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Wow.

Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that's a disgrace. It's an absolute disgrace, and it's got to be fixed.

I'll let Hilzoy take this one:

The fact that we are paying present-day retirees with the taxes paid by workers, young or otherwise, is not a disgrace, or a scandal, or a new development. Social Security has been funded this way since its inception. The first person to receive monthly benefits, one Ida Mae Fuller, had worked for three years, and contributed all of $24.75 to the Social Security Trust Fund. She lived to be 100, and collected $22,888.92 in benefits. Did the Social Security Trust Fund found that money under its pillow? Somehow, I don't think so.

Younger workers paid Ida Mae Fuller's pension. Workers who were younger still paid those workers when they retired. And even younger workers, like me, are paying for their Social Security benefits. This is not a disgrace; it's the way the system operates. And it's certainly not a sign that we've mortgaged our children's futures, or that something has to be fixed.

One interpretation of this statement would be that McCain is being deceptive: trying to make a straightforward feature of Social Security seem like a scary new problem, in order to gin up support for his nonexistent plans to fix it. I tend to think that he just doesn't know how Social Security works. (This would explain why he doesn't see the problem with privatizing the system: the need to pay a generation's worth of transition costs.) However, it doesn't really matter which explanation is right: either one ought to be close to disqualifying.

John McCain: deceptive or stone cold ignorant? We report; you decide.

Sadly, the answer is simple: he's ignorant. John McCain doesn't care about the details of public policy. He never has and he never will.

His budget? It will be balanced because we will declare "victory with honor" in Iraq.

His tax cuts? They will of course pay for themselves. Didn't you know that a 0% tax rate would produce infinite revenues?

The Sunni vs. Shia conflict? All we need to do it get them into a room and say "stop the bullshit."

His gas tax holiday? Economists hate it, but what do they know about economics?

The Surge? It's working, and we're winning, and anyone who says otherwise just doesn't understand the military like him.

When it comes to policy, McCain just isn't a deep thinker. And the saddest thing is, until he decided to run for president he would have told you the same thing himself!

WaPo: McCain's Mixed Fiscal Policy

But it's not the head so much as the lede:

With economic proposal, candidate tries to straddle the GOP's dueling camps on deficits.

On the one hand, you got the so-called fiscal conservatives, a group that claims balanced budgets as a first principle. (Leave aside for the moment that they have never once been able to follow-through on their rhetoric). On the other hand, you've got the Cheney-styled "deficits don't matter" crowd. So yes, mixing those two would require quite the straddle.

Amazingly, that's not even the biggest understatement in the piece:

John McCain has been around Washington long enough to remember the days when Republicans constantly clashed among themselves over fiscal policy. Were they the party of Jack Kemp, of supply-side economics and big tax cuts, or the party of Bob Dole and the green eyeshade economics of deficit reduction?

McCain today finds himself with a foot in both camps, though tentatively. He remains an unconvincing tax cutter but he is also an unpersuasive deficit hawk, at least on the basis of his latest economic plan. He is a pure reflection of the Republican Party he seeks to lead.

That proposal, unveiled with great fanfare on Monday, moved him back in the direction of deficit reduction after a lurch toward tax cutting designed to make him more acceptable to the party's supply-side devotees.

Budget experts were quick to note that McCain lacks a blueprint to achieve his goal of balancing the budget by 2013.

If by "lacks a blueprint" they mean "includes no details whatsoever," then OK, fine. McCain promises everything to everyone in his budget without numbers, going so far as to promise a balanced budget based on - I'm not making this up - "victory in the Iraq and Afghanistan operations in the fight against Islamic extremists."

Josh Marshall:

This has to be one of the better examples of McCain's penchant for policy by slogan seeping out from the campaign trail into actual policy proposals.

McCain's people do realize that there is no budget mark down for 'victory'. Whatever victory's other merits, it is only reductions in expenditures directed (in the broadest sense) toward the war zones that get you actual budget savings.

Is McCain saying that both wars will be over by the end of his first term? And if so, is that victory with all or most of the troops staying on post-victory, as he's implied? Or will they all have left by then? Remember, Adm. Mullen says we need more troops in Afghanistan to deal with spiraling situation developing there. But we don't have any more because of our commitments in Iraq.

And if his four-year balanced budget promise is premised on rapid victory in both theaters, isn't that sort of arbitrary timelines on steroids?

John Cole calls it "just making shit up":

Keep in mind that McCain is promising to do all this while also promising to extend the Bush tax cuts AND ramping up military spending all during a bleak economic setting with current deficit projections hovering near 400 billion annually. Oh, and did I mention the aging population and rising health care costs, and the shrinking dollar, and our energy crisis?

Back to Josh:

I think we may have come to that moment, that quick turn of events, that encapsulates the fact that there is apparently no limit to the howlers and nonsense that John McCain can throw out and still not generate collective guffaws or even scrutiny from the national political press...

Now, the general routine is the face of this kind of candidate announcement is that journalists and economists look at the numbers to see if they add up. In most cases, the exercises generates fairly unsatisfying contradictory opinions, with some experts saying one thing and other experts another.

But here's the thing. McCain doesn't have any numbers. None. Not vague numbers of fuzzy math. He just says he's going to do it. Any other candidate would get laughed off the stage with that kind of nonsense or more likely reporters just wouldn't agree to give them a write up. But this is all over the place.

The simple truth is that given his foreign policy promises in Iraq and tax cut promises at home there's really no way McCain could come up with even a fuzzy plan to balance the budget in his first term. So he's decided instead just promise it. Included in his white paper is just the standard hocum about cutting waste, fraud and abuse in government and making sure we have "reasonable economic growth."

Remember, this is the guy who's riding on his reputation for 'straight talk'. And he's just promised that he'll balance the budget in his first term. For any serious reporter covering this campaign that should immediately lead to a request for actual numbers to back up how he's going to accomplish that.

But I've saved the best analysis for last. Hilzoy is just shredding today. After an extensive look at the numbers implied by McCain's "proposal" - and you really should read the entire thing, so no excerpt of the body - she concludes:

So far, I have argued as though I thought McCain was actually serious about balancing the budget. I was taking him at his word, and giving him the benefit of the doubt. But I do not see how it's possible to even begin to work through his various proposals and think that he is. I suspect that he doesn't fully understand many of his proposals, and so might well be unaware of exactly how big a hole he's planning to blow in the deficit, ad how unlikely it is that he will be able to plug it by the means he's specified. But I don't think that even he can actually believe that he can make up $695 billion by cutting earmarks and "reforming" Social Security.

The deep irony here is that this is precisely the same problem Reagan faced decades ago. His supply-siders convinced him that he could simultaneously increase defense spending, cut taxes, and balance the budget. After two years, it was obvious to anyone with eyes and a brain that it wasn't working, but rather than backtrack and admit their mistakes, they tried to straddle the fence and have it both ways. And Republicans have been trying to force that nonsensical approach on us ever since.

But there's one key difference between then and now, of course. Back then we had limited experience with the downsides of supply-side theory. Now we have $9.5+ trillion reasons to reject it. Reagan might have had an excuse for his cluelessness, but McCain? No such luck for him. Or us.

Let's get out of here with a warp-up from Ezra:

You know the old saying, "misses the forest for the trees?" In political headlines, there should be an analogue: "Misses the policies for the press releases." Take Mike Allen's article entitled "McCain Promises to Balance Budget." Everyone promises to balance the budget. It's like telling your dentist that you floss every night. If that's actually what's in the story, then the article shouldn't have been written.

The question, of course, is how you will balance the budget. If a budget is out of whack, one of two things has to happen: You need more revenues, or you need to cut spending. McCain has already forsworn revenue increases, and isn't saying anything to the contrary. And here, Allen has the goods, albeit goods the Prospect had a couple months back: McCain will "balance the federal budget by the end of his first term by curbing wasteful spending and overhauling entitlement programs, including Social Security, his advisers told Politico."

"Overhauling" is a weasel word. So, in this context, is "reform." If you are going to balance the budget by doing something to entitlement programs, you are going to do one of two things: Raise the payroll tax, or cut the programs. In other words, the accurate headline for this piece would read "McCain Promises to Cut Social Security And Medicare Or Drastically Raise The Payroll Tax." If enough pieces like that were written, McCain would have to explain which of those he intends to do. As of yet, he's been able to dodge the question, saying repeatedly that he'll "talk' to Congress. But Congress won't cut Social Security or Medicare. So is McCain promising a massive payroll tax increase? Or is he just spouting platitudes? It's an interesting question, and it actually has an answer. But in order to get that answer, reporters will need to aggressively explain McCain's plan: Cut Social Security and Medicare. Or pass a huge tax increase. Those are his only two options. And the legendary straight talker should be able to explain which he favors.

If you've ever taken one of my classes on American politics or comparative public policy, these won't come as news to you. But if you haven't, or if you want a quick refresher, this op-ed from today's Washington Post is a must read: 5 Myths About the Bust That Will Follow the Boom(ers)

1. As boomers quit working and ease into their golden years, they could break the backs of the younger workers who will have to support them.

Not so. Even at the peak of boomer retirement, around 2030, most of the population will still be of prime working age, between 20 and 64. The percentage -- about 55, according to the Social Security Administration -- will be lower than it is today (59), but above the levels of the 1960s and '70s, when it ranged between 51 and 54 percent. Not only will a larger portion of the population be of working age than in the past, but a much higher percentage of that group will be available to provide goods and services. Forty years ago, most women didn't work outside the home; these days, about 60 percent do -- and the number keeps going up. In addition, national defense employed more than 10 percent of the workforce in 1968...

2. We're running out of time to fix senior-citizen entitlement programs before a crisis strikes.

Actually, we're out of time. If it was politically impossible to solve this problem when the number of retirees was comparatively small, there's no chance for a major fix as the ranks of the elderly -- and their political clout -- grow. There may be some minor changes in the way benefits are taxed or adjusted for inflation, but it's already too late for any big fix....

3. Boomers' retirement will be bad for the economy.

Not really. It'll be bad for the federal budget, sure, but it will actually be good for the economy as a whole. As retirees, the boomers will continue to buy goods and services, but they won't be competing for jobs. This will tend to push wages up, keep unemployment low and boost demand across the board...

4. The politicians know what needs to be done; they just lack the will to do it.

They may lack the will, but they almost certainly have no idea what needs to be done. Estimates of future Social Security and Medicare spending are based on complex economic and demographic models that are quite sensitive to even modest changes in key assumptions. No one really knows the size of the problem facing the federal budget, and very few people understand all the moving parts.

5. Saving the budget will require either major reductions in the old-age entitlement programs or major tax increases -- or both.

Actually, probably none of the above. Unless there are major changes in benefit rules or in the population, spending on Social Security and Medicare will grow dramatically over the next few decades. But many economic changes are likely to mitigate the effects on the budget. For example, as the workforce shrinks, the demand for labor will grow, pushing up wages and thus increasing payroll taxes, giving the government more income. Higher wages mean that more people are likely to choose to work, and to work longer before retiring. These changes, and many others like them, are likely to offset most of the increases in Social Security costs even without changes in tax rates. That will still leave a bill to be paid, but a manageable one. Medicare benefits are a much more complicated matter, but society is going to provide health care to the elderly one way or another. The issues there have more to do with how to provide that care and how expensive it will be than with who writes the checks.

I see Ross Perot is back, and he's brought his charts with him.

Here are three of my favorites. I've made small modifications to each of them, adding lines that indicate presidential administrations. Notice anything?

Andrew Sullivan calls John McCain's transparent lies about budgeting and tax cuts "the death of fiscal conservatism." "Conservatism," he says, "is about balancing the budget."

Erm - OK. When?

Take a look at the data and see for yourself. Since 1980, when conservative Republicans were in power, the deficit exploded. It was only during the one moment that they did not hold the White House - Clinton's 2 terms in office - that we saw major surpluses. Even LBJ, the man every conservative loves to hate as the prototype of "tax and spend liberalism," had nothing on so-called "fiscal conservatism."

Fiscal conservatism was a branding strategy and nothing more. It has absolutely no basis in reality. None.

Andrew loves to proclaim his conservatism of doubt, yet he takes it as an article of faith that conservatism was at some point responsible for balancing budgets. But it doesn't, and it never has. Never.

UPDATE: I've sent the following to Andrew via email. I'll update later if he responds:

Andrew,

You say that "conservatism is about balancing the budget." Perhaps as a slogan, but when in reality has it ever actually been the case? Since 1980, conservative administrations have been responsible for exploding deficits. Among conservative presidents, only HW tried to do something about the deficit, and he was practically disowned by conservative Republicans for it.

"Fiscal conservatism" was a clever branding strategy, nothing more. $9.1 trillion in debt, and all of it comes courtesy of "fiscally conservative" Republican administrations. Surely you can see that in the data, can't you?

Now might be a good time for you to remind your readers - and perhaps yourself - about The Atlantic's classic "The Education of David Stockman." Read through to the end and it becomes abundantly clear that even by 1981 the idea that conservative politicians wanted to balance the budget was a myth. And that's how we ended up in this mess. Faith and ideology took over for reason and analysis. Stockman and others like him simply assumed that they could impose their will on the political system. Congress? The bureaucracy? The media? The citizens of the country? If he and his fellow travelers worked hard enough, they could bend the entire system to their will.

Your conservatism may be fiscally responsible and full of doubt, but theirs was not. Had they truly been committed to balanced budgets, they would have admitted when their policies had failed and changed course. Supply side theories would have been acknowledged as incomplete. The abiding power of interest groups to block reform would have been taken into account. And most importantly, the inherent inability of humans to plan and predict causes and effects in advance would have been respected and acknowledged.

Stockman did all that, and like HW, he was excoriated by conservatives for it, forced out of the movement and to the sidelines. All by 1985.

1985.

How do you reconcile that with the statement that "conservatism is about balancing the budget?" How can you continue to make blanket statements like that when all of the available evidence suggests otherwise? Where is your conservatism of doubt on this?

--------

Some choice quotes from Reagan's fiscally conservative guru from that now classic article:

"The whole thing is premised on faith," Stockman explained. "On a belief about how the world works."

[...]

"None of us really understands what's going on with all these numbers," Stockman confessed at one point. "You've got so many different budgets out and so many different baselines and such complexity now in the interactive parts of the budget between policy action and the economic environment and all the internal mysteries of the budget, and there are a lot of them. People are getting from A to B and it's not clear how they are getting there. It's not clear how we got there and it's not clear how Jones is going to get there."

[...]

"l'm beginning to believe that history is a lot shakier than I ever thought it was," he said, in a reflective moment. "In other words, I think there are more random elements, less determinism and more discretion, in the course of history than I ever believed before. Because I can see it."

[...]

Stockman thought he had taken care of embarrassing questions about future deficits with a device he referred to as the "magic asterisk." (Senator Howard Baker had dubbed it that in strategy sessions, Stockman said.) The "magic asterisk" would blithely denote all of the future deficit problems that were to be taken care of with additional budget reductions, to be announced by the President at a later date. Thus, everyone could finesse the hard questions, for now.

[...]

"I have a new theory--there are no real conservatives in Congress..."

[...]

"The hard part of the supply-side tax cut is dropping the top rate from 70 to 50 percent--the rest of it is a secondary matter," Stockman explained. "The original argument was that the top bracket was too high, and that's having the most devastating effect on the economy. Then, the general argument was that, in order to make this palatable as a political matter, you had to bring down all the brackets. But, I mean, Kemp-Roth was always a Trojan horse to bring down the top rate."

[...]

That regret was beyond remedy now; all Stockman could do was keep trying on different fronts, trying to catch up with the shortcomings of the original Reagan prospectus. But Stockman's new budget-cutting tactics were denounced as panic by his former allies in the supply-side camp. They now realized that Stockman regarded them as "overly optimistic" in predicting a painless boom through across-the-board tax reduction. "Some of the naive supply-siders just missed this whole dimension," he said. "You don't stop inflation without some kind of dislocation. You don't stop the growth of money supply in a three-trillion-dollar economy without some kind of dislocation ... Supply-side was the wrong atmospherics--not wrong theory or wrong economics, but wrong atmospherics... The supply-siders have gone too far. They created this nonpolitical view of the economy, where you are going to have big changes and abrupt turns, and their happy vision of this world of growth and no inflation with no pain."
The "dislocations" were multiplying across the nation, creating panic among the congressmen and senators who had just enacted this "fiscal revolution." But Stockman now understood that no amount of rhetoric from Washington, not the President's warmth on television nor his own nimble testimony before congressional hearings, would alter the economic forces at work. Tight monetary control should continue, he believed, until the inflationary fevers were sweated out of the economy. People would be hurt. Afterward, after the recession, perhaps the supply-side effects could begin--robust expansion, new investment, new jobs. The question was whether the country or its elected representatives would wait long enough.

His exasperation was evident: "I can't move the system any faster. I can't have an emergency session of Congress to say, Here's a resolution to cut the permanent size of government by 18 percent, vote it up or down. If we did that, it would be all over. But the system works much more slowly. But what can I do about it? Okay? Nothing. So I'm not going to navel-gaze about it too long."

Earmarks must be one of the most widely misunderstood phenomenon in all of US politics. Contrary to widespread belief - even McCain seems to think this! - they are not provisions of bills that instruct the federal government to spend new money. Instead, they are provisions of legislation that instruct a specific part of the federal bureaucracy to spend previously allocated money in a very specific way.

Here's the offical definition from the OMB:

Earmarks are funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents the merit-based or competitive allocation process, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to properly manage funds. Congress includes earmarks in appropriation bills - the annual spending bills that Congress enacts to allocate discretionary spending - and also in authorization bills.

So contrary to popular belief, they do not inflate federal spending. They direct it, maybe even misdirect it, but they don't make it larger than it would have otherwise been.

Do earmarks often go towards "stupid things?" Most people would say yes, unless of course that "stupid thing" is something they like, in which case they would argue that their earmark is fine, but the other ones are beyond the pale. In many ways, this is reminiscent of people's attitudes towards "special interest groups." Their church, synagogue, business association, and gun club are just fine; the problem is all the groups that other people belong to!

So what would happen if we eliminated earmarks? The executive would take full control of the decision-making process. And unless you are certain that federal bureaucrats and political appointees are always, forever, and in all cases more wise than members of the House and Senate, there is absolutely no reason whatsoever to think that eliminating earmarks will solve any problems.

All of which is a very long way of introducing this piece from CAP's Scott Lilly on McCain's bizarre promises about earmarks. This is one of McCain's signature issues, and once again, he has absolutely no idea what he is talking about.