"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.
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. 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."
Sorry to disappoint you, but the top 5% is actually paying a higher percentage of taxes now than before the tax cut - see www.taxpolicycenter.org - which is a site supported by Mr Krugman.
I wonder if tax revenues dropped because of a recession that started before Bush took office or lower corporate earnings.
I guess a new Medicare entitlement and doubling of federal spending on education are not increased domestic spending.
My taxes have dropped, mainly due to the $1000 child tax credit, but payroll taxes are still high. Wait a minute, those payroll taxes are just for Social Security and Medicare entitlements, which are mismanaged anyway. Maybe Krugman wants us to tackle Social Security and Medicare reform to reduce their size and taxes, since we already know he doesn't include them in domestic spending. In that case, I say - Go, Krugman, Go!