In the Long Run, We're All Temporary

To: Paul Krugman
Re: Un-Spin the Budget

You wrote:

It turns out that all of the upside surprise in tax receipts is coming from two sources. One is tax payments from corporations, up both because last year corporate profits grew much more rapidly than the rest of the economy and because the effective tax rate on corporations went up when a temporary tax break, introduced in 2002, expired. Both are one-time events.

You're stretching the meaning of 'one-time event'. The tax break may expire only once, but the new/old rate remains forever; indeed, the depressed rate was the one-time event. And is there any reason to believe that corporate profits will actually decline, rather than increase at the rate of the economy?

Then you wrote:

The other source of increased revenue is nonwithheld income taxes - taxes that aren't deducted from paychecks but are instead paid by people receiving additional, nonsalary income. The bounce in nonwithheld taxes probably reflects mainly capital gains on stocks and real estate, together with bonuses paid in the finance and real estate industries. Again, this revenue boost looks like a temporary blip driven by rising stocks and the housing bubble.

A history of such blips would be enlightening, but might undermine your argument. Didn't a similar blip (the internet bubble) create the surplus whose passing you bemoan? And won't the Next Next Big Thing -- whatever it is -- create another blip in the future? To paraphrase Keynes, in the long run, we're all temporary.

As a long-time admirer, I wish you'd write as rigorously for the Times as you did for Slate. While the Left needs more-effective demagogues, your talent is for analysis.