A Krugman article.
BOLD: emphasis is mine.
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Red Ink Realities
January 27, 2004
By PAUL KRUGMAN
Even conservatives are starting to admit that George Bush
isn't serious when he claims to be doing something about
the exploding budget deficit. At best - to borrow the
already classic language of the State of the Union address
- his administration is engaged in deficit
reduction-related program activities.
But these admissions have been accompanied by an urban
legend about what went wrong. According to cleverly
misleading reports from the Heritage Foundation and other
like-minded sources, the deficit is growing because Mr.
Bush isn't sufficiently conservative: he's allowing runaway
growth in domestic spending. This myth is intended to
divert attention from the real culprit: sharply reduced tax
collections, mainly from corporations and the wealthy.
Is domestic spending really exploding? Think about it: farm
subsidies aside, which domestic programs have received
lavish budget increases over the last three years?
Education? Don't be silly: No Child Left Behind is rapidly
turning into a sick joke.
In fact, many government agencies are severely
underfinanced. For example, last month the head of the
National Park Service's police admitted to reporters that
her force faced serious budget and staff shortages, and was
promptly suspended.
A recent study by the Center on Budget and Policy
Priorities does the math. While overall government spending
has risen rapidly since 2001, the great bulk of that
increase can be attributed either to outlays on defense and
homeland security, or to types of government spending, like
unemployment insurance, that automatically rise when the
economy is depressed.
Why, then, do we face the prospect of huge deficits as far
as the eye can see? Part of the answer is the surge in
defense and homeland security spending.
The main reason for
deficits, however, is that revenues have plunged. Federal
tax receipts as a share of national income are now at their
lowest level since 1950.
Of course, most people don't feel that their taxes have
fallen sharply. And they're right: taxes that fall mainly
on middle-income Americans, like the payroll tax, are still
near historic highs. The decline in revenue has come almost
entirely from taxes that are mostly paid by the richest 5
percent of families: the personal income tax and the
corporate profits tax. These taxes combined now take a
smaller share of national income than in any year since
World War II.
This decline in tax collections from the wealthy is partly
the result of the Bush tax cuts, which account for more
than half of this year's projected deficit. But it also
probably reflects an epidemic of tax avoidance and evasion.
Everyone who wants to understand what's happening to the
tax system should read "Perfectly Legal," the new book by
David Cay Johnston, The Times's tax reporter, who shows how
ideologues have made America safe for wealthy people who
don't feel like paying taxes.
I was particularly struck by Mr. Johnston's description of
the carefully staged Senate Finance Committee hearings in
1997-1998. Senators Trent Lott and Frank Murkowski accused
the I.R.S. of "Gestapo"-like tactics, and Congress passed
new rules that severely restricted the I.R.S.'s ability to
investigate suspected tax evaders. Only later, when the
cameras were no longer rolling, did it become clear that
the whole thing was a con. Most of the charges weren't
true, and there was good reason to believe that the star
witness, who dramatically described how I.R.S. agents had
humiliated him, really was engaged in major-league tax
evasion (he eventually paid $23 million, insisting he had
done no wrong).
And this was part of a larger con. What's playing out in
America right now is the bait-and-switch strategy known on
the right as "starve the beast." The ultimate goal is to
slash government programs that help the poor and the middle
class, and use the savings to cut taxes for the rich. But
the public would never vote for that.
So the right has used deceptive salesmanship to undermine
tax enforcement and push through upper-income tax cuts. And
now that deficits have emerged, the right insists that they
are the result of runaway spending, which must be curbed.
While this strategy has been remarkably successful so far,
it also offers a big opportunity to the opposition. So
here's a test for the Democratic contenders: details of
your proposals aside, which of you can do the best job
explaining the ongoing budget con to the American people?
http://www.nytimes.com/2004/01/27/opinion/27KRUG.html?ex=1076210951&ei=1&en=a86c41a410157fa3
