CNBC versus the GOP

Last night the GOP candidates went into hostile Michigan to face a hostile set of moderators who were booed into sticking to economic issues by the crowd after an unfair detour against Herman Cain.  In all, the night turned into somewhat of a circus.  Hopefully, the GOP will shun CNBC in the future, as this was the worst and most unprofessional case of moderation we have seen.    But aside from that, let’s get to the winners and losers.  First up…

It floored me when they tried to ask if companies should be making a profit or growing jobs.  Excuse me, but how the heck do you create jobs if you aren’t making a profit?? Gingrich’s response was beautiful. Watching the moderator rolling her eyes when Gingrich said a 30 second answer on healthcare was ridiculous was fun to watch.  But my favorite answer of Gingrich’s was on education, where he offered a real life example of a real life solution that addresses the issue of education that is getting exponentially expensive with much cheaper results.  As someone who works full-time, is a full-time grad student and has been in college for a decade following various business and religious pursuits, I connected with Gingrich’s answer and could not agree more.  This morning Neil Boortz in a morning phonecall to WOKV implied that Republicans needed to worry about who could beat Obama, not who would be the best President speaking of Newt Gingrich.  Bull.  Gingrich keeps winning debates because he is the smartest man on that stage.  And he made a joke out of those bombastic, rude moderators.

Rick Santorum did well.  This doesn’t mean anything, he still can’t win.  But he did highlight his leadership on things like medical savings accounts and gave viewers no reason to mark him down.  He has struggled in debates, but performed well last night.  Ron Paul also did a good job.  He avoided saying anything outlandish and produced a solid, constitutionalist approach.  Bachmann did well, but was once again forgettable.  Huntsman also did pretty well, though his attempt at “answer this in 30 seconds?” humor sounded like a lame, screwed up retelling of a good joke.

Mitt Romney needs to understand his precarious position.  He is stuck at 30%.  The rest of the GOP voters are looking for not-Mitt-Romney as their candidate.  His smoothness, economic savvy, and gaffe free debate performances have gotten him this far (along with a great deal of establishment money).  He needs to figure out how to get himself the rest of the way.  He has to find a way to make Social Conservatives trust him. Mitt, if you are listening, make a major statement in favor of state personhood amendments.  Consider that step one to breaking into the 40s in the polls.

Herman Cain also has hit a roadblock, but it is a policy roadblock.  I think many viewers were left with the feeling that if nuclear missiles were airborne from China heading for the US, President Cain would be on the phone with the Chinese President telling him how his bold plan, the 9-9-9 plan, could solve their problems by growing China’s economy.  9-9-9 is to Herman Cain what Windex was to Tula’s family in My Big Fat Greek Wedding.  This one dimensionalism will leave him open to a Gingrich rise.  On the other hand, Cain did very well defending himself against accusations which are more and more looking like racist smears from the Axelrod/Democrat machine.

Rick, Rick, Rick.  By the way, if you want to see the sexism of the left, just watch how long Perry’s crash and burn stays in the media cycle and blogosphere compared to a Palin or Bachmann gaffe.  Talk about not being ready for primetime.  I think Perry likes to start talking and get rolling, and that’s why he sometimes forgets what he was talking about mid-sentence.  No excuses.  You are running for President of the United States.  Running before you secure the ball is how you lose games.  Running your mouth before you have your answer and grasp on the issues is what makes Presidents say stupid things.  E.g. Barack Obama talking about police officers who arrested his professor friend.

Advertisements

Trunkline 2012: Tuesday Tidbits From The Republican Presidential Race – 11/08/11

Bookmark and Share  Today, White House 2012 brings you Herman Cain’s press conference, Iranian nukes, Obama’s anti-Netanyahu remarks, Gallups confirmation of American views, the President’s problem with prayer, and much more in today’s Trunkline 2012.

Bookmark and Share

 

Gingrich vs. Perry. Whose Tax Plan is More Effective?

   Bookmark and Share  On Tuesday, former Speaker Newt Gingrich was quick to compare his flat tax proposal to that of Texas Governor Rick Perry’s flat tax plan which was released earlier in the day.

In his comparison, Newt convincingly argues that his plan is better than Perry’s.  Gingrich is also quick to point out that while the flat tax concept is something which Perry only recently decided to run with, he has been an ardent supporter of flat tax reform since as far back as 1997 when he stated that “There are things I would like to do like a flat tax with virtual elimination of the IRS.”

The biggest distinguishing aspect of Gingrich’s and Perry’s flat tax plan is the rates which the two men arrive at.  While Perry set’s a high 20% flat rate for both corporate and personal income taxes, Newt Gingrich proposed two separate rates and each one is lower than Perry’s.  In Gingrich’s plan, which predates Perry’s, the Speaker calls for a 12.5% corporate flat tax and and a 15% personal flat tax rate.

Other distinguishing features of the two plans involve capital gains taxes, deductions for charitable giving and home ownership, and payroll taxes.

While Gingrich’s optional flat tax system seeks to eventually replace payroll taxes with personal accounts that  yield better results. Perry’s plan does not change the payroll tax at all.  And on the issue of capital gains and  deductions for charitable giving and home ownership, Newt argues that Rick Perry is adopting a liberal class warfare approach that only gives such deductions and eliminates capital gains taxes on  those making $500,000 a year or less.  Newt’s plan fairly offers it to everyone. [For the actual comparison and a list of references demonstrating Newt’s longstanding committment to a flat tax, see the table and lists that the Gingrich campaign provided, at the bottom of this post]

While Perry’s plan is most definitely a good one, and touches on a few things that Newt’s does not seem to, such as abolishing the tax on Social Security benefits, Newt’s plan seems to benefit economic growth more than Rick Perry’s does. Much of the reason for that is simply based on the fact that Gingrich’s rate is much lower than Perry’s.  In addition to that, Newt Gingrich has offered significant entitlement reforms that go far beyond anything that Perry has toyed with.  Together, those two factors alone make Newt Gingrich’s plan stronger than Rick Perry’s.

In a previous post, White House 2012 gave Perry’s plan which he calls Cut, Cap and Balance, two thumbs up.  Perry’s plan still gets both thumbs up.  However; the plan which Newt Gingrich proposed long before Rick Perry put his proposal out,  gets three, not two thumbs up.

Meanwhile both men have done better than all their opponents on this issue.  For his part, Mitt Romney offered a 59 point plan that included some tinkering with the tax code, but failed to realize that he is tinkering with a tax code that is defective and needs to junked.  And while his plan is a solid and accetable program of pro-growth policies, it fails to acknowledge the simple reality that we will be much better off scrapping the existing tax code instead of tinkering with it.

As for Herman Cain,  I am no fan of his hybridized version of a flat tax and a little disappointed in Cain’s evolution on this issue.

Cain was initially calling for a Fair Tax, which is more accurately described as a national sales tax.  The one day he suddenly turned it into 9-9-9, a plan that offers a 9% corporate tax rate, a 9% personal income tax rate, and a 9% national sales tax.  That is a plan I cannot support simply because I refuse to give the federal government the authority to play with a new tax…..the sales tax.

Of course Gingrich and Perry and even Romney may still change their own plans as this campaign plays out, but so far, Gingrich and Perry are at least on the right path to the right reforms and currently, I find Gingrich’s path to be the most prosperous one for the nation.  The big questions now is, which one can best sell their plan and which one can use it in a way that will get their campaigns moving in the right direction and win them the votes they need to become the Republican presidential nominee?

Photobucket

The following was provided by the Gingrich presidential campaign

Let’s Bump Plans: A Comparison of Gingrich and Perry’s Flat Tax Plans

Gingrich’s Plan Far Bolder than Perry’s Plan and Will Lead to Far More Robust Job Creation and Capital Investment in United States

Gingrich Perry Verdict: Gingrich Plan Better
Rate 15% 20% Gingrich has advocated for several years an optional flat tax rate of 15%, which when coupled with Gingrich’s bold entitlement and regulatory reforms, will usher in another era of booming economic growth and new, higher-paying jobs. The Perry rate of 20% is higher than the 17% that Steve Forbes proposed in his 1996 and 2000 presidential campaign.
Who Gets to Make Deductions for Charitable Giving and Home Ownership?? Everyone Families making less than $500,000/year By creating two separate classes of taxpayers, the Perry plan buys into the same class warfare that characterizes the Obama and Romney economic plans. The fact that there are still two brackets – even under a supposed “flat tax” plan – calls into question whether this is really a flat tax at all.
State and Local Tax Deductions Not deductible in optional flat tax plan Deductible in optional flat tax plan The Gingrich plan has a lower rate so less need for state and local deductions.  The deduction is a federal subsidy for states to adopt higher state and local taxes. Removing the subsidy would lead states to reduce state and local taxes, or adopt their own flat tax reforms. The Perry plan erodes states’ competitive advantages by making state and local taxes deductible in his optional flat tax plan.
Who Benefits from Elimination of Capital Gains Tax? Everyone Depends whether capital gains is long term or short term.  Perry’s plan eliminates cap gains only for long term. The Gingrich plan maximizes the capital investment and job creation that will accompany the elimination of this tax. The Perry plan only goes halfway, and by levying up to 35% tax on short-term capital gains, it will discourage investment, venture capital, and new jobs creation.
Corporate Income Tax 12.5% 20% The Gingrich plan will create a boom of new American entrepreneurship by dramatically cutting the corporate tax rate to one of the lowest in the developed world. The Perry plan relies upon a short term “tax holiday,” then only drops the corporate tax rate to 20% — only average in the developed world, and still over 20% higher than our closest economic competitor Canada, which has a rate of only 16.5%.  Gingrich rate makes U.S. more competitive than Canada.
Payroll Taxes Eventually replace payroll tax with personal accounts, financing better results No change in existing payroll tax Gingrich supports personal savings investment and insurance accounts that would eventually be expanded to finance all of the benefits now financed by the payroll tax, allowing that tax ultimately to be phased out altogether.
Earned Income Tax Credit (EITC) and Child Tax Credit Both the EITC and the Child Tax Credit are preserved in Gingrich’s optional flat tax system. No information provided. Preserving the EITC and Child Tax Credit are critical to ensure that the optional flat tax system does not unfairly target low-income Americans. Gingrich passed the first child tax credit as Speaker in 1997, and will preserve this credit and the EITC under his optional flat tax system.
Record in Achieving Dramatic Jobs and Economic Recovery at the National Level? Yes. Substantial. See record at right. None. Speaker Gingrich’s Record (1995-1999):•    Eleven Million New Jobs
•    Four Straight Balanced Budgets for the First Time Since the 1920s.
•    Unemployment rate of 4.2%.
•    Federal Spending Held to the Slowest Growth Rate Since the Early 1950s (avg. of 2.9% a year).
•    Venture capital investments grew 500% in three years and manufacturing sector grew to 17.43 million jobs.
•    Bipartisan Welfare Reform that Lifted Millions from Poverty.
•    Over $400 Billion of National Debt Paid Down

Gingrich’s Advocacy of the Flat Tax Dates Back to 1997

From Item 2 in Gingrich’s 21st Century Contract with America (September 29, 2011)

All tax filers would be given the option to pay their income taxes subject to current income tax provisions or to pay under a lower single rate of taxation with limited deductions.

Release of Jobs and Prosperity Plan Upon Announcement of Campaign (May 13, 2011)
Move toward an optional flat tax of 15% that would allow Americans the freedom to choose to file their taxes on a postcard, saving hundreds of billions in unnecessary costs each year.

In his 2010 book, To Save America
To generate another lasting economic boom, we need fundamental tax reform, similar to that proposed by Steve Forbes. We should adopt the optional 15 percent flat tax with generous personal exemptions.

In his 2008 book, Real Change
This concept of an optional flat tax was developed by Steve Forbes when his flat tax campaign was undermined by criticisms that it would take away popular tax breaks. Steve Forbes and Stephen Moore have both proposed giving American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions. They call it the free choice flat tax, and it’s an idea whose time has come.

In a 2008 National Review op-ed with Texas Representative Michael Burgess
An optional flat tax would save taxpayers more than $100 billion per year and reduce compliance costs by over 90 percent. This is a stimulus package that would have an immediate effect on our American economy.

In Foreword to Steve Forbes’ 2005 Book Flat Tax Revolution
I believe there is a real opportunity for a similar grass roots revolution imposing the flat tax on Washington. As people learn how much money and time they can save through a flat tax they are going to demand a simple alternative to the complexity and uncertainty of the Internal Revenue Service. As people spend hours in frustrating and seemingly endless paperwork and record keeping and preparing they are going to demand the freedom for their own time offered by a flat tax….As people watch the endless maneuvering of the lobbyists and the special interests they are going to demand the fairness of a flat tax.

As Speaker of the House in 1997
There are things I would like to do like a flat tax with virtual elimination of the IRS.

Bookmark and Share

Perry gets one chance to resurrect his election campaign with his Tax Plan.

Bookmark and Share   After a difficult month which saw him plummet in most national polls, Governor Rick Perry, today launched his much anticipated Flat Tax plan. Making the announcement, Perry said, “The goal of my ‘Cut, Balance and Grow’ plan is to unleash job creation, address the current economic crisis, while at the same time generating a stable source of revenue to address our record deficit and put our fiscal house in order.”

“The flat tax will unleash growth but growth’s not enough,” Perry said. “We must put a stop to this entitlement culture that risks the financial solvency of this country for future generations. I mean the red flags are alarming.”

Perry called for corporate tax reform, including a one-time reduced tax rate of 5.25% for businesses that bring their profits that are parked overseas back to the U.S.

The U.S. Chamber of Commerce estimates this one-time tax reduction would bring more than $1 trillion in capital back to the U.S. create up to 2.9 million jobs, and increase economic output by $360 billion,” he said.

“In other words, it’s the kind of economic stimulus President Obama could have achieved if he wasn’t hell-bent on passing big government schemes that have failed American workers,” he said.

Perry’s plan may seem very attractive and indeed, the most attractive aspect of the plan is that it gives most American’s a “Choice.” It doesn’t stipulate you must do X, it says to ordinary American’s you have these two options, A or B.

As we saw recently with Herman Cain’s plan, people like simplicity however, Governor Perry is going to come under intense scrutiny over the next week from the media regarding his plans. I welcome the plan because it is a departure from previous elections and like Herman Cain and Newt Gingrich, it is bold in wanting to reform the unnecessary tax code which, most American’s having mountains of paperwork to work through annually to get their tax returns completed.

The one big problem I see with Governor Perry’s plan ironically, is the very person who has been credited with lending Perry a lot of support in establishing it, Steve Forbes. Inside the first hour, I witnessed Forbes on a major media outlet supporting the plan.

I admire Steve Forbes and in fact, it was his innovative thinking back in the 1996 campaign that many credit as the root of today’s Perry plan. The harsh fact is this however, Perry needs to be able to convince American on his own and sell them the plan on his own. Herman Cain has been doing it with his 9-9-9 plan, former speaker Gingrich with his “New Contract for America,” and even President Obama has been touring the country trying to sell his jobs bill.

Perry needs to show American’s on a national stage that he can demonstrate the leadership qualities and convince them about the direction he wants to take the country. In the $17 million dollars he raised in the last quarter, $10 million of that came from within Texas, he’ll need extend his appeal beyond the Lone Star State to prove a credible and serious challenger to President Obama nationally.

While I like the “Choice” feature of Governor Perry’s plan, the next week is crucial. He needs to stand independent of Steve Forbes and sell his own ‘Cut, Balance and Grow’ plan and hopefully, Perry’s communication’s team, will have already set it up for Steve Forbes, to limit his air time talking about Perry’s plan.

My experience about business dealing in America tells me one thing; American’s admire creativity and innovation. If Perry stumbles during interviews or gets labelled as Steve Forbes 2.0 his chances of resurrecting his campaign nationally will all but disappear. I wish the Governor well however.

Bookmark and Share

Perry’s Cut, Cap and Balance Flat Tax Plan is a Winner But Will it Make Him a Winner?

  Bookmark and Share  In advance of his announcement of a flat tax proposal that would be the most dramatic tax reform in the nation’s history, Governor Rick Perry penned a summary of his proposal in this mornings Wall Street Journal .

Calling his proposal “Cut, Balance and Grow”, Perry hopes to balance the federal budget by 2020 and explains that his plan will abolish the death tax and give taxpayers the option to pay their current income tax rate or a new 20% flat tax that “preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and  increase the standard deduction to $12,500 for individuals and dependents.”   In addition to a 20% personal income tax, the Perry plan will also adopt a lowers the corporate tax rate to 20% and encourage the swift repatriation of nearly $1.4 trillionthat are currently hidden overseas by temporarily lowering the rate to 5.25%.  The third part of his flat tax proposal includes what he calls a transition to a “territorial tax system”, that will only tax income earned in the United States.

Perry’s plan also calls for the elimination of the tax on Social Security benefits, a change that will supposedly boost the income of 17 million current Social Security recipients.

Governor Perry argues that without significant changes, our nations will go the way of Europe and be mired in a longterm debt crisis that will only get worse than the one we are currently experiencing and to help avoid that in addition to his new flat tax reform he attempts to cut, cap and balance federal spending habits by capping federal spending at 18% of our gross domestic product, banning earmarks and future bailouts, and passing a Balanced Budget Amendment to the Constitution. Additionally he will freeze federal civilian hiring and salaries until the budget is balanced and enact an immediate moratorium on pending federal regulations while also mandating  a full audit of all regulations passed since 2008 to determine their need, impact and effect on job creation.

In what is a direct nod to his need to shore up those voters who are fearful about Perry’s past remarks about Social Security being a Ponzi scheme and as such, something which he would seek to eliminate, Perry’s plan touches entitle reforms, an issue which needs to be addressed and which Perry’s plan does not address enough. His proposal merely declares that he will preserve benefits for current and near-term Social Security beneficiaries, by permanently prohibiting “politicians from raiding” the Social Security trust fund.

That part of his plan is the most politically shallow aspect of his proposal.  While he addresses that issue under the category of entitlements, he does not really address all of the entitlement reforms that are burdening the budget now and will bust it in the future.  It is also worth mentioning that it is nearly, if not totally impossible for a President to vouch for the permanent inability of Congress to “raid” any fund.  President’s come and go.  The mentality that relies on political expediency among Congress lasts forever.

In general, Perry’s Cut, Cap, and Balance plan is one of the most comprehensive and promising plans to come down the pike in decades.  One of the most, but the not only one.  Others have proposed similiar flat tax based plans and one of the major differences between those other plans and Perry’s plan is that at 20%, Rick Perry sets his flat tax at a rate significanlty higher than most all others.  That high 20% rate is probably the least attractive aspect of Perry’s plan.

Insofar as reform goes, it is much more solid than the light on detail, 9-9-9, hybridized flat tax proposal of Herman Cain and when it comes to the issue of reform, Perry’s proposal outshines even Ronald Reagan’s, Jack Kemp inspired, lower taxation, supply side economics plan of the 80’s.  That plan simply adjusted the existing tax code and while it was in no way insignificant, Perry’s plan admits that the tax code is not worth tinkering with and needs to be scrapped and replaced by something that will allow America to be competitive in the modern global economy.

In a previous post I indicated that if Perry proposes a good flat tax plan and can market it properly and exploit the promise that exists in a flat tax from a politically strategic point of view, than he can reestablish himself as a frontrunner, or at least within reasonable striking distance of such a status.  Now that the relative details of his plan are out, I can honestly say that despite my belief that his 20% rate is too high,  if he can build his campaign around this plan and make it a focal point of the overall Republican nomination contest, than Rick Perry will have many fruitful themes to touch upon and run on.  Now is just a matter of developing an effective campaign strategy and organization that can force the other candidates to run around his promising, conservative based economic plan and reforms. Bookmark and Share

RIP Cain’s 9-9-9 Plan

So much for simple.  After heavy criticism of his 9-9-9 plan, Herman Cain is retooling it to look a whole lot more like the current income tax code.  Cain plans on adding empowerment zones for poor neighborhoods, which is no surprise, but also adding tax brackets and exemptions.  Cain’s caving will not satisfy Republicans like Michele Bachmann who said everyone should pay taxes and then attacked Cain’s plan, or Democrats who have portrayed Cain as the devil for trying to come up with a fairer system.  What it does do is knock the legs out from under Cain’s campaign by removing the one base of support he could count on: the Fairtax, limited government crowd.

Another issue for Cain’s new progressive approach to his formerly flat 9-9-9 plan is that he proves himself wrong in his assertion that it would be a solid, unchangeable plan that future Presidents couldn’t tinker with.  One of the key elements to a flat tax is that it gets government out of the business of picking winners and losers, giving advantages to people in their districts, or buying votes through sin taxes and tax breaks for good behavior.  With Cain’s empowerment zone approach, there is a risk of taxes being a political selling point to the extent that they are now.

Rethinking Cain's effectiveness on flat and fair taxes

The complexity of empowerment zones, brackets and exemptions for good behavior will bog this system down in compliance issues.  The sales tax will basically replace the payroll tax on a business’s to do list, but with added complexities if that is possible.

Anyone with a “get rid of the IRS” bumper sticker may need to rethink Herman Cain.

Newt’s rebirth: Romney’s innocence: Cain’s oops

Give Newt a chance?

That seems to be the message coming from GOP grassroots following another commanding debate performance in Nevada.  Newt Gingrich is announcing on his Facebook page that contributions over the last four days have exceeded what he took in for the entire month of July.

With some of this campaign cash, Newt is making moves in New Hampshire and hopes to hit other early states as well.

To date, Newt Gingrich’s campaign was slowed by an apathetic start, low fundraising, and staff defections.  The general mood towards Newt Gingrich has been that everyone will admit he is the smartest man in the room, but nobody thinks he can get elected.  Un-electability has cost him financial support in a catch 22 situation where he has found it hard to raise the sort of excitement that gets people to fork over even small donations.  In many cases people like Newt in theory, but can think of better things to spend their cash on.

Newt also has the misfortune of having a public record far longer than any other candidate out there.  From the Clinton impeachment to his three wives, Newt has plenty of baggage.  However, none of this baggage is fresh.  This could prove to be an advantage over candidates who have made much more recent slip ups that are fresh in people’s minds.

Romney’s Illegal Aliens

Rick Perry may have made a critical error in attacking Mitt Romney for “hiring illegal aliens”.  This was a flimsy charge when it was made in 2008 and has not become any more serious since then.  Such a mean spirited attack on such a baseless charge is not what Republicans want to see candidates doing to each other.  Perry may be believing some of the religious conservative hype coming from his side of the ring: that getting rid of Romney is as high a priority as getting rid of Obama. 

Most conservatives would rather see Obama go, even if it means electing someone not as socially conservative.  Romney is not going to go down over this illegal immigration charge, and for a good reason.  Romney didn’t hire illegal aliens.

In fact, as an accountant myself, I would wager that under the criteria given by Rick Perry I could discover illegal aliens that Rick Perry has “hired”.  Romney hired a legal US company to perform services for him.  That company broke the law and hired illegal aliens without Romney’s knowledge or direction.  When Romney found out, he gave them one chance to fix it and then fired them.

So, has Rick Perry eaten at any restaurants along the border?  Has he ever used the services of any company that hired illegal aliens?  Give me unfettered access to his check books and credit records and I can easily find you the illegal aliens Perry has “hired” by this criteria.

Besides, did Nannygate in the Clinton administration change one voter’s mind?  Stick to the Issues, Rick Perry.

Cain talking himself out of contention

For two straight debates, 9-9-9 has played a significant role in tax discussion.  Cain is tapping the anti-IRS Fairtax group in the country with step one on the way to a national sales tax.  But the Fairtax has always overpromised on things it could not deliver.  9-9-9 actually makes the Fairtax look pretty good.  Cain has lucked out so far since no candidate attacking his plan seems to understand his plan.  But eventually word will get out on some of the real flaws in it, such as the basis for the 9% corporate tax.

The 9% corporate tax is on gross minus purchases.  For service  intensive industries such as consulting firms, temp agencies, and other such businesses, that 9% tax could easily turn into an effective 90% tax or even higher.  How?  Picture a company that makes $1.1 million gross per year.  They are a consulting firm with $100,000 in expenses and $900,000 in payroll costs resulting in $100,000 in profit.  Under Cain’s plan, it they leave the $100,000 profit in the business, they will be taxed on 9% of $1 million, or $90,000.  Of course, $90,000 tax on $100,000 net profit is a 90% corporate tax.

Now Cain has made another misstep on abortion.  At the same time, he practically handed out endorsements to his two biggest competitors, Mitt Romney and Newt Gingrich.

Cain continues to establish his amateur status and lack of political savvy.  Some voters will find that endearing, especially in our polished political world.  Others will start questioning just how much they can trust Cain to hold the line on important principles and give fast, correct answers in one of the most demanding jobs on the planet.

%d bloggers like this: