BS of the Week – Herman Cain

October 21, 2011

This BS of the Week is a Herman Cain trifecta. It is unbelievable that he is currently a front-runner for the Republican nomination. He is likable and charismatic but many of his plans and statements are a bunch of BS. It just goes to show that some people will believe anything as long as you say it with complete confidence, claiming to have “performed an in-depth study of the issue”.

BS #1 – 20 Foot (Electrified?) Border Fence

“We’ll have a real fence – 20 feet high with barbed wire, electrified, with a sign on the other side that says it can kill you .” Herman Cain (Video)

Herman Cain has said that he was (but wasn’t really) joking about this fence. It is still unclear if he wants to electrify a border fence. However, he is among those who want to build a physical fence along the entire border with Mexico. No one seems to agree about the cost of this project as estimates range from $4-8 billion and up.

You can build a fence. But, it is BS to say that this would eliminate illegal entry into the country. There are many details that those arguing for the fence have apparently not discussed or considered.

Tunneling – This is already happening in areas where we have completed fencing. Digging under a fence could certainly mitigate its effects regardless of its electrified status. This possibility would mean increased costs for ground sensors to alert border agents to tunneling. Of course, it is unclear how effective this would be.

Boats and rafts – If people can make it from Cuba to Florida on boats or makeshift rafts, they could certainly journey a much shorter distance from the northernmost coastlines in Mexico to either portions of the southern California coast or coastline on the southern tip of Texas.

International travel – Some individuals pay from hundreds to a couple of thousand dollars to those who smuggle people across the border. Even if a fence is somewhat effective, what is to prevent people from traveling Internationally and coming across the Canadian border? A Mexican passport costs slightly over $100. A one-way ticket to Vancouver or Toronto is around $250-350. So, what would prevent people from just flying to Canada and strolling across the Canadian border in a spot without a checkpoint? Voila! You’re in the U.S. illegally.

So are we also going to build a wall on the Canadian border and put border patrol agents along our entire coastline? Completely sealing off the country is virtually impossible. It seems ridiculous that Republican leaders would be willing to throw billions of dollars at a border fencing project that might only discourage but not eliminate illegal entry into the U.S. However, these same individuals are not willing to spend these billions to put Americans back to work with new jobs legislation. It’s shameful.

BS #2 – Blame Yourself

“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.” Herman Cain (Video)

What kicked off the financial crisis that tanked our economy so badly in 2008 that we still are crawling our way out and dealing with high unemployment?  Banking deregulation that allowed some in the financial sector to play fast and loose – bundling subprime mortgages into mortgage backed securities that no one could understand, performing a smoke and mirrors routine to get them rated AAA by the ratings agencies, and selling them to all the banks. Then the bottom fell out, the banks were all on the verge of financial collapse and the government went into panic mode and passed TARP to bail them out.

Frankly, those joining the Occupy Wall Street protests are completely correct in blaming the financial sector for triggering our economic mess.

BS #3 – The 9-9-9 Plan Won’t Hurt Low Income Individuals

“If they are working and drawing a paycheck, they are paying 15.3% off the top of their income. So, relative to their income they are going to go from 15% down to 9%. They are going to pick up a 6 percentage point gain. Now, if they are in fact in the lowest income bracket, that 6% will be more than enough to compensate for them spending the rest of their money and paying the sales tax on the remainder of their income. ” Herman Cain (Video – question at 10:08, response begins at 10:53)

Let’s examine how the 9-9-9 plan would really impact a full-time minimum wage employee making $15,080 yearly or $1256.67 monthly before taxes:

− 80.58 (Federal tax withholding)
− 52.78 (Social Security withholding)
− 18.22 (Medicare withholding)
− 29.00 (Kansas withholding)
$1076.09 (Current monthly net – single with 1 exemption)

First BS – There are 12% not 15.3% in deductions for federal tax, social security, and medicare ($151.58 of $1256.67).

Moving on, let’s assume our example individual is spending $300 on rent sharing a 2 bedroom apartment and spends the remaining $776.09 on living expenses paying approximately 9% in state and local sales tax. This yields $706.24 spent on expenses and $69.85 paid in sales taxes. However, this individual will also qualify for a $409 federal tax refund (i.e., an extra $34 per month). This means that this individual would really have just over $740 per month to spend on non-rent expenses after taxes paid under our current tax structure.

Now, what is the impact under 9-9-9?

− 113.10 (9% of $1256.67 = $113.10)
− 29.00 (Kansas withholding)
$1114.57 take home under 9-9-9

$300 for rent (assuming it is not taxable) leaves $814.57 for expenses on which the individual must pay 9% in state and local sales tax ($69.85) plus 9% in federal sales tax ($69.85). This leaves $674.87 to spend on expenses after taxes. Since this is a 9% flat tax on income, there would be no income tax refund to add to available monthly income.

Under the 9-9-9 plan, minimum wage employees would need to spend $65 more per month on taxes which equals 5.2% more of their gross income. Therefore, Herman Cain’s claim that low wage earners would not be adversely affected is complete and total BS!