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I know I promised to stay out of the secretary speculation game, but.... When I heard Tim Geithner might be the new Secretary of the Treasury, my first thoughts went to a speech he gave last June to the Economic Club of New York calling for a serious, fundamental rethinking of our entire regulatory structure. So my first reaction was that this was very good news.

Apparently Wall St. agrees with me. Good to know!

Want more? Read this.

UPDATE: While I'm at it, Peter Orszag's appointment to head OMB is also very, very good news, particularly for those of you focused on health care reform. Ezra explains.

Here's your substance:

Yes, earmarking is a process that is often abused, sometimes even in ways that open the system wide to corruption. But can we please get some perspective here? Mark Thoma lends a hand:

To which Brad DeLong adds the following:

To which I would add: Earmarking is a process by which already allocated funds are specifically directed or redirected towards specific projects. It doesn't increase the size of the overall budget, but merely directs how it will be spent.

If you want to attack it as a corruption issue, fine. It won't be a particularly effective way to attack it, but at least you'll be aiming at the right target. But attacking earmarks as a way of reigning in spending? It's just nonsense.

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?