In addition to falsely claiming the recent stock market turmoil would have affected the benefits of current retirees under McCain’s plan, Obama is running an ad accusing McCain of wanting to cut guaranteed Social Security benefits in half.

As Marcos explains, this is quite the deception:

The Bush plan would have limited benefits for some workers to growing at the rate of inflation rather than at the generally faster pace of wages. In other words, these workers would be getting benefits equal in real dollar value to those received by current retirees. But under the “progressive price indexing” approach endorsed by the president, lower-income workers would continue to receive all their promised benefits; medium-income workers would have their benefits reduced somewhat; and high-income workers would take the biggest hit.

The Obama campaign stretches the truth beyond recognition when it says that this would cut benefits in half. Under progressive price indexing, the average-earning worker would see a 28 percent cut in promised benefits — in 2075. In other words, trims of that magnitude would affect workers not yet born. Today’s average-earning 25-year-old would experience much smaller reductions in promised benefits upon reaching retirement age — more like 16 percent.

And the only way the Obama campaign can inflate the supposed benefit cut to “half” is by assuming that the change in calculating benefit growth would be applied to all workers, not just the top tier. In that case, workers not yet born would get 49 percent of the benefits not yet promised to them by 2075.

So, on one side, we have McCain using silly math to claim Obama will raise taxes on the middle class while, on the other side, we have Obama using silly math to claim McCain wants to rip the Social Security safety net in half.

In a time when very real math is beating up our financial markets, it’s disheartening to see both candidates playing such games. But at least the Democrats no longer have to worry that their guy won’t take it to McCain.

Apparently, when it comes to the Democratic playbook on Social Security, offering hope and change doesn’t preclude running on fear and lies.

In Florida recently, Obama himself claimed McCain’s privatization plans would extend to people who rely on Social Security income to live. But the record shows that’s provably false.

CNN has the facts…

On his Web site, McCain says he “supports supplementing the current Social Security system with personal accounts — but not as a substitute for addressing benefit promises that cannot be kept.” The Web site does not specify how those accounts would operate. But McCain supported President Bush’s plan in 2005 to allow some workers to place a limited amount of their payroll taxes into private accounts, which would have been invested in stock or bond funds.

That proposal — which never came to a vote — limited participation to people born in 1950 or later. None of today’s recipients of Social Security retirement benefits is old enough to have participated. So, under the specific plan that McCain weighed in on, it is wrong to say that “the millions of Floridians who rely on” those benefits would have them tied to the stock market. Some younger people who chose to participate would have their future benefits affected.

There’s no doubt that privatization is a very hot button issue, but Obama didn’t have to grossly misrepresent McCain’s position in order to hit home the potential dangers of it.

Shame on him for using scare tactics to drum up votes from Florida seniors.

McCain said he would obviously prefer not to raise taxes but …

While I tend to think taking tax increases off the table is politically foolish for any politician, McCain needs to be careful here. One of his advantages over Barack Obama is that voters know McCain a lot better and can be more confident about where he stands on major issues. To waver on such a fundamental issue as Social Security payroll taxes really makes me question where his head is at. He already has trouble explaining why he voted against George Bush’s tax relief – now he’ll have to explain this too.

And the 2006 deficit alone? $4.6 trillion.

That’s based on a GAO analysis (pdf) that looks at the present value of future liabilities the government has racked up over the next 75 years.

Are the numbers real? Yes. Are they meaningful? Sort of.

The figures come in answer to the following question: “If the current budget situation continues, what will be the cumulative difference between federal revenue and federal outlays in the next 75 years?”

Note all the important qualifiers: “If the current situation continues” and “75 years.” The estimate ignores things like economic growth and population growth and then projects current conditions out over a very long time frame.

That time frame is important, because the longer the time period, the less accurate the projection becomes (and the larger the total gets). It is extremely unlikely that current conditions will prevail for the next three quarters of a century, and even small changes can have big effects on such long-term guesses. Do the same projection in five years and you’ll get a much different answer.

Further, the time frame makes the numbers look more scary than they really are. The $4.6 trillion deficit for 2006, for example, works out to about $61 billion a year — big, but manageable.

Finally, this is not money actually spent; it’s money we’ve implicitly promised to spend, assuming federal policy doesn’t change in the next seven decades. Most of it represents Social Security and Medicare payments that won’t come due for years — but for which we’ve made no preparation, in part because we’re using the Social Security “surplus” to pay for current government operations. So far the government has borrowed nearly $2 trillion from Social Security; if that money were instead held in trust, the multiplier effect of 75 years would go a long way toward reducing that $53 trillion.

So we’re not really $53 trillion in the hole. What the figure mostly shows is the difference between our promises and our willingness to pay for them.

But they do serve as a wakeup call. The longer we run deficits and refuse to start saving for our long-term obligations, the greater the pain will be in the end — either through higher taxes or greatly reduced government services. We need to end deficit spending sooner rather than later, start paying money back into the Social Security reserves and make some decisions about the intent and breadth of entitlement programs.

President Bush’s tax cuts, mind-bogglingly expensive invasion of Iraq (with a final price tag estimated to be in the trillions) and ill-considered Medicare drug benefit have certainly worsened the problem, but he’s not the only one to blame. We all share the blame to one extent or another, for wanting more government than we’re willing to pay for.

I’ve commented before on how unethical it is to live large now and leave the bill for our grandchildren. What the GAO report demonstrates is how large that bill actually is. It’s time to act like grownups and pay our own way. Anything else is simply unconscionable.

This latest move by Bush is ridiculously underhanded.

Last year, even though Bush talked endlessly about the supposed joys of private accounts, he never proposed a specific plan to Congress and never put privatization costs in the budget. But this year, with no fanfare whatsoever, Bush stuck a big Social Security privatization plan in the federal budget proposal, which he sent to Congress on Monday.

His plan would let people set up private accounts starting in 2010 and would divert more than $700 billion of Social Security tax revenues to pay for them over the first seven years.

Here’s what this plan means in real numbers…

On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion.

In the first year of private accounts, people would be allowed to divert up to 4 percent of their wages covered by Social Security into what Bush called “voluntary private accounts.” The maximum contribution to such accounts would start at $1,100 annually and rise by $100 a year through 2016.

It’s not clear how big a reduction in the basic benefit Social Security recipients would have to take in return for being able to set up these accounts, or precisely how the accounts would work.

Good lord, what is he trying to pull with all of this? And I’m not the only one complaining. Look at the overwhelming social security poll numbers from Americans who do not like Bush’s handling of this situation.

Unbelievable…

However, now we’re faced with other issues and one of them is boosting the retirement age. Anybody think this is a good idea?

From the Washington Post:

…an increase in the retirement age is one of the suggestions that Sen. Charles Grassley, chairman of the Senate Finance Committee, outlined last week for fellow Republicans on the panel, according to several officials. Officials said Grassley’s suggestion for raising the retirement age would be phased in, possibly over two decades or more, depending on future demographic trends.

At least Grassley is considering some compromises too.

The Iowa Republican has also suggested steps to hold down benefits for future upper-income retirees. The officials who described his presentation did so on condition of anonymity, saying the discussions were confidential.

And lastly I’d just like to point out a little common sense. Somebody who has probably worked for nearly 40+ years deserves to retire at 65. Heck, they deserve to retire earlier than that. Hiking the age isn’t right. And not to put too fine a point on it, but for the government to make that decision is suspect at best. I’m sure you’ll find that the majority of people in Washington politics have the ability to retire far earlier than 65 if they want to. They should instead give that decision to the people to settle. I know that won’t happen, but it should.

Thoughts?