Former businessman Herman Cain survived challenges from fellow Republican presidential contenders during a debate Tuesday evening while Texas governor Rick Perry, who had to make up for a number of unconvincing debate appearances, apparently came better prepared although he seemed ill at ease in the setting.
Cain scored well in recent opinion polls after Perry’s lackluster debate performances put off many likely primary voters. He touts a “9-9-9” plan for tax reform that seems to resonate with conservatives although the other Republican candidates took aim at the proposal during last night’s debate in the early primary state of New Hampshire which was sponsored by Bloomberg News and The Washington Post.
Former Massachusetts governor Mitt Romney, who won the endorsement of popular New Jersey governor Chris Christie ahead of the debate, argued that the country needed more than tax reform to stir job growth. “Simple answers are always very helpful but oftentimes inadequate,” he said.
9-9-9 would replace the existing tax code with three equal business, personal income and national sales tax rates. Such a federal sales tax is estimated to raise $378 billion per year while a 9 percent corporate tax rate would net $270 billion. If all income tax rates were reduced to 9 percent, it would probably bring in some $1.12 trillion, providing a total of $1.768 trillion in revenue compared to the $2.16 trillion that the federal government takes in under the current tax regime — which is approximately a trillion dollars less than Washington spends.
Cain may argue that if the economy improves, corporate and income tax revenues will increase but in the short term, deep spending cuts will be necessary to implement his plan.
Moreover, lawmakers may hesitate to abolish payroll taxes that directly fund the health-care support and pension programs Medicare and Social Security. Both are in dire need of reform as they are projected to run out of money in fifteen years but “starving” them would be unacceptable to Democrats who have vowed to protect entitlements for future generations.
Other candidates were skeptical of imposing a national sales tax, warning that future Congresses would be tempted to increase the rate. “Once you get a new revenue stream, you’re never going to get rid of it,” said Congresswoman Michele Bachmann of Minnesota. Former Utah governor Jon Huntsman dismissed the 9-9-9 plan as unrealistic. “Here’s what we need,” he said, “something that’s doable, doable, doable.”
Huntsman, who was also ambassador to China, was critical of frontrunner Mitt Romney who blamed Chinese economic policy for undermining the recovery in the United States. “The Chinese,” said Romney, “are taking our currency and taking our jobs and taking a lot of our future.” Huntsman agreed that the Chinese keep their currency undervalued to boost exports but pointed out that the expansionary monetary policy of the Federal Reserve is having a similar effect. “You’re going to find yourself in a trade war very, very quickly,” he told Romney.
Texas governor Rick Perry, who surged in the polls after he joined the race two months ago but since disappointed in the debates, argued that for jobs to return to the United States, the country should deregulate. “You free up this country’s entrepreneurs where they know that they can risk their capital and have a chance to have a return on investment, and all this conversation that we’re having today becomes substantially less impactful,” he predicted.
Perry’s state of Texas added 260,000 jobs in the last two years, nearly half of those created nationwide, but the governor has yet to put out a plan to expand all of the American economy. At Tuesday’s debate, he suggested that tens of thousands of jobs could be available in energy production if the federal government opened up more areas for drilling.
The governor blamed President Barack Obama for enforcing restrictions on energy exploration and production in Alaska, the Gulf of Mexico, the Pacific Ocean and on land where vast oil and natural gas reserves are situated in Colorado and Wyoming. The Democrat’s administration, said Perry, has, “by intimidation or by overregulation, put our energy industry and the rest of our economy in jeopardy.”
The president claims that “drilling alone cannot come close to meeting [America’s] long-term energy needs” and favors subsidies for renewables and regulatory standards for cleaner fuels.