FACT CHECK: Misfires on taxes and more in debate

October 21, 2011 - 6:28 PM
Republicans Debate

Republican presidential candidates former Massachusetts Gov. Mitt Romney, right, points at businessman Herman Cain during a Republican presidential debate Tuesday, Oct. 18, 2011, in Las Vegas. (AP Photo/Chris Carlson)

WASHINGTON (AP) — Herman Cain's 9-9-9 tax plan ignited plenty of sparks in the Republican presidential debate Tuesday night and President Barack Obama's health care law came in for its usual thumping. In both cases, the facts took a bit of a beating as well.

A look at the accuracy of some of the claims in the Las Vegas debate:

MICHELE BACHMANN: "Even the Obama administration chose to reject part of Obamacare. ... Now the administration is arguing with itself."

THE FACTS: True, the administration is moving to scrap a long-term insurance program that was part of Obama's health care law. But it would be wrong to take that as a sign the administration is losing faith in the overhaul. Quite the contrary.

Unlike the central provisions of the health care law, the long-term insurance plan, called CLASS, was voluntary. From an accounting viewpoint, that was its fatal weakness.

Without some reason for large numbers of healthy people to sign up, experts warned all along that CLASS would attract too many people in frail health. Rising benefit costs would send premiums spiraling upward. Healthier people would drop out, and eventually taxpayers would have to bail CLASS out.

Obama's health insurance mandate, requiring nearly everyone to have insurance, protects his overhaul from a similar fate.

"You have to have a broad risk pool," said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates cutting the federal deficit. "By mandating coverage, (the health care law) creates a broad risk pool and that makes the system much more sustainable."

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HERMAN CAIN: "It does not raise taxes on those that are making the least."

THE FACTS: An independent analysis of his tax plan, released Tuesday, concluded otherwise. The Tax Policy Center, a Washington think tank, said Cain's plan would increase taxes on 84 percent of U.S. households, hitting low- and medium-income households the hardest. The analysis said that households making $10,000 to $20,000 would see whopping tax increases averaging $2,705 — an increase of nearly 950 percent.

The rich, however, would get big tax cuts, the analysis said.

Cain's plan would scrap current taxes on income, payroll, capital gains and corporate profits. He would replace them with a 9 percent tax on income, a 9 percent business tax and a 9 percent national sales tax.

The study is in line with economic theorists — whether on the left or right — who note that sales taxes tend to hit low-income families the hardest because they spend more of their income than wealthier families do.

Unlike most states, Cain's plan would not exempt food or medicine from sales taxes. Used items, however, would be exempt.

Cain said his plan would create zones where people and businesses could get additional tax deductions, which would reduce taxes for low-income people. The Tax Policy Center said it did not take the zones into account because the Cain campaign did not provide any details on how they would work.

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Associated Press writers Ricardo Alonso-Zaldivar, Stephen Ohlemacher and Jim Drinkard contributed to this report.