By Tera Ertz
Much has been made of Herman Cain’s 9-9-9 tax plan over the last few weeks. The other candidates or their supporters have derided it as a VAT tax, unworkable, unpassable. They’ve complained that it does nothing about reducing the debt or cutting spending. It’s been called naïve. It’s been called establishment. In short, it’s been called a lot of things, but I’m here to call it something a little different. My friend Stacy called me up last night to ask me to write about the 9-9-9 plan because of a lively discussion on his facebook wall. So, I decided to begin a series this evening, and as I was contemplating how to begin, I realized there are a lot of folks who’ve done a pretty good job of explaining the pros and cons of this plan as a tax plan, including Mr. Cain himself. Now I’ll get to that part, but to start with tonight, I wanted to take a different approach.
9-9-9 is the best campaign finance reform bill proposed in modern history. It is a free market, constitutional approach to removing the power of heavily funded, high-powered lobbying groups from our election process. Now, before you decide that I’ve lost my mind, follow the logic. The last major campaign finance reform bill was passed in 2002, pushed through by Senators McCain and Feingold. The stated goal was to remove the big money, and the attendant undue influence from our elections. A laudable goal but, as with all the other campaign finance reforms over the years, it was a flawed approach. Parts of McCain Feingold were successfully challenged in the courts as unconstitutional because they infringe on freedom of speech. Other parts still stand, but most legal scholars believe that is only because they have not yet been challenged. This outcome is to be expected when one tries to treat the side effects instead of the root cause.
The current protests on Wall Street, and some part of the Tea Party uprising two years ago, are a reaction to the perceived corruption of Wall Street. They paid money to elect politicians, who in turn stole money from the mouths of the people to keep them afloat when their businesses went south, or so goes the mantra. But, the key to solving a problem is to first correctly diagnose what the problem is and look for solutions that account for reality. Looking first at reality will often lead to a better understanding of the correct diagnosis, so let’s start there.
Politicians are human beings, just like the rest of us. They are predictable creatures if we bother to study the nature of man. Mankind throughout all of history has always tended to act in his own best interest. And he has been susceptible to persuasion through praise, through pressure, and often through sheer inertia. And being volatile creatures, he tends to be short sighted in his ambitions. This is the basic truth of mankind that led the Founders to conclude that if men were angels governments wouldn’t be necessary. And what led them to devise a government that was limited in scope, and pitted one faction against another, to limit the opportunities for the frailties of mankind to wreak havoc in the lives of its citizens. We have sadly lost sight of many of these truths, and at the same time become even more susceptible to that short sightedness as technology and wealth have encouraged a culture of instant gratification and ever greater pressures to “do something.”
In this scenario though, it is not just politicians we need to look to in order to find the root cause. Corporations, whether the kinds that make profits or advocacy group or unions, also behave in predictable patterns. For simplicity’s sake let just look at for profit corporations. The purpose of a corporation is to make money for its stockholder or owners. In other words, the purpose of any corporation is to benefit the people who have invested their time and money into it. The natural by-product of this is that they employ people, they produce things and they provide services. But these are only by-products of the main purpose. Once you understand that the purpose of a corporation is to benefit its shareholders, then you can examine why they spend so much on getting politicians elected. No corporation would spend millions of dollars for the purpose of ideology. If they did, they’d fail in their primary function, and their owners or shareholders would stop investing in them, and they’d cease to exist. So there must be another fundamental reason that they invest in politicians, and make no mistake it is an investment. Corporations only invest resources for one of two reasons, first because it will increase their profit and second to minimize their losses. They invest in things like infrastructure, employees and research because it will increase their profit. They invest in things like insurance, attorneys, and safety procedures to minimize their losses. They invest in politicians to do both. For minimizing losses they seek politicians who will either create few regulations or taxes that will cut into their profits, or will create regulations or taxes (and subsidies) that will benefit them by giving them an advantage in the marketplace. For both of these things, politicians use the tax code to accommodate the pressures they feel from corporations (or unions, or non-profits, etc.) who helped to get them elected to office.
The current tax code is more than 70,000 pages long. Contained within the pages of this very complex and highly legalistic code are nearly 100 years worth of congressional favors passed out like candy to those who invest in politics to protect or enrich themselves. Because of the complexity of this code, and the tax bills that are passed every few years to feed its ever increasing size, the average individual has no idea who get what from whom or who pays how much to whom. Not only has this code made it nearly impossible to trace all the hidden ins and outs for anyone without degrees in both advanced mathematics and law, it has more recently become a political tool as those who are in favor are given cover when they are caught with their pants down (Timothy Geithner and Charles Rangel come to mind) and those who are out of favor are punished with IRS agents crawling through their dirty underwear (Rush Limbaugh comes to mind here).
So, in looking at the reality of human frailty and corporate purpose, it becomes clear that the money being paid into political campaigns isn’t so much the problem, as the money and power flowing out of the current tax code is. In looking at the history of the current code, and various “reforms” that have been tried over the years, it also becomes apparent that nibbling around the edges, flattening it out, or once again adjusting it may have a short term effect, but will leave in place the mechanism whereby Washington DC and affluent advocates can combine to pick the pockets of every day citizens to their hearts content. This is where 9-9-9 comes in. The 9-9-9 plan, and the Fair Tax it is paving the way for, does not fiddle with the current code, it tosses it out in the trash (much to the relief of the many trees that have sacrificed their lives to its printing) and erects a transparent tax that cannot be manipulated piecemeal by future Congresses. There are those that contend the 9-9-9 might turn into 20 20 20 in a future Congress, and it is undeniably true that it could if the populace once again becomes somnolent in the face of prosperity. But the warning bells of deception will ring far more easily with this structure should the Congress try to manipulate the code to bestow favor or punishments as it does now.
So, for you Wall Street protesters, and you Tea Party patriots, and all of the rest of the fed up folks, if you really want to end the corruption that money brings to our politics, get on the Cain Train and support 9-9-9 Campaign Finance Reform.