Tag Archives: marketing

Cain’s 9-9-9 Plan: Great Marketing of an Awful Product

Last night, my wife and I attended the North Carolina State Fair.   Aside from all the rides, games, and exhibits, what I find most fascinating is the plethora of the most unnatural and unhealthy food modern science has ever created.  The most exotic deep-fried items always tend to have the biggest, brightest signage, and likewise…the longest lines.   Now, I have faith that most people realize that a deep-fried Snickers bar can be detrimental to one’s health.  But what fun is going to the fair and eating something “normal”, like say, a plain slice of pizza, right?

As I sat down to eat my boring pizza, I started thinking about Herman Cain’s rise to the top of the GOP field.  I suppose the fact that he was a former CEO of Godfather’s Pizza had something to do with that.  Specifically, I was thinking about his signature 9-9-9 tax plan and what a brilliant job he has done marketing it.    For most Americans, making sense of the current tax code is like asking a newborn baby to recite William Shakespeare.  On how to turn the economy around, most of the current GOP candidates have stuck to boiler plate Republican ideas that mainly cut taxes for the wealthy while doing virtually nothing for middle and working class families.    Hardly anything we haven’t heard before countless times.  Mitt Romney released his 59-point economic plan back in September.  Quick…name at least 3 of those points off the top of your head right now.  Didn’t come up with any?  Me neither.

But 9-9-9 gives us something different.  It gives people something they “think” is just so simple.  I mean, a flat 9% income tax, 9% corporate tax, and 9% national sales tax. Pretty simple, right? As Cain says himself, “If 10% is good enough for God, then 9% ought to be good enough for the Federal Government.”  Now, 10% may in fact be good enough for God, but God didn’t run up a $14 trillion-dollar deficit, and with all of the other GOP “saviors” crashing and burning, Cain saw an opening and took it.   Seemingly a long shot just a few short months ago, Mr. Cain is now leading most early primary states, and has even led in few national polls…all thanks to the branding of 9-9-9.

Of course, once the spotlight shifted away from the Romney-Perry dogfight for a few minutes, Cain’s 9-9-9 plan went under attack, and rightfully so.  It would be a disaster if ever signed in to law.  Jon Huntsman, who I believe is a very pragmatic candidate, and therefore has no shot at winning the GOP nomination, had one of the best debate one-liners I’ve heard in while.

“The first time I heard of it, I thought it was the price of a pizza”

Huntsman was close.  Another pizza chain, Dominoes, used to offer a 5-5-5 deal.   Now, anyone that has ever ordered Dominoes can attest that it’s pretty bad pizza, but for $5, at least you were saving a few bucks.  Mr. Cain’s 9-9-9 plan is worse.  Not only is it a bad idea, but most people will end up paying more in the long run.

9-9-9 is a brilliant scheme to deliver deeper tax breaks to the wealthy, while punishing low income families.  This is not surprising given Mr. Cain’s recent statements:

“Don’t blame Wall Street. Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”

 “It took our nation nearly 250 years to end slavery and live up to the self-evident truth that all men are created equal. It should not take us another 250 years to cease the involuntary negative return most working people receive from Social Security, or the involuntary servitude imposed by the oppressive income tax code.”

Under 9-9-9, low income families will end up paying more.  A lot more.  Republicans hate the fact that up to 46% of low income earners pay no federal income tax, and in same cases, even get tax rebates.

When President Obama proposed that his $447 billion American Jobs Act be paid for by imposing a slight increase on taxes for the top 1%, Congressional Republicans demanded that the 46% pay taxes first before their precious millionaires got dinged.

The reality is that low income families do in fact pay some taxes in the form of payroll and other state or local taxes.  The reason they may not pay any federal income tax is due to the deductions they are legally entitled to.  For instance, a couple with 2 children who earn less than $26,400 would pay no income tax after considering the standard deduction of $11,600 and 2 $3,700 exemptions for the children.   With 9-9-9 in effect, that same family would receive a federal income tax bill of almost $2,400. On top of that, they would also have to pay an additional 9% sales tax on anything they buy, which would be in addition to any state and/or local sales tax already in place.  In a state like Alabama, which has a 10% sales tax, and no exemption for food or clothing, adding a 9% national tax, results in a total sales tax of 19%!    A $200 grocery bill that would normally become $220 with sales tax, would jump to $238 under 9-9-9.   Ultimately this will cause low income families to have less take home pay, which means less money that they are spending on goods and services.  And if people are spending less, then there is less demand, which means less incentive for businesses to hire workers again.

Not surprisingly, New Hampshire, which actually has no income tax, is the one early voting state, that is not looking good for Cain.  Some of that may have to do with Mitt Romney’s ties to the area, but I suspect people up there don’t like what they see in 9-9-9.  Being the only state in New England without a sales tax, New Hampshire brings in a lot of business from around the region.   If 9-9-9 went into effect, I doubt people would make the same effort.

What’s worse is that 9-9-9 would actually grow the deficit.  In it’s current form, it would not generate the same amount of revenue as today’s tax code does.  Of course, recent history shows that Republicans only care about the deficit when a Democrat occupies the White House.  The debt ceiling debacle that took place over the summer was more about sticking it to President Obama than actually being sincere about fixing the economy.   After all, it’s hard to take people like  House Speaker John Boehner seriously when he voted for the 2001 and 2003 Bush tax cuts, the Iraq war, Medicare Part D, and TARP!

Yet, given all of the debunking of Herman Cain and his 9-9-9 plan, a new University of Iowa poll out today gives him a 10 point lead of Romney.  Cain also placed first in the Western Republican Leadership Conference straw poll in Nevada.

Despite all of this, I firmly believe Herman Cain will NOT end up being the GOP nominee.   9-9-9 is the least of his problems.  He has no clue on foreign policy and would get obliterated on that subject in a debate with President Obama, who has gotten some very big wins over the past few months, including the recent death of Moammar Qadahffi in Libya.  Mr. Cain has also made several incendiary remarks while campaigning that can easily be turned into negative ads against him.

But for now, we are stuck with Mr. 9-9-9 for a little while longer.  Eventually, I believe people will come to their senses and realize that Cain and 9-9-9 are just not good for them, much like a deep-fried twinkie.

Tagged , , , , , , , , , , ,