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Michael Hiltzik: Rick Perry runs off the highway

Rickperry
Texas Gov. Rick Perry's take on the federal Highway Trust Fund is something of a car wreck.

Perry's hastily assembled economic plan released Tuesday holds up the Highway Trust Fund as the model for how to "protect" federal funds from being raided by Congress for "unrelated purposes." The idea is to contrast the HTF with the Social Security trust fund, which Perry claims has been "pilfered...by spendthrift Washington politicians."

Thus Perry manages to demonstrate that he doesn't know the first thing about either fund.

Funded principally from federal gasoline taxes, the Highway Trust Fund has, in fact, been a disaster. In May, the Congressional Budget Office forecast that it would be out of money by mid-2012 -- in effect, bankrupt. By 2018, the CBO says, its shortfall of receipts versus proposed expenditures will be $80 billion.

Not even the right-wing Heritage Foundation would agree that it's been well-managed. In fact, Heritage offers a list of all the ways Congress has raided the fund -- for ferry boats and magnetic levitation research, among other things.

Congress borrows from the highway fund all the time. But it also requires the fund's balance to be invested in non-interest bearing securities, thus stiffing motorists on the interest their tax funds would accrue. By contrast, the Social Security trust fund must by law be invested in interest-paying Treasury bonds. That trust fund collected $117 billion in interest last year on its balance of more than $2.5 trillion -- a risk-free return of better than 4.6%.

Perry's critics in both parties will no doubt be picking apart all the details of his economic plan in coming days. But this one bollixed nugget leads us to ask: Did he do all his research this way?

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-- Michael Hiltzik

Photo: Rick Perry speaking in South Carolina on Tuesday. Credit: Mary Ann Chastain / Associated Press

Michael Hiltzik: The Cain Monstrosity

Cain

As long as Americans demonstrate a limitless thirst for tax nostrums, there will be politicians around to slake it. My Wednesday column places Herman Cain's 9-9-9 plan in historical context. The plan, such as it is, can be found here. USC expert Edward Kleinbard's analysis can be downloaded here. Be forewarned: It makes depressing reading.

The column starts below.

Herman Cain’s 9-9-9 plan would probably be seen as just another cockamamie tax scheme were it not for his surprising ascendance to front-runner ranks in the Republican Party primary.

Yet one of the more interesting questions raised by the plan hasn’t gotten much attention: What accounts for the enduring popularity of such tax nostrums, when they never pencil out?

Cain’s proposal, which purportedly would replace today’s federal tax code with a flat 9% personal income tax, a flat 9% corporate tax and a flat 9% national sales tax, has the surface appeal of an advertising slogan. He maintains it would be “fair” and “simple,” get the government “out of our pockets,” allow for the abolition of the IRS and create a huge surge in economic growth.

There’s reason to be skeptical about these claims, because every tax scheme mooted during a political campaign makes the same promises, and none ever seems to be rooted in political or economic realities here on planet Earth. One feature they all share, as it happens, is their murkiness, and 9-9-9 is no exception.

Read the whole column.

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-- Michael Hiltzik

Photo: Republican presidential candidate Herman Cain speaks Monday at the office of Maricopa County Sheriff Joe Arpaio in Phoenix. Credit: Eric Thayer/Reuters

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