Herman Cain - Debt, Deficit, Spending, and the Size of Government
Summary
Mr. Cain is a vocal advocate for reducing the deficit and the debt by reducing the amount of spending in the fedeal goverment. He has stated that every federal agency, every government program and every single expenditure must be reviewed and revised with a keen eye and a red pen, and that leaders should be willing to shrink budgets by target percentages, and those charged with implementing those changes must be held accountable.
Deficits Matter
In December of 2008, Herman Cain wrote an article discussing a recent statement made by President Obama that in the short term deficits don't matter.
December 29, 2008
Obama’s Big Mistake: ‘Deficits Don’t Matter’President-elect Barack Obama has made a big mistake that, as usual, the mainstream media has given him a pass on by not making a big deal about it.
It’s not his cabinet nominations, which the mainstream media are all gushy about. It’s not whether he or any of his staff can be linked to the sale of his Illinois Senate seat by “caught red-handed but I didn’t do it” Gov. Rod Blagojevich.
And it is certainly not who Obama has chosen to pray at his inauguration. It’s his inauguration for peace sake!
“We can’t worry, short-term, about the deficit” is what Obama stated two weeks ago on Meet The Press. Deficits don’t matter.
Big mistake!
That is the last message that needs to be sent to a spend-happy Congress controlled by Democrats, where trillion has become the new billion.
When Vice President-elect Joe Biden was asked about the “deficits don’t matter” statement a week later on a different show, he defended it with pride by saying that their first priority is to get the economy moving again.
Let’s try a few metaphors to shed some light on the misguided thinking that “deficits don’t matter”: Pouring gasoline on a fire, giving a six-year-old kid a loaded gun or giving a shopping mall maniac a no-limit credit card.
If you destroy the economy it will never get moving again.
Economist Brian Wesbury published an article on his web site, dated December 8, 2008, explaining the folly of “deficits don’t matter” thinking. More importantly, he described several alternatives for stimulating the economy with something other than another “toothless” stimulus package.
Wesbury’s suggestions included eliminating corporate taxes altogether during most of 2009, a 50 percent reduction in individual income taxes, or allowing full expensing of equipment and investments made by businesses.
Those ideas would keep billions of dollars directly in the economy, rather than funneling those dollars through the federal government to become polluted with pet political projects and the usual inefficiencies.
Of course none of those ideas would appeal to Harry Reid, Nancy Pelosi and the other liberals who believe in more taxes, bigger government and less individual responsibility.
Congress has collectively been in denial for decades that deficits do matter. This is why we have over $50 trillion in unfunded liabilities associated with Social Security, Medicare and Medicaid.
This is also why we have a growing national debt in excess of $10 trillion, while partisan political fanatics focus more on who is to blame than what to do to fix the problem.
One of any president’s responsibilities is to set the tone for the direction of the country, and the tone for how we should deal with our most pressing issues. Sending Congress a message that deficits don’t matter is way off key.
We are all hopeful that Obama will be a successful president. The nation needs him to be successful, and it is unrealistic to expect him to be perfect in all of his decisions. He will make some mistakes.
But a big mistake before he even takes office is not encouraging.
Deficits do matter. Business and economic history books are littered with casualties who believed otherwise.
Las Vegas Campaign Event
At a Las Vegas campaign event in January of 2011, Mr Cain spoke about the need to cut programs to decrease the spending level.
Nevada News and Views Interview
In May of 2011 , after the first Presidential debate, Herman Cain was interviewed by the Nevada News and Views and asked about balancing the budget. He notes that he would do this through a series of tax cuts and changes to entitlement programs.
Reporter: The biggest issue is the economy. Everyone says that they’re going to create more jobs. How are you going to do that?
Cain: First of all let’s start with my five point economic stimulus plan:
- Lower corporate tax rates from 35 to 25% and bring individual tax rates down to a maximum top rate of 25%.
- Take capital gains tax rates to zero.
- Suspend taxes on repatriated properties from foreign investments generated overseas.
- I would propose a real payroll tax holiday of 6.2%.
- Make the tax rates permanent.
Reporter: What is President Herman Cain’s solution for the national debt and our deficit?
Cain: First, implement the kind of five-point plan that I talked about. In the second two years of my first term, replace the entire tax code with the fair tax to supercharge this economy. We can’t just stimulate the economy and sit back. We have to establish an advantage on the rest of the world and the fair tax would give us that advantage.
I would require an across-the-board 10% cut in federal spending in every agency except defense. The only reason I exclude defense is because the world is not safe. You got all these nut cases out there, pipsqueak potentates, rattling their sabers so we’re going to cut defense.
I would restructure Social Security, Medicare, and Medicaid. Trimming around the edges is not going to work. For example, take Social Security. The only thing that this administration and the previous administrations have done for the last several decades is decrease benefits, raise the retirement age, or increase taxes. How about restructuring it using personal retirement accounts? I didn’t say privatization. The country of Chile did it 30 years ago. They don’t have a Social Security problem anymore. Every worker has an individual personal retirement account. We can get to the same point if we stop demagoguing and saying it’s going to privatize Social Security, it’s going to hurt old people, children, and puppy dogs.
Fox News Sunday
On May 22, 2011 Herman Cain appeared on Fox News and discussed the problems with the federal deficit. Mr Cain explained his plan, but then stated that his plan would not work now as the Congress and President have waited too long and the problem is too mature to prevent raising the debt ceiling again.
WALLACE: You ended your announcement yesterday talking about what will happen to America once you're elected.
(BEGIN VIDEO CLIP)
CAIN: We will al be able to say -- free at last! Free at last! Thank God Almighty, this nation is free at last again!
(END VIDEO CLIP)WALLACE: Mr. Cain --
CAIN: Yes?
WALLACE: -- free from what?
CAIN: Free from rising debt. Free from legislation that's being forced down the throat of the American people like Obamacare. Free from an arrogant disregard of the American people as it relates to things that the people want. Free from a stagnant economy when, in fact, we have the ability to grow a lot faster if we lower taxes, if we get rid of the -- lower the capital gains tax.
Suspend taxes on foreign repatriated profits, providing direct stimulus such as a real payroll tax holiday for employees and employers. And free from dependence on foreign oil, which is only going up because we don have a real energy independence plan.
WALLACE: All right. Let's drill down, that is the whole point of you being here today. Drill down on some of you views.
On the debt limit, you say: don't make a deal. Even John Boehner who says: let's cut spending at least as much, dollar for dollar, as we raise the debt limit. You say that is nothing but a stall tactic.
CAIN: Yes, it is.
WALLACE: Let's take a look.
(BEGIN VIDEO CLIP)
CAIN: Raise the debt ceiling, pay for the stuff that's critical, and then the other things are going to have to be forced mandatory cuts.
(END VIDEO CLIP)WALLACE: So, under the Cain plan, you would pay our Chinese creditors first --
CAIN: Yes.
WALLACE: -- while substantially cutting, sharply cutting, services, programs for Americans?
CAIN: Yes. But not -- pay the debt, pay the interest on the debt first. Make sure we take care of our military and their families. Thirdly, make sure the people that are getting paid for Social Security checks that they get paid. And then, fourth, make sure that people's Medicare bills get paid.
Then, you look at everything else, and that's where you start cutting. You don't start cutting until after we take care of those things. Now --
WALLACE: That's going to mean a lot of serious cuts for people while paying we're paying the Chinese creditors first.
CAIN: Yes. If we don't pay the Chinese creditors first, the amount of interest we have to pay will go up. I am sure that there are penalties in there if we don't pay it on time.
Now, here is the corner, quite frankly, that Representative Boehner and others have painted themselves into. If you were to do those four things, you need to have done it at the beginning of this crisis, before getting this close. What has happened now is that they have allowed the timing to get so close to the end, they may not be able to do the Cain plan for the four things that I talked about. They may have allowed themselves to get in a corner where they may be forced to and I still call, they should have -- they should have seen this coming, which they did. But they didn't move fast enough.
WALLACE: But even your plan --
CAIN: Yes.
WALLACE: -- and let's say, even if they had been able to take care of this sooner, Federal Reserve Chairman Ben Bernanke says that your idea, you're not the only one offered it, is too dangerous.
This is the way he put it -- "Even if the debt is paid, there's the issue of market contest and how the market would respond to risk of default or even the default on non-debt obligations."
Bernanke says it will end up just as you suggested, it will end up costing the U.S. more, even if you pay the debt, it's going to end up costing the U.S. more to borrow from other countries which will only increase the deficit. And that's going to filter down to higher interest rate, whenever you want to get a new home, buy -- got a mortgage or get a new car loan.
CAIN: He is absolutely right. But I also think raising the debt ceiling is also going to be a negative against the market confidence. They're caught between a rock and a hard place, quite frankly, now. And the reason that they got in between this rock and a hard place, they waited too long to deal with the issue. That's now compounding the problem, not helping problem.
WALLACE: Yes. But Bernanke is saying, at this point, you've got to make a deal. And you've got to make a deal and raise the debt ceiling. And if you don't and you just pay the debt off, that still going to frighten the market.
CAIN: And I would agree with him. I agree --
WALLACE: So, you just said the Cain plan is wrong.
CAIN: No, I didn't. I said that they allowed themselves to get in a hole. They allowed themselves to get between a rock and a hard place. What I said about identifying those four things and pay those first, if they had done this a year ago, anticipating this, it would have worked. He's right.
WALLACE: But is the Cain plan right or wrong now?
CAIN: The Cain plan can't work now. It cannot work now, simply because they waited too long. And this is part of the problem. They wait until a problem is at a disaster point and then go to the American people and say, we have no choice.
That's not leadership. That's not good decisions.
Iowa Debate
In August of 2011, Herman Cain participated in the Republican debate in Ames, Iowa. He stated that he opposed the recent debt deal as spending reductions were not solid.
BACHMANN: I think the -- I think the analysts -- I think we just heard from Standard & Poor's. When they dropped -- when they dropped our credit rating, what they said is, we don't have an ability to repay our debt. That's what the final word was from them.
I was proved right in my position: We should not have raised the debt ceiling. And instead, we should have cut government spending, which was not done. And then we needed to get -- get our spending priorities in order.
BAIER: Mr. Cain, do you agree with that?
CAIN: I did not agree with raising the debt ceiling, because the solution that they came up with does not solve the problem, as Representative Bachmann talks about.
The way to deal with it is pay those things that need to be paid and then make the tough choices of cutting the other things, agency by agency, program by program, based upon performance metrics. We didn't need to raise the debt ceiling, but there was an easy way out, and the problem still has not been solved. And Standard & Poor's has sent a message.
2012 Presidential Campaign Website Statements
Chapter Three: Cut Government Spending
It is no secret that federal government spending is out of control. They view the American taxpayers as a bottomless piggybank for their wasteful programs and expansion of power. And we the people will not tolerate it any longer. The massive debt caused by liberal policies will be passed onto our children and grandchildren if we do not stop it. They will be stuck with the tab for the government takeover of health care, industry bailouts and failed stimulus packages. They will be the ones approached with outstretched palms by the Chinese to pay back the billions upon billions we owe them. Each generation of Americans should seek to leave behind a better and more prosperous nation for the next, not saddle them with debt from reckless spending.
Though it might not be politically popular to modernize and eliminate some of our entitlement programs, responsible leaders should be willing to do it all the same. They must be prepared to make tough choices and learn to simply say “no.” This can only happen when our elected officials stop being politicians and start being leaders. Simply put: there is no “Department of Happy” in Washington, D.C.
Nothing should be off the table. Every federal agency, every government program and every single expenditure must be reviewed and revised with a keen eye and a red pen. Leaders should be willing to shrink budgets by target percentages, and those charged with implementing those changes must be held accountable.
And it works! I have served as an executive of several major corporations. When times were tough and money was tight, I asked our employees to cut back drastically, and explained why it was necessary, and they did. We have all had to make difficult decisions in our own household or at our work place. Serious but responsible belt tightening can save businesses, and it can also save our country with the right leadership.
Chapter Nine: Eliminate Excessive Regulatory Burdens
The federal government has amassed incredible amounts of control through its ability to regulate everything from emissions to food to businesses. Certainly, some regulation is necessary to protect American consumers and taxpayers, but excessive regulation has driven up the price of the goods and services we want, need and desire.
According to the Heritage Foundation, burdensome regulations have increased at an alarming rate. In 2010 alone, Washington forced 43 major new regulations on us. The cost of complying with these additional measures is more than $26.5 billion, which according to Heritage, is “far more than any other year for which records are available.” Experts anticipate that with health care “deform,” financial regulatory “deform” and other liberal agenda items, next year’s regulatory costs will skyrocket farther.
We pay for regulations with every bite of food we eat, with every drop of gasoline we put in our cars and with every good or service we obtain. While we might not immediately recognize the impact of such drastic regulations, they are laced tightly in the cost of everything we buy. In fact, the Small Business Administration estimates that complying with regulation costs around $1.75 trillion annually, which is actually twice as much as all revenue from individual income taxes last year.
Alleviating the burdens of cumbersome regulation would be an immediate boost for our weakened economy. It would signal to businesses and investors that the government intends to maintain conditions that allow for them to thrive, not to bog them down with additional costs they must inevitably pass on to their consumers. No one is arguing for lead-based paint in toys for kids or unsafe food. We just want reasonable regulations that cut down on bureaucracy and help businesses succeed. And ultimately, the free market, aided in part by the watchful eyes of investors and consumers, will regulate itself.