I hadn't paid a lot of attention to McCain's social security gaffe, mostly because McCain didn't call social security itself a disgrace, as some on the left are whining, but called the way we are funding it a disgrace. Here's what he said:
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.
Good for McCain. The only problem with this statement, as Ezra points out:
[John McCain] seems to believe that at some other point in history, retiree benefits were paid for through taxes contributed by former workers, or possibly the retirees themselves. But, as Dean Baker says, "present-day retirees have always been paid their benefits from the taxes paid by current workers. That has been true from Social Security's inception." And it would remain true, incidentally, in the partial privatization plans that McCain and other conservatives favor: Those plans would still see Social Security funded out of payroll taxes, with current workers subsidizing current retirees.
Coupled with Gramm's gaffe, this became a pretty rough economics week for McCain.