Cain Adviser: 9-9-9 Plan Doesn't Need Economist

Thursday, 13 Oct 2011 05:02 PM

 

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Republican presidential candidate Herman Cain’s so-called 9-9-9 tax plan isn’t revolutionary and didn’t need a professor to develop it, said the suburban Cleveland investment adviser who did.

Rich Lowrie of Gates Mills, Ohio, Cain’s senior economic adviser, developed the plan based with Cain on core principles and in consultation with economists including Arthur Laffer and Stephen Moore, whom he calls friends.

“When people say, ‘Well, you’re not an economist, you’ve not even set foot in a faculty lounge, what could you possibly know about economics?’ I’m not holding myself out to be that,” Lowrie, 47, said in a telephone interview from Cleveland. “We’re just focused on simple truths of economics, the same way it doesn’t take a Ph.D. in physics to know what would happen if I held a bowling ball and then dropped it.”

Cain has moved to the Republican race’s top tier in part because of the 9-9-9 plan, which would tax sales transactions at 9 percent, and the same rate for business and individual incomes. The campaign has described it as a first step toward eliminating the income tax and imposing a single national retail sales levy.

At a debate sponsored by Bloomberg News and the Washington Post on Oct. 11, Cain singled out Lowrie as “my lead economist on helping to develop this.”

First Encounter

Lowrie, who earned an accounting degree from Case Western Reserve University in Cleveland, said he has been managing money at Lowrie/Carney/String/Smith Wealth Management Group of Wells Fargo Advisors in Pepper Pike, a Cleveland suburb, since 2008 and previously worked for McDonald Investments and McDonald & Co. Securities.

He said he met Cain, 65, at a conference hosted by the antitax Club for Growth in 2004 in Florida, where Cain was a speaker. Lowrie introduced himself and began following his career, he said.

“He made a lasting impression, to say the least,” Lowrie said. “I thought, ‘This guy really gets it.’”

Lowrie said he became friends with Mark Block, Cain’s campaign manager, when both were involved with Americans for Prosperity, a nonprofit organization based in Arlington, Virginia, that promotes limited government.

Block called Lowrie last year to tell him that Cain planned to run, and they had casual conversations about economic policy, Lowrie said. Lowrie was hired as an adviser in June, and has kept his full-time job as he does campaign work on his own time, he said.

Lowrie used what he called “rough-cut numbers” to develop the 9-9-9 plan.

Soak the Poor

Cain’s proposal would lead to a shift of the tax burden to individuals from corporations and investors, Edward Kleinbard, a University of Southern California law professor and former chief of staff to the congressional Joint Committee on Taxation, has said. Eliminating the deductibility of wages would raise the cost of labor, which businesses would pass on to workers in the form of lower pay, he said.

That, combined with no mention of the standard deduction, personal exemption or earned-income tax credit, “means a huge tax hike for the working poor,” he said. During the Oct. 11 debate, U.S. Representative Michele Bachmann of Minnesota raised concerns about the 9-9-9 sales tax turning into a value-added levy, a tax on the worth added to a product at each stage of its production.

Transparent, Efficient, Fair

Lowrie said the criticism is wrong. The plan is based on the ideas that production drives the economy, not consumption; that risk-taking drives growth, so tax or regulatory policies that inhibit entrepreneurship are not good; and that units of measure must be dependable, Lowrie said. Cain also insisted on a plan that is simple, transparent, efficient, fair and revenue- neutral, he said.

“It isn’t anything revolutionary,” Lowrie said. “The only thing that’s revolutionary is the guy that’s bold enough to champion real reform.”

“I kind of knew all along that Cain was going to be the one that was going to become the national figure and kind of take the country by storm the way he has,” Lowrie said. “I just thought if I can be kind of a behind-the-scenes helper, then I’m serving my country.”

--Editors: Stephen Merelman, Ted Bunker

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

© Copyright 2014 Bloomberg News. All rights reserved.

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