Growing the pool of money

Krugman’s Op-Ed comment today is based on that tired but neglected truth: if you want something you can’t afford you can only hope for a sale or wait for an inheritance. Meaning: either the price has to come down, or the pool of money has to grow. The administration’s proposed budget relies, as we know, on cuts in discretionary spending. But think of it, what is the source of the deficit to begin with? Krugman writes:

The prime cause of giant budget deficits is a plunge in the federal government's tax take, which fell from 20.9 percent of G.D.P. in fiscal 2000 to a projected 15.7 percent this year, the lowest share since 1950. About 45 percent of this plunge can be attributed to the Bush tax cuts. The rest reflects the end of the stock market bubble, the still-depressed economy and — probably — growing tax sheltering and evasion...

So what will it take to get the budget deficit under control? Unless Social Security and Medicare are drastically cut — which is, of course, what the right wants — any solution has to include a major increase in revenue.
Many Democrats have called for a partial rollback of the Bush tax cuts, preserving the "middle class" cuts… that would help, but one hopes politicians realize that it's not enough.

Another major source of revenue could be a crackdown on tax loopholes and tax evasion, which has reached epidemic proportions. In particular, what's going on with the tax on corporate profits? That source of revenue is down, as a percent of G.D.P., to 1930's levels. No, that's not a misprint. And receipts are not growing nearly as fast as one would expect, given an economic recovery that has bypassed workers but given big gains to their employers. An administration that actually tried to make corporations pay their taxes might be able to find $100 billion or more each year.

I don’t even mind that I can never ever find any tax loopholes at all ever when I fill out the IRS forms on April 14th. This is always a source of amusement for others: ha, ha, ha, she’s a lawyer and she can’t find the loopholes, ha ha ha. However, I do mind terribly that last little comment “an administration that actually tried to make corporations pay their taxes.” You mean it doesn’t? And they don’t? I mind.