‹‹‹ Return to Presidential White Papers

Herman Cain

2012 Presidential White Paper #3

Herman Cain, Former Chairman and CEO of Godfather's Pizza


INTRODUCTION

Print off a PDF version
of this paper, complete with footnotes.
Herman Cain is the former Chairman and CEO of Godfather’s Pizza. He was deputy chairman and chairman of the Federal Reserve Bank of Kansas City between 1992 and 1996. In 2004, Cain ran for the U.S. Senate seat in Georgia vacated by the retiring Senator Zell Miller. Cain came in second in the primary to then-Rep. Johnny Isakson, who avoided a runoff with 53.2% of the vote. Since Cain has never been elected to public office, the public record is fairly thin. This paper evaluates only what Cain has said he would do if elected.


TAXES

The Club for Growth is committed to lower taxes – especially lower tax rates – across the board.  Lower taxes on work, savings, and investments lead to greater levels of these activities, thus encouraging greater economic growth.

Herman Cain supports the Fair Tax, a pro-growth reform that would scrap the entire tax code, not just the income tax, and replace it with a national sales tax. In a 2004 campaign press release as a candidate for U.S. Senate, Cain said, “Having served as Chairman and President of the Tax Leadership Council, replacing the tax code has been my number one economic issue for over a decade. Getting the burden and the complexity of the tax code off of American workers and American companies is way overdue.” 

Cain has written that the Fair Tax satisfies the six principles for a new tax system that have been supported by several tax commissions, including one that Cain served on, the 1995 National Commission on Economic Growth and Tax Reform, chaired by former Vice-Presidential candidate and Congressman Jack Kemp. In his 2005 book “They Think You’re Stupid,” Cain outlines these principles:
  • First, it should promote economic growth by reducing marginal tax rates and eliminating the tax bias against savings and investments.
  • Second, it should promote fairness by having one tax rate and eliminating all loopholes, preferences and special deductions, credits and exclusions.
  • Third, it should be simple and understandable. Simplicity would dramatically reduce compliance costs and allow people to truly comprehend their actual tax burden.
  • Fourth, it should be neutral rather than allowing misguided officials to manipulate and micromanage our economy by favoring some at the expense of others.
  • Fifth, it should be visible so it clearly conveys the true cost of government and so people would not be subjected to hidden changes in the tax law.
  • Sixth, it should be stable rather than changing every year or two so people can better plan their businesses and their lives. 
He continues to support the Fair Tax in 2011: “Replace the entire (federal tax) code with the Fair Tax,” he said to the Georgia Republican Party convention in 2011. 

In his 2012 campaign document “Common Sense Solutions: The People’s Platform”, Cain states he supports “across-the-board tax cuts to provide long-term relief, including reducing the capital gains tax, suspending taxes on repatriated profits and permanently eliminating the Death Tax.”  He also opposes tax credits, but he qualifies that by saying that there “are some exceptions.”  It’s unclear what those exceptions are or how they square with his support for a Fair Tax, which allows no exceptions other than a large purchase exemption to avoid taxing the poor.

Cain also has said that the Bush tax cuts of 2001 and 2003 should be made permanent.  During the debate over the 2010 two-year extension of the Bush tax cuts, Cain referred to the “Making Work Pay” tax credit and the Cash for Clunkers program supported by President Obama  as “backdoor welfare.” 


SPENDING

The Club for Growth is committed to reducing government spending.  Less spending enhances economic growth by enabling lower taxes and diminishing the government’s economically inefficient allocation of resources.

Cain’s public record on spending is very thin. “Nothing should be off the table,” Cain writes in “The People’s platform,” a policy document on his exploratory campaign website. “Every federal agency, every government program and every single expenditure must be reviewed and revised with a keen eye and a red pen.”

Cain opposes earmarks, telling a crowd in New Hampshire that “When my Republican colleagues come to me and want to put earmarks in because it is a way of life in Washington, DC, I’m going to say: there’s a new sheriff in town.”

Cain supported TARP, the government bailout of the financial industry, and even chastised people who opposed it in a condescending op-ed: “Earth to taxpayers! Owning stocks in banks is not nationalization of the banking industry. It’s trying to solve a problem,” Cain wrote.  “Owning a part of the major banks in America is not a bad thing. We could make a profit while solving a problem.”

“The free market purists’ objection to this is that it smacks at government control of the banking industry, which is called nationalization,” Cain added. “They are correct. It smacks, but it is not nationalization because that would require the government to own at least 51 percent of the entity for an indefinite period of time.” 

Cain’s point on TARP is a distinction without a difference and he could be criticized for suggesting that the federal government should take an active role in the private sector. In 2011, he doubled-down on this support. “I don’t have any regrets,” Cain said, “I studied the situation. I didn’t have trouble with the idea; I had trouble with its implementation, picking winners and losers.”

Cain opposed the Democrats’ stimulus, saying, “The Obama-Reid-Pelosi cure for more national economic pain – more spending, more taxes and more socialism! That’s just more pavement for the road to perpetual debt.”


ENTITLEMENT REFORM

America’s major middle-class entitlement programs are already insolvent.  The Club for Growth supports entitlement reforms that enable personal ownership of retirement and health care programs, benefit from market returns, and diminish dependency on government.

Cain’s opposition to healthcare mandates goes all the way back to 1994. That year, as vice-president of the National Restaurant Association, he slammed the Clinton health care reform plan, specifically criticizing the employer mandate. "That's the big kicker, the mandate to cover all employees," he said. "I am talking about a 250 percent increase in my insurance costs at Godfather's Pizza over what I am paying today for my current health care insurance plan.”

Again, Cain is vague on what he will do to fix entitlement programs in his platform. “We must return to free market-based solutions that empower our nation’s workers to take control over their professional and retirement futures,”  he writes. Cain also supports Social Security personal accounts for younger workers,  and writes in “The People’s Platform” that “it is essential that we modernize our Social Security and Medicare programs.” 

He clearly favors the repeal of ObamaCare,  and wants health insurance premiums to be deductable “regardless of whether they are purchased by the employer or the employee.”  In 2003, he opposed the addition of the Medicare prescription drug benefit calling it “another massive entitlement.”  He said he “could go along with means-testing” Medicare and block grant other entitlements to the states.

Cain supports Congressman Paul Ryan’s 2011 budget proposal as well. “I absolutely support Paul Ryan’s plan…[i]t is exactly the kind of bold restructuring that we need in order to get our hands around the entitlements issue. We need to restructure programs, not just reshuffle, which is what we did for decades, and now look where we are.”

Cain supports the passage of a Balanced Budget Amendment (BBA) and he opposes an increase in the federal debt ceiling.


REGULATION

Excessive government regulation stymies individual and business innovation necessary for strong economic expansion. The Club for Growth supports less and more sensible government regulation as a critical step toward increasing freedom and growth in the marketplace.

Like most issues, Cain’s public position on regulation is thin. However, Cain opposes the Employee Free Choice Act or “Card Check.”  He favors the repeal of the onerous Dodd-Frank financial regulation bill.  “The People’s Platform” says he wants to “eliminate excessive regulatory burdens…which would signal to businesses and investors that the government intends to maintain conditions that allow for them to thrive.”

Cain is one of the few candidates to consistently oppose ethanol subsidies, unlike the majority of the 2012 Republican field.  He opposes cap-and-trade and calls it “just another tax.”  He also wants to relax restrictions on oil drilling.  In his 2005 book “They Think You’re Stupid,” Cain says that the Department of Energy “took control of decisions concerning development of new and efficient energy sources from the private sector. Because of this, private energy companies are now unable to explore domestic energy sources or build new nuclear power plants.”


FREE TRADE

Free trade is a vital policy necessary for maximizing economic growth.  In recent decades, America’s commitment to expanding trade has resulted in lower costs for consumers, job growth, and higher levels of productivity and innovation.   

Cain appears to be in favor of free trade. He favored the General Agreement on Tariffs and Trade (GATT) in 1993, saying "Free trade is not a zero sum game… Everyone can benefit.”  On trade with China, he says that “China is not the problem…Our economic growth is the problem. If we can start to grow in a robust fashion, we won’t even have to look back at China.”  His suggestion for stimulating economic growth is to cut the top corporate tax rate from 35% to 25% and “take the capital gains rate to zero.”


SCHOOL CHOICE

The Club for Growth supports broad school choice, including charter schools and voucher programs that create a competitive education market including public, private, religious, and non-religious schools.  More competition in education will lead to higher quality and lower costs.   

Cain is for “expanding school vouchers and charter schools” and says “a critical component of improving education in our country is to decentralize the federal government’s control over it.”   He has written that the establishment of the Department of Education “took control of education policy and curriculums away from local school districts and the states and placed it in the hands of unaccountable bureaucrats in Washington, D.C.”

Cain is for eliminating No Child Left Behind as well. “Cut or end all programs that contain unfunded mandates. No Child Left Behind is one of those programs that has unfunded mandates,” Cain said in May of 2011. “We remove the unfunded mandates and give the states the opportunity to decide how they want to use those dollars, or we end the program.  Let the people closest to the problems decide on the solution.”


TORT REFORM

The American economy suffers from excessive litigation which increases the cost of doing business and slows economic growth. The Club for Growth supports major reforms to our tort system to restore a more just and less costly balance in tort litigation.   

Cain favors “legitimate and sweeping tort reform that lets doctors practice medicine without fear of frivolous lawsuits.”  He believes that the ease of “filing baseless medical malpractice and product liability lawsuits,” is hurting America’s health care system.


POLITICAL FREE SPEECH

Maximizing prosperity requires sound government policies.  When government strays from these policies, citizens must be free to exercise their constitutional rights to petition and criticize those policies and the politicians responsible for them.

Herman Cain appears to have not made any public comment on McCain-Feingold, Citizens United, or any other issue dealing with political free speech.


POLITICAL ACTIVITY & ENDORSEMENTS

Robust political activity is essential to producing a federal government that is more respectful of free markets and produces more pro-economic growth policies. The Club for Growth’s PAC has been active in some of the more central battles within the Republican Party nominating process in recent years, supporting pro-growth candidates over pro-government ones.

In 2000, Cain filed to run for President, before dropping out and endorsing Steve Forbes.  He lost his 2004 race for Senate, when he finished second but failed to force a run-off after receiving only 26.2% of the vote.  Cain often responds that the fact that he has never held elected office is “a good thing,” and adds that “My experience is solving problems and growing businesses, creating jobs and making this country much stronger, that's what my experience is. The fact that I haven't had political experience, the American people are saying that's OK. That could be a good thing.”

His history of political support is odd. Cain gave money to the pro-tax Mike Huckabee in his race for President, and donated to Danny Tarkanian over Sharron Angle in Nevada’s 2010 Senate race.  However, Cain was also a national co-chair of Steve Forbes’s 2000 Presidential Campaign, which emphasized economic growth-oriented policies such as a flat tax and personal accounts for Social Security.  In 2008, Cain endorsed Mitt Romney for president, writing that Romney “has successfully managed a real business with other people’s money and some of his own. He has balanced budgets. He successfully led a turnaround situation with the Olympics. And he has spent more of his career outside government than inside.”

Cain does speak out in primaries. In a 2006 column, he wrote:

Republican candidates lose when the party apparatus, whose goal is to win elections, abandons the conservative base, whose goal is conservative policy solutions. Just two years ago [President George] Bush and [Senator Rick] Santorum unconscionably endorsed liberal Senator Arlen Specter (R-PA), who was in a primary race with conservative Congressman Pat Toomey. Specter won the primary, but Santorum ultimately paid the price. In this year’s Rhode Island Republican Senate primary, the RNC openly supported liberal Senator Lincoln Chafee against his more conservative opponent, Steve Laffey. Sen. Chafee is one of the most liberal members of the Senate and refused to vote for President Bush in 2004, writing in the president’s father instead, yet the RNC still paid for ads in his primary race. Rhode Island voters were not likely to nominate or elect a conservative, but the RNC’s actions were heard across the fruited conservative plain.



SUMMATION


Herman Cain has generally used pro-growth rhetoric during his time in public life but has not had to serve as an elected official to prove he would govern to match his rhetoric. Aside from his support for TARP, we have very little question, based only on his rhetoric, that Herman Cain would be a pro-growth president. We look forward to seeing more details about his economic policy proposals.

 
Club for Growth is a national network of thousands of Americans, from all walks of life, who believe that prosperity and opportunity come through economic freedom. We work to promote public policies that promote economic growth primarily through legislative involvement, issue advocacy, research, training and educational activity. Join today!