Today's column by Paul Krugman, Red Ink Realities (01/26/04), is a perfect example of this quandary for the left. He's completely flummoxed! Clearly he thinks we are not spending enough, but, because of that nasty old deficit, he ends up pushing for higher taxes on the top 5% of income earners. But that's a non-starter. The top 5% starts at about $125,000. Thus a husband and wife each earning $75,000 are well into this bracket and are about as middle class as you can get these days. They pay the full load of payroll taxes, the full load of college tuition and they qualify for few if any tax breaks. They are the real victims of our current tax system.

So why doesn't Krugman want to soak the top 1% instead? Simple. There's not enough money there. The top 1% already pay 35% of the income tax. How much does Krugman think they should pay? 50%? 60%? Trust us, he'll never say.

He ends the column this way:

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?��

Who will define the middle class by income bracket and then explain that anyone in that bracket gets a tax cut; anyone above it gets a tax increase.

But what about the outlook for the deficit? Krugman continues to say the deficit is exploding and we keep saying it is constructively small. In fact, the latest projections [PDF] by the non-partisan Congressional Budget Office agree with us. Even assuming the current tax rates are made permanent as Bush has proposed and that the Alternative Minimum Tax (ATM) is indexed to inflation at some point, the annual US deficit is still comfortably in the 2% to 2.5% range for the next 10 years. That's good enough to qualify the US for the Euro zone. If France and Germany are kicked out for violating the deficit guidelines we could take their place.

Just kidding!