Rick Perry tries to give his flat-lining campaign a flat-tax boost

Texas Gov. Rick Perry (R) sought to reinvigorate his presidential campaign on Tuesday by unveiling a new economic plan, the latest in a series of steps to rebrand himself as a candidate of heft before his slide in the polls becomes irreversible.

Perry’s plan also signified a challenge to both former Massachusetts Gov. Mitt Romney (R) and Herman Cain, his two primary roadblocks to the Republican nomination. Cain has surpassed Perry in the polls on the strength of his 9-9-9 flat-tax plan.

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But both Cain and Romney were notably silent on Perry’s plan, which would create an alternative 20 percent flat tax, a privatized option for Social Security and a hike in the eligibility age for Social Security and Medicare.

“Those who oppose it, they’re going to wrap themselves in the cloak of status quo,” Perry said of his proposal.

The Texas governor unveiled his plan in South Carolina, an early-primary state where he is counting on a promising performance, the day after he announced the hiring of several veteran campaign staffers, the endorsement of businessman Steve Forbes and the launch of television ads in Iowa.

The campaign reboot comes as a CBS News/New York Times poll showed Perry in fifth place even though he was leading in the polls a couple months ago.

Perry’s economic plan would offer taxpayers a choice between their current tax rates and a 20 percent flat tax, allow younger workers to opt in to privatized Social Security accounts and scale back business regulations.


One advantage Perry had in announcing his proposal was that Cain’s road test of his 9-9-9 proposal and subsequent tweaks gave Perry a valuable opportunity to steer clear of the elements that plagued Cain’s reception.

Unlike Cain, Perry proposes no new national sales tax. And by allowing taxpayers to keep their current rate if they prefer it to the flat tax, Perry undercut Democrats’ argument that he is imposing a fresh burden on lower-income Americans.

But by offering many a lower tax rate without adding any new revenue streams, analysts say Perry’s plan guarantees that the federal government would take in less money under his plan than it does now. That complicates deficit-cutting efforts and raises alarms for the left that Perry will seek painful spending cuts elsewhere.

It took weeks after Cain introduced his plan for his opponents and the media to take it seriously enough to crunch the numbers and determine its ramifications. But Republicans — and some Democrats — wasted no time weighing in on Perry’s proposal.

The Club for Growth, which promotes conservative fiscal policies, called the plan “massively pro-growth.”  

Democratic National Committee Chairwoman Rep. Debbie Wasserman Schultz (Fla.) called it “trickle-down economics” that had been tried, and failed, in the past.

“He mentioned dividends, capital gains, corporate profits — those are all byproducts of the wealthiest in this country,” she said on MSNBC. “Where does he help the middle class? Nowhere at all.”

Among the other GOP candidates, reaction ranged from undercutting Perry’s ideas to claiming they lacked originality.

Former Utah Gov. Jon Huntsman (R) accused Perry of taking the easy way out by leaving the current tax code — with all its loopholes and deductions — in place as an option for taxpayers. 

On Twitter, Rep. Michele Bachmann (R-Minn.) sarcastically thanked Perry “for using my ideas for your tax plan,” while Newt Gingrich (R-Ga.) challenged Perry to compare his plan to the former Speaker’s newly released 15 percent flat-tax proposal.

Tax policy experts said Perry’s plan would be a significant change to existing law. 

“This looks like a sizable tax cut for most Americans, except for the 42 percent who currently pay no income tax. And they wouldn’t have to pay any more,” said Scott Hodge, president of the conservative-leaning Tax Foundation.

That’s because many low-income taxpayers could choose to keep the current regime, which offers refundable tax credits like the Earned Income Tax Credit.

But the more caveats and deductions that remain in the system, the harder it becomes for Perry to put forth the claim that his plan simplifies life for taxpayers.

“Taxpayers will be able to fill this out and file their taxes on that,” Perry said Tuesday, holding up a postcard-sized sheet of paper while gesturing to a pile of file boxes stacked four high that he said represented the current U.S. tax code.

Perry’s plan would also lower taxes for the wealthy, who could opt for the 20 percent flat tax over the 35 percent rate they pay now.

Other critics of Perry’s plan pointed out that the federal coffer would inevitably end up with less supply.

“How could it not?” asked a release from the liberal Citizens for Tax Justice. “If taxpayers are offered an alternative way to file, we assume they will choose this alternative only if it lowers their tax bills. The result will be, inevitably, a loss of revenue.”

Perry, in an interview with The New York Times and CNBC, pushed back against those who say his plan would add to deficits.

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“The budget deficit needs to be addressed through a number of ways,” he said. “We think this will balance the budget by 2020. And you’ve got to have some hard cuts. You’ve got to deal with the entitlement issue.”

Entitlement reforms presented a second major lightning rod in Perry’s proposal and harkened back to Perry’s first major campaign test, when he called Social Security a Ponzi scheme and prompted concerns that he wants to eventually do away with the program.

Perry called Tuesday for entitlement “options,” including raising the retirement age for both Social Security and Medicare, tying Social Security benefit levels to income levels and permitting workers to invest their own Social Security benefits in the free market — a proposal President George W. Bush tried and failed to pass.

“I happen to think it is time to end the nanny state and empower our people to exert greater control over their money,” Perry said.

Those measures could drastically rein in federal spending on the social safety net, which would delight many conservatives, but could also alienate older voters.