Monday, May 09, 2011

Wanting To Repeal Laws Of Arithmetic Isn't Foolish?

Paul Krugman now writes that it is wrong to blame the voters for the American budget mess. That sure is a big change of mind, as he less than 3 months ago wrote that a large majority of voters in effect wanted to repeal the laws of arithmetic by at the same time opposing tax increases for them, opposing spending cuts in almost all programmes and wanting to eliminate the $1.5 trillion deficit immediately.

Krugman is also wrong in asserting that the Bush tax cuts for the wealthy and the war in Iraq are key factors behind the deficit. The upper income tax cuts costs just $70 billion per year even assuming a static analysis (no effects on behavior) while the cost for the Iraq and Afghanistan wars was $160 billion, and these days, Afghanistan operations costs more than half of that $160 billion. Ending the Bush tax cuts for households earning more than $250,000 and withdrawing from Iraq would thus reduce the deficit by less than a tenth.

Krugman would perhaps argue that the total cost of the Bush tax cuts was a lot more, but that's only if you include the middle class tax cuts, and those cuts are unlike the upper income tax cuts very popular.