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Fox News "Fox News Sunday with Chris Wallace" - Transcript

Interview

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WALLACE: The Republican presidential race is at a crucial stage with the Fox News/Google Florida GOP debate set for next Thursday.

We continue our 2012 one-on-one series of interviews now with a candidate looking to move up in the polls.

Herman Cain, welcome back to "Fox News Sunday."

HERMAN CAIN, REPUBLICAN PRESIDENTIAL CANDIDATE: Thanks, Chris. My pleasure.

WALLACE: You heard my discussion with Paul Ryan. Let's talk about some of the president's various plans.

Let me ask you specifically -- what do you think of this idea of a minimum tax on millionaires to make sure they pay at least the same percentage of their earnings, their income as middle income taxpayers?

CAIN: Bad idea as Representative Ryan said. You tax something more, you get less of it. I couldn't say it better than Representative Ryan. It's a bad idea. Secondly, if you were to tax the millionaires more using that bad idea, it still doesn't solve the problem of how to reduce the spending. So, that's just class warfare flowering in my opinion and it's not going to help.

WALLACE: What do you think, generally speaking, of the president's deficit reduction plan?

WALLACE: We don't know all the details, but apparently he is going to address entitlements. Not sure how deeply. But he is going to address entitlements. He's also going to ask supposedly at least $800 billion including this millionaire's tax, in new revenue.

CAIN: Right. The speech that he gave was supposed to be a jobs plan was not a job's plan. He put one little thing in there which was to take the pay roll down 50 percent for the employer and employee. That is just small potatoes compared to what the big problems. My anticipation along with a lot of other people that when he comes out saying how he is going to pay for it, it is going to be filled with more tax increases including what I call sneaker taxes.

When Obamacare passed, a lot of people didn't realize that that was a 3.8 percent surtax hidden into the health care legislation. And so it's going to be a hodgepodge of taxes and sneaker taxes and to try and make up for the $450 billion that he wants to spend.

WALLACE: Do you give him credit for at least putting, and I know this was a bit criticism of him during the debt debate, that he wasn't putting specifics on the table about entitlements, Medicare, Medicaid? Do you give him credit for -- that he's going to have something specific about that?

CAIN: If he puts some specifics out there, I will give him credit for it, but I can't get excited about the president saying he's going to be specifics on the table until we actually see the specifics, because too often we heard a lot of promises but we didn't get the specifics that I believe most people were looking for.

WALLACE: You talk about the fact that you are a businessman. You come from a different sector than all these politicians. What about the argument that you hear from top officials in the economic side like Fed chairman Ben Bernanke and top economist in the private markets who say yes we do need long-term deficit reduction, but in the short-term if all you do is cut spending, that is going to be a drag on growth it is going to drive this country into a double-dip recession if we're not already headed there?

CAIN: We are headed to a double-dip recession. See the discussion has been mostly about, you know, whether you cut spending and where do you spend more? The Democrats want to spend more and that puts the Republicans on the defensive of trying not to spend.

My focus is growth. That should bring everyone together. If we focus on getting serious about growing the economy, which this president is not serious about growing the economy, because he is not using fundamental economic guiding principles. The biggest one that this president and the administration have no clue, quite frankly, is that the business sector is the engine that drives economic growth. That is one of the guiding principles for the plan that you mentioned that I have put on the table called 999.

WALLACE: We're going to get to that in a minute.

CAIN: But my point is the business sector, this president continues to come up with ideas that's going to punish the business sector, that's going to slow down the business sector, and as Representative Ryan mentioned it's going to create more uncertainty for the business sector.

We don't even know what the tax rate structure is going to be in the beginning of the 2013 and that's less than a year-and-a-half away. Uncertainty is killing this economy, Chris.

WALLACE: But what about the idea that the president is offering let's cut the payroll tax rate not just for employees but for employers as well. And we'll give a tax credit for businesses that hire, small businesses, that hire new people or give a raise to people already on the payroll?

CAIN: Cutting the payroll tax by 50 percent by employers and employees is too little too late. It's not deep enough.

Plus if you only do that and you don't cut the top corporate and personal tax rates, like I have proposed prior to my new plan, and if you don't suspend taxes on repatriated profits, you really have not provided any boost. So, yes, he took a little -- he's put his toe in the water on that, but he didn't really go far enough. It is still, still mostly with more spending, more trinkets, more things in the tax code that the business community, quite frankly, can't get excited about.

WALLACE: Before we get to 999, your plan, I want to ask you one

other question -- Solyndra, the solar panel manufacturer, got half billion federal loan guarantee just went bankrupt, laid off a thousand workers and we the taxpayers end up footing the bill.

CAIN: Right.

WALLACE: Do you think this was a good faith effort on the president's part to boost, maybe misguided, but good faith to boost the green industry or do you think he was just trying to help one of his big political supporters?

CAIN: I think it was two things. First, he was trying to help one of his political supporters. And it would have been good faith if halfway through this waste of money, they had stopped. But according to the reports that we've seen, they didn't stop and they knew that the company was going down the tubes. So I don't think it was not a good faith effort to boost this green energy business in the green energy sector. It was bad decision making and it was an attempt to select one of the losers. And as Representative Ryan said, I know I keep referring to him but he is absolutely right on, the government should not be in the business of picking winners and losers because most of the time they pick the losers. That's what the whole Solyndra thing is about.

WALLACE: OK, you are now pushing what you call the 999 plan for economic growth -- 9 percent corporate flat tax and 9 percent personal flat tax and 9 percent sales tax, but you would eliminate the payroll tax, the estate tax and the tax on capitol gains. Question, what do you think that would do to the economy?

CAIN: It would boost the economy and here's why. Think about the fact that corporations now are looking at for the next year and few months a 35 percent top corporate tax rate. To wake up and say you mean the tax rate is going to be 9 percent? That is going to inspire the business community.

Secondly, small businesses which generate most of the jobs, they are also going to be excited because it is going to treat subchapter S and S corporations the same. What the president doesn't understand, a lot of people don't understand, is when he throws around numbers like everybody making over $250,000 is going to impose another tax, he is punishing small business, because with a subchapter S corporation, if you eke out a profit, you have to run it through personal income tax and you could be penalized if you make too much money.

WALLACE: Let me ask you about this, though, you say that this plan would be revenue neutral, yet you would lose all these rates -- you would lower all these rates, you would eliminate the deductions and we'd end up with the same amount of total revenue for the government as what we currently have.

We went to your website to try to check this out. There is no explanation on your website of how you arrived at 999 or how these numbers add up.

CAIN: Here is how we arrived at it. I had some of the best economists in this country help me to develop this plan. You know, my background is mathematics. It was a simple regression analysis. We took the government data and looked at how much tax revenue from personal income tax, how much tax revenue came from corporate tax, how much revenue came from capitol gains tax, how much revenue from the death tax. We added them all up and you do a simple regression analysis and say in order to reduce this much on corporate income, personal income and national sales tax, what should that number be if we equally break up those three buckets. It was a simple regression analysis.

WALLACE: Now you say that, and you say -- and you just repeated that this plan was researched and developed by some of the leading economic thinkers in the country. Again we looked at your website, no mention of anyone.

CAIN: No, I haven't put them on there, -- the most important thing is to put the plan on there. We are following up now with an official scoring of my plan, but because the way it was derived was so simple to produce such a simple concept we didn't make that a priority.

WALLACE: All right. But let me ask you about this, because Mitt Romney came out with a 59-point plan on jobs. Glenn Hubbard who was -- is now the Dean of Columbia Business School and was the chairman of the council of economic advisers for George W. Bush wrote the forward, helped him develop the plan. Tell me the name of one of these leading economic thinkers who helped you come up with this plan.

CAIN: The chairman of my economic advisers is a gentleman by the name of Rich Lowery of Cleveland, Ohio. He worked with a couple of other people quite frankly that are well known that I'm not at liberty to mention their names.

WALLACE: Why not?

CAIN: Because they have their own independence businesses and I don't want to compromise their confidentiality at this point.

When they tell me it is OK to mention their names publicly, I will mention it. But I -- trust me, it was a couple of people that you know very well. But I don't want to compromise their...

WALLACE: But wouldn't they be proud? I mean, if this is a great plan wouldn't they be proud to say?

CAIN: They'd be proud after I get it passed. And then they would be. But no, Chris, I got some people to work -- help me go through the thinking on this that I'm not going to compromise their confidentiality at this point just to prove to people that this is a well thought out plan.

WALLACE: Well, let me just say, because there isn't a whole lot of back up, and we don't have the bona fides of a guy like Glenn Hubbard. We tried to do our own very rough analysis and you are a lot better of this idea of regression analysis than we are. It looks to us under your plan corporations and the wealthy will end up paying a considerably less than they currently do, and lower income people, particularly the 45 percent, roughly of Americans who don't pay any income tax now will end up paying a lot more true?

CAIN: No. Not true. Everyone who works pays the payroll tax, which is 15.3 percent. So even if you don't own a corporation and don't have to pay corporate taxes, your tax goes from 15.3 to --

Secondly on the national sales tax.

WALLACE: Yeah, but what about the 45 percent who don't pay income tax now?

CAIN: A good economic growth plan should not be designed to help more people not pay taxes, Chris. And let me give you the statistic as to why. 50 percent of the taxpayers pay 97 percent of the taxes. What are we supposed to do, get that number to 50 percent paying 100 percent? No. And --

WALLACE: I'm not saying it's wrong, I'm just saying though that they're going to end up paying more in taxes.

CAIN: They are going to end up paying some taxes, but not necessarily more. And here's why.

The individual taxpayer will decide how they spend their money in terms of the 9 percent sales tax. OK? Now, their behavior will determine how much tax they pay.

Only if they spend every dime that they make will they pay the full 9 percent. It will encourage savings and it will encourage people to be responsible for their own decision-making

WALLACE: Mr. Cain, we're going to have to leave it there. It is one of the new plans, one of the few new plans that's come out. And we're going to have to explore it some more.

CAIN: We will have it officially explored (ph), and I'm going to try to get my advisers to allow me to use their name.

WALLACE: Well, we would like to have them and you back on.

Mr. Cain, it's always a pleasure.

CAIN: Thanks, Chris. It's a pleasure. Thank you.

WALLACE: And we'll see you at the big debate on Thursday in Florida.

CAIN: I'll be there. I'll be there.

WALLACE: I am sure you will be. Me too.

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