The Republican presidential primaries – shortly to determine who will be the finalist to face off, and likely lose, against Barack Obama next November – has been a particularly base spectacle. That the contest has devolved into an embarrassing clown show has many causes, beginning with the fact that GOP voters loathe Mitt Romney, their belief-free, anointed-by-Wall-Street frontrunner who clearly has the best chance of defeating the president.
In a desperate attempt to find someone less slithery and soulless (not to mention less Mormon), party members have lurched manically from one ludicrous candidate to the next, only to watch in horror as each wilted the moment they were subjected to scrutiny. Incessant pleas to the party's ostensibly more respectable conservatives to enter the race have been repeatedly rebuffed. Now, only Romney remains viable. Republican voters are thus slowly resigning themselves to marching behind a vacant, supremely malleable technocrat whom they plainly detest.
In fairness to the much-maligned GOP field, they face a formidable hurdle: how to credibly attack Obama when he has adopted so many of their party's defining beliefs. Depicting the other party's president as a radical menace is one of the chief requirements for a candidate seeking to convince his party to crown him as the chosen challenger. Because Obama has governed as a centrist Republican, these GOP candidates are able to attack him as a leftist radical only by moving so far to the right in their rhetoric and policy prescriptions that they fall over the cliff of mainstream acceptability, or even basic sanity.
In July, the nation's most influential progressive domestic policy pundit, New York Times columnist Paul Krugman, declared that Obama is a "moderate conservative in practical terms". Last October, he wrote that "progressives who had their hearts set on Obama were engaged in a huge act of self-delusion", because the president – "once you get past the soaring rhetoric" – has "largely accepted the conservative storyline".
Krugman also pointed out that even the policy Democratic loyalists point to as proof of the president's progressive bona fides – his healthcare plan, which mandates the purchase of policies from the private health insurance industry – was designed by the Heritage Foundation, one of the nation's most rightwing thinktanks, and was advocated by conservative ideologues for many years (it also happens to be the same plan Romney implemented when he was governor of Massachusetts and which Newt Gingrich once promoted, underscoring the difficulty for the GOP in drawing real contrasts with Obama).
How do you scorn a president as a far-left socialist when he has stuffed his administration with Wall Street executives, had his last campaign funded by them, governed as a "centrist Republican", and presided over booming corporate profits even while the rest of the nation suffered economically?
But as slim as the pickings are for GOP candidates on the domestic policy front, at least there are some actual differences in that realm. The president's 2009 stimulus spending and Wall Street "reform" package – tepid and inadequate though they were – are genuinely at odds with rightwing dogma, as are Obama's progressive (albeit inconsistent) positions on social issues, such as equality for gay people and protecting a woman's right to choose. And the supreme court, perpetually plagued by a 5-4 partisan split, would be significantly affected by the outcome of the 2012 election.
It is in the realm of foreign policy, terrorism and civil liberties where Republicans encounter an insurmountable roadblock. A staple of GOP politics has long been to accuse Democratic presidents of coddling America's enemies (both real and imagined), being afraid to use violence, and subordinating US security to international bodies and leftwing conceptions of civil liberties.
But how can a GOP candidate invoke this time-tested caricature when Obama has embraced the vast bulk of George Bush's terrorism policies; waged a war against government whistleblowers as part of a campaign of obsessive secrecy; led efforts to overturn a global ban on cluster bombs; extinguished the lives not only of accused terrorists but of huge numbers of innocent civilians with cluster bombs and drones in Muslim countries; engineered a covert war against Iran; tried to extend the Iraq war; ignored Congress and the constitution to prosecute an unauthorised war in Libya; adopted the defining Bush/Cheney policy of indefinite detention without trial for accused terrorists; and even claimed and exercised the power to assassinate US citizens far from any battlefield and without due process?
Reflecting this difficulty for the GOP field is the fact that former Bush officials, including Dick Cheney, have taken to lavishing Obama with public praise for continuing his predecessor's once-controversial terrorism polices. In the last GOP foreign policy debate, the leading candidates found themselves issuing recommendations on the most contentious foreign policy question (Iran) that perfectly tracked what Obama is already doing, while issuing ringing endorsements of the president when asked about one of his most controversial civil liberties assaults (the due-process-free assassination of the American-Yemeni cleric Anwar Awlaki). Indeed, when it comes to the foreign policy and civil liberties values Democrats spent the Bush years claiming to defend, the only candidate in either party now touting them is the libertarian Ron Paul, who vehemently condemns Obama's policies of drone killings without oversight, covert wars, whistleblower persecutions, and civil liberties assaults in the name of terrorism.
In sum, how do you demonise Obama as a terrorist-loving secret Muslim intent on empowering US enemies when he has adopted, and in some cases extended, what was rightwing orthodoxy for the last decade? The core problem for GOP challengers is that they cannot be respectable Republicans because, as Krugman pointed out, Obama has that position occupied. They are forced to move so far to the right that they render themselves inherently absurd.
Friday, November 18, 2011
How the rich created the Social Security “crisis”
The Bush tax cuts coupled with a decades-long smear campaign are the real threat to the successful program Gene Lyons
Wednesday, Nov 2, 2011
http://www.salon.com/2011/11/03/how_the_rich_created_the_social_security_crisis
Now and then, George W. Bush told the unvarnished truth—most often in jest. Consider the GOP presidential nominee’s Oct. 20, 2000, speech at a high-society $800-a-plate fundraiser at New York’s Waldorf-Astoria. Resplendent in a black tailcoat, waistcoat and white bow tie, Bush greeted the swells with evident satisfaction.
“This is an impressive crowd,” he said. “The haves and the have-mores. Some people call you the elites; I call you my base.”
Any questions?
Eight months later, President Bush delivered sweeping tax cuts to that patrician base. Given current hysteria over what a recent Washington Post article called “the runaway national debt,” it requires an act of historical memory to recall that the Bush administration rationalized reducing taxes on inherited wealth because paying down the debt too soon might roil financial markets.
Eleven years later, the Post warns in a ballyhooed article, reading like something out of Joseph Heller’s “Catch-22,” that Social Security—the 75-year-old bedrock of millions of Americans’ retirement hopes—has “passed a treacherous milestone,” gone “cash negative,” and “is sucking money out of the Treasury.”
Anybody who discerns a relationship between these events, that is, between a decade of keeping the “have-mores’” yachts and Lear jets running smoothly and a manufactured crisis supposedly threatening grandma’s monthly Social Security check must be some kind of radical leftist.
That, or somebody skeptical of the decades-long propaganda war against America’s most efficient, successful and popular social insurance program. It’s an effort that’s falsely persuaded millions of younger Americans that Social Security is in its last days and made crying wolf a test of “seriousness” among Beltway courtier-pundits like the Post’s Lori Montgomery, who concocted an imaginary front page emergency out of a relatively meaningless actuarial event.
All in service, alas, of a single unstated premise: The “have-mores” have made off with grandma’s money fair and square. They have no intention of paying it back. That’s the only possible interpretation of the Post’s admonition that “the $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”
Little relief? In fact, the law’s working precisely as intended. After 28 years of generating huge payroll tax surpluses to cover the baby boomers’ retirement benefits, the system must now begin to draw upon those funds to help pay current benefits—the vast majority still covered by current payroll tax receipts.
“Rather than posing any sort of crisis,” explains Dean Baker of the Center for Economic and Policy Research, “this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.”
Again, this is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.
A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?
Raise taxes, cut spending or borrow? What other options does the U.S. government, or any government, have?
On his New York Times blog, Paul Krugman dissects the Catch-22 logic behind the Post’s bogus crisis. You can’t simultaneously argue “that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program.” For practical purposes, it’s got to be one or the other.
So is Social Security a “Ponzi scheme”? No, it’s group insurance, not an investment. You die young, somebody else benefits. Its finances have been open public record since 1936. Do fewer workers support each beneficiary? Sure, but who cares? It’s denominated in dollars, not a head count. The boomers were nearing 40 when the Reagan administration fixed the actuarial tables. No surprises there.
Are longer life expectancies screwing up the numbers? Not really. Most of the rise is explained by lower infant and child mortality, not by old-timers overstaying their welcome. Kevin Drum points out that gradually raising the payroll tax 1 percent and doubling the earnings cap over 20 years would make Social Security solvent forever.
But that’s not good enough for the more hidebound members of the $800-a-plate set. See, over 75 years Social Security has provided a measure of dignity, security and freedom to working Americans that just annoys the hell out of their betters.
Arkansas Democrat-Gazette columnist Gene Lyons is a National Magazine Award winner and co-author of "The Hunting of the President" (St. Martin's Press, 2000). You can e-mail Lyons at eugenelyons2@yahoo.com
Wednesday, Nov 2, 2011
http://www.salon.com/2011/11/03/how_the_rich_created_the_social_security_crisis
Now and then, George W. Bush told the unvarnished truth—most often in jest. Consider the GOP presidential nominee’s Oct. 20, 2000, speech at a high-society $800-a-plate fundraiser at New York’s Waldorf-Astoria. Resplendent in a black tailcoat, waistcoat and white bow tie, Bush greeted the swells with evident satisfaction.
“This is an impressive crowd,” he said. “The haves and the have-mores. Some people call you the elites; I call you my base.”
Any questions?
Eight months later, President Bush delivered sweeping tax cuts to that patrician base. Given current hysteria over what a recent Washington Post article called “the runaway national debt,” it requires an act of historical memory to recall that the Bush administration rationalized reducing taxes on inherited wealth because paying down the debt too soon might roil financial markets.
Eleven years later, the Post warns in a ballyhooed article, reading like something out of Joseph Heller’s “Catch-22,” that Social Security—the 75-year-old bedrock of millions of Americans’ retirement hopes—has “passed a treacherous milestone,” gone “cash negative,” and “is sucking money out of the Treasury.”
Anybody who discerns a relationship between these events, that is, between a decade of keeping the “have-mores’” yachts and Lear jets running smoothly and a manufactured crisis supposedly threatening grandma’s monthly Social Security check must be some kind of radical leftist.
That, or somebody skeptical of the decades-long propaganda war against America’s most efficient, successful and popular social insurance program. It’s an effort that’s falsely persuaded millions of younger Americans that Social Security is in its last days and made crying wolf a test of “seriousness” among Beltway courtier-pundits like the Post’s Lori Montgomery, who concocted an imaginary front page emergency out of a relatively meaningless actuarial event.
All in service, alas, of a single unstated premise: The “have-mores” have made off with grandma’s money fair and square. They have no intention of paying it back. That’s the only possible interpretation of the Post’s admonition that “the $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”
Little relief? In fact, the law’s working precisely as intended. After 28 years of generating huge payroll tax surpluses to cover the baby boomers’ retirement benefits, the system must now begin to draw upon those funds to help pay current benefits—the vast majority still covered by current payroll tax receipts.
“Rather than posing any sort of crisis,” explains Dean Baker of the Center for Economic and Policy Research, “this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.”
Again, this is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.
A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?
Raise taxes, cut spending or borrow? What other options does the U.S. government, or any government, have?
On his New York Times blog, Paul Krugman dissects the Catch-22 logic behind the Post’s bogus crisis. You can’t simultaneously argue “that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program.” For practical purposes, it’s got to be one or the other.
So is Social Security a “Ponzi scheme”? No, it’s group insurance, not an investment. You die young, somebody else benefits. Its finances have been open public record since 1936. Do fewer workers support each beneficiary? Sure, but who cares? It’s denominated in dollars, not a head count. The boomers were nearing 40 when the Reagan administration fixed the actuarial tables. No surprises there.
Are longer life expectancies screwing up the numbers? Not really. Most of the rise is explained by lower infant and child mortality, not by old-timers overstaying their welcome. Kevin Drum points out that gradually raising the payroll tax 1 percent and doubling the earnings cap over 20 years would make Social Security solvent forever.
But that’s not good enough for the more hidebound members of the $800-a-plate set. See, over 75 years Social Security has provided a measure of dignity, security and freedom to working Americans that just annoys the hell out of their betters.
Arkansas Democrat-Gazette columnist Gene Lyons is a National Magazine Award winner and co-author of "The Hunting of the President" (St. Martin's Press, 2000). You can e-mail Lyons at eugenelyons2@yahoo.com
Cain Dropping Like a Rock
Herman Cain's repeated attempts to brush aside sexual harassment charges are faltering and his once high-flying presidential campaign is likely to suffer, according to neutral Republicans.
Cain had managed to tread water for more than a week after news reports first surfaced of two anonymous charges of sexual harassment made when he led the National Restaurant Association in the 1990s. But when Sharon Bialek went public Monday to say he'd once groped her, the story started to seriously threaten Cain's public support.
"He was already slipping before these stories came out. This will accelerate his decline," Republican pollster Whit Ayres said.
"Now we see Cain supporters having pause," Iowa Republican analyst Craig Robinson added. "He can no longer laugh it up. This is serious, serious stuff."
"My sense is he's dropping like a rock," South Carolina Republican strategist J. David Woodard said...
Cain sinking like a stone, neutral GOP analysts say
Steven Thomma | McClatchy Newspapers
11-8-2011
http://www.mcclatchydc.com/2011/11/08/129690/cain-sinking-like-a-stone-neutral.html
Cain had managed to tread water for more than a week after news reports first surfaced of two anonymous charges of sexual harassment made when he led the National Restaurant Association in the 1990s. But when Sharon Bialek went public Monday to say he'd once groped her, the story started to seriously threaten Cain's public support.
"He was already slipping before these stories came out. This will accelerate his decline," Republican pollster Whit Ayres said.
"Now we see Cain supporters having pause," Iowa Republican analyst Craig Robinson added. "He can no longer laugh it up. This is serious, serious stuff."
"My sense is he's dropping like a rock," South Carolina Republican strategist J. David Woodard said...
Cain sinking like a stone, neutral GOP analysts say
Steven Thomma | McClatchy Newspapers
11-8-2011
http://www.mcclatchydc.com/2011/11/08/129690/cain-sinking-like-a-stone-neutral.html
Sunday, October 16, 2011
Inside the Cain Tax Plan
BRUCE BARTLETT October 11, 2011
http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.
With recent polls showing increased support for Herman Cain as the G.O.P. presidential nominee, attention is being drawn to his platform, especially what he calls the 9-9-9 tax plan. News reports describe it as a 9 percent tax rate on business and personal income, combined with a 9 percent national sales tax.
Little detail has been released by the Cain campaign, so it’s impossible to do a thorough analysis. But using what is available on Mr. Cain’s Web site, I’m taking a stab at estimating its effects.
First, the 9-9-9 plan is actually an intermediate step in Mr. Cain’s plan to overhaul the tax system and jump-start growth. Phase 1 would reduce individual and business taxes to a maximum of 25 percent, which I assume means reducing the top statutory tax rate to 25 percent from 35 percent.
No mention is made on the site of a tax cut for those now in the 10 percent, 15 percent or 25 percent brackets. This means that the only people who would get a tax rate cut are those now in the 28 percent, 33 percent or 35 percent brackets. According to the Joint Committee on Taxation, only 4 percent of taxpayers pay any taxes at those rates.
As for corporations, Mr. Cain’s proposal is primarily going to benefit those with revenues of more than $1 million a year, because they account for 98.7 percent of all receipts by C corporations. (A C corporation is a legal entity separate and distinct from its owners that is taxed as a corporation; its shareholders pay taxes individually on their gains.) Those companies with receipts over $50 million account for 88.8 percent of total receipts.
Other business entities — sole proprietorships, S corporations (which have between 1 and 100 shareholders and pass through net income or losses to shareholders) and partnerships — would not benefit because they are not taxed on the corporate schedule. But they represent 92 percent of all businesses.
Second, Mr. Cain would eliminate all taxes on profits earned by multinational corporations outside the United States. It’s hard to know the impact of this provision, but according to Martin Sullivan, an economist with Tax Analysts, the 50 largest corporations in the United States generated half of their profits in other countries.
The actual benefit of Mr. Cain’s proposal would be much greater to many of them, because, according to Mr. Sullivan, while some of these 50 companies have no foreign operations, others derive 100 percent of their gross profits in foreign countries. In 2010 these included Philip Morris, Pfizer and Abbott Laboratories.
Third, Mr. Cain would abolish all taxes on capital gains. Such taxes typically generate more than $100 billion in federal revenue annually, according to the Tax Policy Center. According to the Joint Committee on Taxation, two-thirds of all capital gains are reported by those with incomes over $1 million.
Mr. Cain says these three proposals, which he would put into effect immediately without offsetting the lost revenue, will jump-start economic growth. He offers no evidence for this assertion; it is simply put forward as self-evident. But the experience of the George W. Bush administration was that cuts in tax rates on the wealthy and on capital gains had no effect whatsoever on growth, according to the Congressional Research Service.
And this is only Phase 1 of the Cain plan. In Phase 2, the payroll tax would be eliminated, causing more than $800 billion in revenue to evaporate. The estate and gift tax would be abolished, further reducing taxes on the wealthy. And the 9-9-9 plan would be implemented.
It’s important to understand that the 9 percent rates on personal and business income would apply to very different tax bases than now exist. For individuals, the tax would apply to gross income less only the deduction for charitable contributions. No mention is made of a personal exemption.
This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won’t even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well.
Additionally, everyone would now pay a 9 percent sales tax on all purchases. No mention is made of any exemptions from this tax, so we may assume that it will apply to food, medical care, rent, home and auto purchases and a wide variety of other expenditures now exempt from state sales taxes. This would increase their cost of living by 9 percent while, at the same time, the poor would pay income taxes.
The business tax in the Cain plan bears no resemblance to the present corporate income tax. The tax would apply to gross sales less dividends paid and all purchases from other companies, including investment goods. Thus, there would be no deduction for wages.
How benefits would be treated is unclear, because purchases of things like health insurance might constitute a purchase from another company and remain deductible. If so, what is to stop a company from paying its employees by leasing their cars and homes for them and even buying their food and clothing? That would reduce their taxable revenue.
The abolition of any deduction for wages is likely to raise the cost of employing workers, even with abolition of the employers’ share of the payroll tax. And since the dividend deduction doesn’t appear to be related to profitability, companies could borrow to pay dividends and still get the deduction. Even a novice tax lawyer could easily make a tax shelter out of that.
And here’s the kicker in the Cain plan. Phase 2 is merely a transition to yet another fundamental tax reform. In Phase 3, the United States would adopt the so-called Fair Tax, which would replace all federal taxes with a 30 percent sales tax on all goods and services. In a previous post, I explained why the Fair Tax is a bad idea. I went into more detail in testimony before the House Ways and Means Committee on July 26.
Whatever one thinks of the Fair Tax, it makes not the slightest bit of sense to have a plan that requires fundamental changes to the federal tax system twice to achieve its objective.
Veterans of tax reform attempts in the United States know reform is very difficult and time-consuming even once. If the Fair Tax is a good idea, Mr. Cain ought to just do it, without confusing the issue with his unnecessary and highly complicated 9-9-9 plan. After all, one of the prime selling points of the Fair Tax is its simplicity, and the 9-9-9 plan is far from that.
Because so little detail exists, it’s hard to do either a proper revenue estimate or distributional analysis of the Cain plan. It’s obvious, however, that Phase 1 would represent a huge tax cut for the wealthy at a time when federal revenues are at a historical low as a share of the gross domestic product and the economy’s fundamental problem is a lack of aggregate demand.
Thus the Cain plan would increase the budget deficit without doing anything to stimulate demand, because rich people can already spend as much as they want and are unlikely to spend more even if their taxes are abolished.
The poor and the middle class might increase their spending if they could keep more of their earnings, but they will unquestionably pay more under Phase 2 of the Cain plan. With no tax on capital gains, the rich would pay almost nothing, while elimination of all deductions and credits, as well as imposition of a national sales tax, must necessarily raise taxes on everyone else, especially those not now paying income taxes.
At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase.
Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.
http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.
With recent polls showing increased support for Herman Cain as the G.O.P. presidential nominee, attention is being drawn to his platform, especially what he calls the 9-9-9 tax plan. News reports describe it as a 9 percent tax rate on business and personal income, combined with a 9 percent national sales tax.
Little detail has been released by the Cain campaign, so it’s impossible to do a thorough analysis. But using what is available on Mr. Cain’s Web site, I’m taking a stab at estimating its effects.
First, the 9-9-9 plan is actually an intermediate step in Mr. Cain’s plan to overhaul the tax system and jump-start growth. Phase 1 would reduce individual and business taxes to a maximum of 25 percent, which I assume means reducing the top statutory tax rate to 25 percent from 35 percent.
No mention is made on the site of a tax cut for those now in the 10 percent, 15 percent or 25 percent brackets. This means that the only people who would get a tax rate cut are those now in the 28 percent, 33 percent or 35 percent brackets. According to the Joint Committee on Taxation, only 4 percent of taxpayers pay any taxes at those rates.
As for corporations, Mr. Cain’s proposal is primarily going to benefit those with revenues of more than $1 million a year, because they account for 98.7 percent of all receipts by C corporations. (A C corporation is a legal entity separate and distinct from its owners that is taxed as a corporation; its shareholders pay taxes individually on their gains.) Those companies with receipts over $50 million account for 88.8 percent of total receipts.
Other business entities — sole proprietorships, S corporations (which have between 1 and 100 shareholders and pass through net income or losses to shareholders) and partnerships — would not benefit because they are not taxed on the corporate schedule. But they represent 92 percent of all businesses.
Second, Mr. Cain would eliminate all taxes on profits earned by multinational corporations outside the United States. It’s hard to know the impact of this provision, but according to Martin Sullivan, an economist with Tax Analysts, the 50 largest corporations in the United States generated half of their profits in other countries.
The actual benefit of Mr. Cain’s proposal would be much greater to many of them, because, according to Mr. Sullivan, while some of these 50 companies have no foreign operations, others derive 100 percent of their gross profits in foreign countries. In 2010 these included Philip Morris, Pfizer and Abbott Laboratories.
Third, Mr. Cain would abolish all taxes on capital gains. Such taxes typically generate more than $100 billion in federal revenue annually, according to the Tax Policy Center. According to the Joint Committee on Taxation, two-thirds of all capital gains are reported by those with incomes over $1 million.
Mr. Cain says these three proposals, which he would put into effect immediately without offsetting the lost revenue, will jump-start economic growth. He offers no evidence for this assertion; it is simply put forward as self-evident. But the experience of the George W. Bush administration was that cuts in tax rates on the wealthy and on capital gains had no effect whatsoever on growth, according to the Congressional Research Service.
And this is only Phase 1 of the Cain plan. In Phase 2, the payroll tax would be eliminated, causing more than $800 billion in revenue to evaporate. The estate and gift tax would be abolished, further reducing taxes on the wealthy. And the 9-9-9 plan would be implemented.
It’s important to understand that the 9 percent rates on personal and business income would apply to very different tax bases than now exist. For individuals, the tax would apply to gross income less only the deduction for charitable contributions. No mention is made of a personal exemption.
This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won’t even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well.
Additionally, everyone would now pay a 9 percent sales tax on all purchases. No mention is made of any exemptions from this tax, so we may assume that it will apply to food, medical care, rent, home and auto purchases and a wide variety of other expenditures now exempt from state sales taxes. This would increase their cost of living by 9 percent while, at the same time, the poor would pay income taxes.
The business tax in the Cain plan bears no resemblance to the present corporate income tax. The tax would apply to gross sales less dividends paid and all purchases from other companies, including investment goods. Thus, there would be no deduction for wages.
How benefits would be treated is unclear, because purchases of things like health insurance might constitute a purchase from another company and remain deductible. If so, what is to stop a company from paying its employees by leasing their cars and homes for them and even buying their food and clothing? That would reduce their taxable revenue.
The abolition of any deduction for wages is likely to raise the cost of employing workers, even with abolition of the employers’ share of the payroll tax. And since the dividend deduction doesn’t appear to be related to profitability, companies could borrow to pay dividends and still get the deduction. Even a novice tax lawyer could easily make a tax shelter out of that.
And here’s the kicker in the Cain plan. Phase 2 is merely a transition to yet another fundamental tax reform. In Phase 3, the United States would adopt the so-called Fair Tax, which would replace all federal taxes with a 30 percent sales tax on all goods and services. In a previous post, I explained why the Fair Tax is a bad idea. I went into more detail in testimony before the House Ways and Means Committee on July 26.
Whatever one thinks of the Fair Tax, it makes not the slightest bit of sense to have a plan that requires fundamental changes to the federal tax system twice to achieve its objective.
Veterans of tax reform attempts in the United States know reform is very difficult and time-consuming even once. If the Fair Tax is a good idea, Mr. Cain ought to just do it, without confusing the issue with his unnecessary and highly complicated 9-9-9 plan. After all, one of the prime selling points of the Fair Tax is its simplicity, and the 9-9-9 plan is far from that.
Because so little detail exists, it’s hard to do either a proper revenue estimate or distributional analysis of the Cain plan. It’s obvious, however, that Phase 1 would represent a huge tax cut for the wealthy at a time when federal revenues are at a historical low as a share of the gross domestic product and the economy’s fundamental problem is a lack of aggregate demand.
Thus the Cain plan would increase the budget deficit without doing anything to stimulate demand, because rich people can already spend as much as they want and are unlikely to spend more even if their taxes are abolished.
The poor and the middle class might increase their spending if they could keep more of their earnings, but they will unquestionably pay more under Phase 2 of the Cain plan. With no tax on capital gains, the rich would pay almost nothing, while elimination of all deductions and credits, as well as imposition of a national sales tax, must necessarily raise taxes on everyone else, especially those not now paying income taxes.
At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase.
Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.
Cain’s ’999' Plan Would Cause Largest Deficits Since WWII
Cain’s ’999' Plan Would Cause Largest Deficits Since WWII, While Increasing Taxes For Most Americans
Pat Garofalo
Oct 5, 2011
http://thinkprogress.org/economy/2011/10/05/336649/cain-999-analysis-deficits
2012 GOP presidential hopeful Herman Cain — who has seen a recent surge in the polls — has been trumpeting the supposed benefits of his “999? economic plan, which would implement a 9 percent flat-tax on personal income and corporate income, along with a 9 percent national sales tax, while scrapping the rest of the tax code (including all of the deductions and all of the taxes on investment income such as capital gains).
Cain claims that his plan would not be “regressive on the poor,” but economists disagree due to the imposition of a national sales tax that would wallop the poor significantly harder than the rich. Cain also claims the plan will be revenue-neutral, in that it would raise as much revenue as the current tax code. I had Center for American Progress Director of Tax and Budget Policy Michael Linden run the numbers on Cain’s plan, and it turns out that it wouldn’t be deficit-neutral — not even close (all calculations are based on 2007 tax data, the last year before the Great Recession):
– For the income tax portion: In 2007, total Adjusted Gross Income on all income tax returns was $8.7 trillion. Since Cain’s plan would exempt investment income, but would have no other deductions, that brings taxable income down to $7.4 trillion. A flat 9 percent tax would therefore have yielded about $665 billion in income tax revenue.
– For the corporate tax portion: In 2007, there was a total of $1.3 trillion in reported corporate income subject to tax. A flat 9 percent would have yielded $112 billion in revenue.
– For the sales tax portion: I used generally accepted estimates of the revenue generated from a value-added-tax (see here and here, for example). Those estimates suggest that a broad-based 5 percent tax on goods and services would generate about 2 percent of GDP in revenue. That implies that a 9 percent tax in 2007 would have generated about $500 billion.
– Together, then, the 9-9-9 plan would have generated a bit less than $1.3 trillion in total federal tax revenue. That may sound like a lot, but it’s only 9.2 percent of GDP. In 2007, we actually collected 18.5 percent of GDP in tax revenue. In other words, the 9-9-9 plan would cut federal revenue in half!
“Even if we reduced federal spending to the ‘historical average’ (when the population was younger and health care cost much less) it would still leave us with deficits over 11 percent of GDP (bigger than any deficit since WWII, including the deficits of the past three years),” Linden noted.
Linden also found that someone in the bottom quintile of earners — who currently pays about 2 percent of his or her income in federal taxes — would pay about 18 percent under Cain’s plan (9 percent on every dollar they make, plus 9 percent on every dollar they spent, which would likely be close to all of them). A middle-class individual would see his or her taxes go from about 14 percent to about 18 percent. But someone in the richest one percent of Americans would see his or her tax rate fall from about 28 percent to about 11 percent.
So Cain’s plan — which has earned accolades from the likes of supply-side guru Art Laffer — would explode the deficit, while increasing taxes on the poor to pay for a giant tax cut for the rich. As Center for American Progress Vice President for Economic Policy Michael Ettlinger put it, the plan “would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country.”
Pat Garofalo
Oct 5, 2011
http://thinkprogress.org/economy/2011/10/05/336649/cain-999-analysis-deficits
2012 GOP presidential hopeful Herman Cain — who has seen a recent surge in the polls — has been trumpeting the supposed benefits of his “999? economic plan, which would implement a 9 percent flat-tax on personal income and corporate income, along with a 9 percent national sales tax, while scrapping the rest of the tax code (including all of the deductions and all of the taxes on investment income such as capital gains).
Cain claims that his plan would not be “regressive on the poor,” but economists disagree due to the imposition of a national sales tax that would wallop the poor significantly harder than the rich. Cain also claims the plan will be revenue-neutral, in that it would raise as much revenue as the current tax code. I had Center for American Progress Director of Tax and Budget Policy Michael Linden run the numbers on Cain’s plan, and it turns out that it wouldn’t be deficit-neutral — not even close (all calculations are based on 2007 tax data, the last year before the Great Recession):
– For the income tax portion: In 2007, total Adjusted Gross Income on all income tax returns was $8.7 trillion. Since Cain’s plan would exempt investment income, but would have no other deductions, that brings taxable income down to $7.4 trillion. A flat 9 percent tax would therefore have yielded about $665 billion in income tax revenue.
– For the corporate tax portion: In 2007, there was a total of $1.3 trillion in reported corporate income subject to tax. A flat 9 percent would have yielded $112 billion in revenue.
– For the sales tax portion: I used generally accepted estimates of the revenue generated from a value-added-tax (see here and here, for example). Those estimates suggest that a broad-based 5 percent tax on goods and services would generate about 2 percent of GDP in revenue. That implies that a 9 percent tax in 2007 would have generated about $500 billion.
– Together, then, the 9-9-9 plan would have generated a bit less than $1.3 trillion in total federal tax revenue. That may sound like a lot, but it’s only 9.2 percent of GDP. In 2007, we actually collected 18.5 percent of GDP in tax revenue. In other words, the 9-9-9 plan would cut federal revenue in half!
“Even if we reduced federal spending to the ‘historical average’ (when the population was younger and health care cost much less) it would still leave us with deficits over 11 percent of GDP (bigger than any deficit since WWII, including the deficits of the past three years),” Linden noted.
Linden also found that someone in the bottom quintile of earners — who currently pays about 2 percent of his or her income in federal taxes — would pay about 18 percent under Cain’s plan (9 percent on every dollar they make, plus 9 percent on every dollar they spent, which would likely be close to all of them). A middle-class individual would see his or her taxes go from about 14 percent to about 18 percent. But someone in the richest one percent of Americans would see his or her tax rate fall from about 28 percent to about 11 percent.
So Cain’s plan — which has earned accolades from the likes of supply-side guru Art Laffer — would explode the deficit, while increasing taxes on the poor to pay for a giant tax cut for the rich. As Center for American Progress Vice President for Economic Policy Michael Ettlinger put it, the plan “would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country.”
Subscribe to:
Posts (Atom)