Herman Cain's 9-9-9, Praising of Greenspan Cause for Concern?
On Tuesday night, presidential candidate Herman Cain may have made his biggest slip thus far, by electing former Federal Reserve Chairman Alan Greenspan, who some now blame for the 2008 financial crisis, as his standard of economic leadership.
During the Tuesday night debate in New Hampshire, Cain told audience members that he believes Greenspan was the best Fed chairman in the last 40 years, and he would be a model for the person Cain would nominate to the position. His reasoning was simple.
"That's when I served on the board of the Federal Reserve in the 1990s, and the way Alan Greenspan oversaw the Fed and the way he coordinated with all of the Federal Reserve banks, I think that it worked fine back in the early 1990s," Cain said.
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Cain's statement, though carefully framed to use the 1990s as his point of reference, did not acknowledge Greenspan's current reputation as the man who some – including fellow presidential candidate Ron Paul – blame for the housing bubble.
Paul, the U.S. House Domestic and Monetary Policy Subcommittee chairman, pounced on Cain's answer, stating, "Alan Greenspan was a disaster."
Paul continued, "Everyone in Washington, liberals and conservatives, said he kept interest rates too low too long."
At a 2008 congressional hearing, Rep. Henry Waxman (D-Calif.) questioned Greenspan about his possible role in the subprime mortgage crisis and Greenspan accepted partial blame, conceding, according to The New York Times, that credit default swaps needed to be restrained.
In Maine, the state Republican Party approved a platform last year calling for the United States to abolish the Fed altogether.
Combined with his 9-9-9 plan, Cain's Fed pick may be a cause for concern about whether the former businessman's economic ideas can save the country.
Cain has proposed his flat 9-9-9 tax to spur economic growth and jobs. The 9-9-9 plan stands for 9 percent corporate tax, 9 percent personal income tax and 9 percent national sales tax.
Both The Washington Times and Bloomberg have attempted to test Cain's plan. Both publications found that 9-9-9 created less revenue than the current tax code. The Washington Times projected that the plan would raise $1.8 trillion; Bloomberg said the plan could raise no more than $2 trillion.
The government currently takes in $2.16 trillion in taxes, according to Politifact.
Cain said these attempts are "incorrect" because "they start with assumptions we don't make." He went on to explain that 9-9-9 will be replacing the current tax code and drawing from a broader tax base.
The plan has been scored, Cain spokesman J.D. Gordon told The Christian Post, and is projected to create 6 million jobs. Consultant Gary Robbins, who says he scored Cain's plan, praised the plan as "economically fine," but told Politico it is not the plan he would pick.
"The problem with the big-bang changes like that, the flat tax or the fair tax, is that they are so alien to the current system that it would be a great big shock," he said.
Other candidates bashed the plan as one that would not pass through Congress. Additionally, Minnesota Congresswoman Michele Bachmann and former Pennsylvania Sen. Rick Santorum both expressed concern that 9-9-9 would allow the government to impose new federal sales taxes.
Cain replied that he would insist the tax bill enacting 9-9-9 stipulate that a two-thirds majority vote is needed to change the plan.
