McCAIN ON ECONOMICS….Does John McCain really think Social Security is a disgrace? I guess not, but he sure seems to think its funding mechanism is a disgrace, and last night he repeated himself just so we’d all know that it wasn’t a slip of the tongue the first time around:
So let’s describe it for what it is. They [i.e., younger workers] pay their taxes and right now their taxes are going to pay the retirement of present-day retirees. That’s why it’s broken, that’s why we can fix it.
This is nuts. McCain is talking as if he just figured out that this is how Social Security works and he’s scandalized by it. Needless to say, though, this is the way virtually every retirement system in the world works, and it works fine. What’s more, if Social Security really does turn out to have a shortfall in future years, it’s easily fixed by a very modest combination of higher taxes and reduced benefits — exactly the bipartisan, reach-across-the-aisle solution forged in 1983 that McCain is constantly praising (and that he voted for as a freshman congressman).
But you want something even scarier? In the very same interview, McCain serves up the supply-side full monty to CNN’s John Roberts: “You can’t get over the fact that historically when you raise people’s taxes, revenue goes down,” he said. “Every time we cut capital gains taxes, there has been an increase in revenues.” The second half of this statement is flat out wrong, and the first half is so wrong that we need a new name for it. This is Jonestown levels of Koolaid drinking.
UPDATE: I see that Hilzoy beat me to this. Click here for a more detailed take on McCain’s Grandpa Simpson approach to economics.