Posted 11:33 AM by Robert

Krugman's Latest

Steve Verdon scribes a very good, down to earth take-down of Paul Krugman's latest flight of partisan fancy.

UPDATE: Among other observations, Steve makes the correct call that most of the benefits of the tax cut go to the "rich" mostly because only the "rich" pay taxes. There's some room to fuss about this argument, but it's essentially correct - and it helps explain the curious dynamic of tax cut proposals:

First, a tax cut is proposed by Republicans.

Second, Democrats and their liberal media camp followers condemn the cut because "most of the benefits of the tax cut go to the rich."

Third, most people polled say that the tax cut favors the "rich" - not them.

Fourth, Democrats and their liberal media camp followers ballyhoo the poll results and predict disaster for the tax cut and the Republicans pushing it.

Fifth, the non-rich more or less figure out that their taxes are not going up even though the Democrats and their liberal media camp followers are hooting that the non-rich are being disadvantaged. Arguments about deficits and interest rates rises and bad things that hoity-toity economic arguments predict will supposedly stem from tax cuts are mostly wrong. Remember in the 1980's when Democrats argued ad infinitum that the trade deficit was just flat out caused by the Reagan tax cuts and the "resulting" federal budget deficits? Well, taxes went up and the budget deficit went away in the 1990's but the trade deficit just kept on rising. Are hoity-toity economic arguments mostly not understood or cared about by the non-rich? Do most people of modest means decide to care only when someone wants actually to raise their taxes or cut their benefits or interest rates go up or some other bad thing actually happens? I think there is more to it than that.

Sixth, most of the tax cut passes in Congress. Republican popularity goes up.

It will probably happen this time, too. Of course, as the 1993 tax rise shows, the whole thing can work in reverse.

MORE: From Jay Caruso.