Honestly, I don't want to be writing about McCain's various displays of economic ignorance all the time. But he keeps coming up with statements that are just so jaw-droppingly awful that I have to. The latest is a CNN interview from this morning, which is posted, with its transcript, here. Rather than go through it at length, I'll just list the main points:
(1) McCain is asked how he plans to balance the budget. He says that the problem is that spending is out of control, and he will control it. He adds that he will create lots of new jobs in nuclear energy and coal gasification, I assume using only controlled spending. John Roberts (who has cited figures, and seems quite well-prepared) presses him, and this exchange follows:
"ROBERTS: Senator, you can't get over the fact, though, that extending the Bush tax cuts, as you want to do, and adding in your tax cuts do take the deficit number -- we actually go from a $70 billion surplus to a $445 billion deficit.
MCCAIN: You can't seem to get over the fact that it's spending that's out of control. And you restrain spending and also you can't get over the fact that historically when you raise people's taxes, guess what, revenue goes down. Every time we cut capital gains taxes, there has been an increase in revenue. I'm glad to have this discussion with you, and obviously you disagree, but the facts are that when you keep taxes low, when you restrain spending, as we did in 1982 when Ronald Reagan came to office, then the economy grows. We've created 46 million new jobs since 1982, because of lower taxes, but the spending got out of control, and that obviously caused the deficit, which then caused us to have to borrow money from China, et cetera, et cetera. And that's our problem that we have today, is spending and not keeping taxes low and stimulating the economy."
No. When you raise taxes (within reason), revenue tends to go up. (See this helpful graph.) And when you cut capital gains taxes, revenues go down, save for short-term blips that reflect people wanting to cash in under the new rates. McCain also mentions that the CBO and others who have estimated the effects of cuts in capital gains taxes use "static scoring." According to Greg Mankiw, who was the chair of Bush's Council of Economic Advisors, even with dynamic scoring, cuts in the capital gains tax only recoup 50% of the revenue lost.
(2) Just one day after releasing an economic plan (pdf) that said that "John McCain supports supplementing the current Social Security system with personal accounts" (p. 5), McCain repeated his earlier claim that "I want young workers to be able to, if they choose, to take part of their own money, which is their taxes, and put it in an account which has their name on it."
Supplementing Social Security with private accounts is one thing. Allowing workers to divert their FICA taxes into private accounts is another. The first just gives workers more options; the second guts Social Security's funding. These are very, very different proposals. Unfortunately, McCain doesn't seem to understand the difference, perhaps because he doesn't understand how Social Security works.
I wonder how long it will take his advisors to walk him back this time, and how long it will take him to say the same thing again.
(3) This is much less important, but still amusing: asked whether a request he made for funding for Arizona was an earmark, McCain said:
"The definition of an earmark is a program that is put in, and money that is put in an unauthorized fashion in the middle of the night. So no, it's not that, and it's not the same."
There's a pattern to this. McCain seems to have a few ideas about economics. Spending is out of control, and if we just restrain it, things will be OK. (Moreover, none of the spending he proposes -- e.g., the spending required to add 200,000 troops to the armed forces -- actually counts.) People should have the right to put their own tax money into their own Social Security accounts. Cutting taxes raises revenue. And that seems to be about it.
Since he doesn't actually understand what he's talking about, he periodically says something ill-advised -- that he supports privatizing Social Security, that he'll balance the budget in four years, and so forth. Then his advisors walk him back -- as they have already done with his promise to balance the budget by the end of his first term, and as I expect they'll do shortly on Social Security.
But it's not just on economics that this happens. Recall his advisors taking back his promise to kick Russia out of the G-8, the way he has needed to be corrected about whether Iran is training al Qaeda, or whether al Qaeda is Shi'a, or how many troops we have in Iraq, and so forth. And remember that he doesn't seem to know what a cap and trade system is, despite having co-sponsored cap and trade legislation in Congress, and having a cap and trade system as a central part of his energy policy.
He has a few ideas lodged in his head, without anything like the background he'd need in order to question or assess them, and without any discernible interest in learning more. He doesn't keep basic, basic facts straight, or know really elementary aspects of his own policies.
I never thought I'd end up covering John McCain like this. I expected, after eight years of Bush, to be able to argue about genuine philosophical and policy differences, rather than going on about the most basic matters of competence. But McCain's performance so far is just frightening. We've had eight years of a clueless President who governs on the basis of his gut plus a few stray ideas that wafted in on the breeze and somehow stuck. We do not need four more.