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Editorial Review Book Description
Wielding his widely recognized powers of explanation, Paul Krugman lays bare the hidden facts behind the $2 trillion tax cut. With huge budget surpluses just ahead, the question of whether to cut taxes has shifted to when? and by how much? With Fuzzy Math, Paul Krugman dissects the Bush tax proposal and shows us who wins, who loses, and how quickly the tax cuts will consume the surplus. Always the equal-opportunity critic when it comes to faulty economics, Krugman also tucks into the Democratic alternatives to the Bush plan. This little book packs a big wallop. Together with major media appearances, it puts Krugman's wisdom and steely-eyed analysis firmly at the center of the debate about how to spend upwards of $2 trillion. It may very well change the course of history.Download Description
This little book packs a big wallop. It puts Krugman's wisdom and steely-eyed analysis firmly at the center of the debate about how to spend upwards of $5 trillion. It may very well change the course of history. Paul Krugman, who "writes better than any economist since John Maynard Keynes(Fortune), writes the biweekly Reckonings column for the New York Times. Winner of the John Bates Clark Medal, Krugman teaches at Princeton University. ... Read more Customer Reviews (11) 
prophetic?
In "Fuzzy Math," Paul Krugman debunks the deceptive hype deployed on behalf of the tax cut of 2001.Krugman points out how so extravagant a tax cut will force serious reductions in services - most likely, to social security.
Four years later, pundits and analysts told Americans of the dire threat to social security - a threat those same pundits and analysts dismissed when defending the cuts.As Krugman suggested they would.
Still, some might be disappointed to find that Krugman is less prophetic than simply an academic applying basic economic observations in a realistic manner.By clarifying processes of taxation, spending, and budgeting, Krugman succeeds in clearing away fog and myth, offering a healthy handbook for economics to all American citizens.
One of Krugman's best -- brief and informative
Every policy-maker and voter should read this book.After months of Krugman's anti-tac-cut NY Times Op-Eds, I was sick of hearing about this debate.But "Fuzzy Math" literally changed my mind in one night.It is not only a guide to the Bush tax cut but also a layman's guide to general tax policy, tax law, the federal budget, and distributional issues.Not only that, but Krugman provides a novel theory (at least to me) on why anti-big-government ideologues prefer tax cuts for the rich disproportionately over tax cuts for the bottom 99%.Krugman also exposes many statistical and other tricks that policy-makers play on the public in order to promote their programs.In short, this book does so much so thoroughly, and I am amazed that Krugman fit it all into so few pages.
Highly recommended
I recommend this book to anyone, even though the tax cuts Paul Krugman argues against have already come.Krugman, who is a New York Time od-ed writer and also a policy professor at Princeton, presents clear reasons why the Bush tax cuts are not a good idea.
Conservatives will find the book biased, which it is since Krugman is pretty democratic.Although conservatives might be able to argue the political philosophy of progressive versus regressive taxes, they will find it very difficult to challenge the numbers that Krugman presents.The end conclusion is that Bush has used "fuzzy math" to propose a tax cut and that the money is just not there for such a huge cut.Krugman is right. Even though the cuts have already come, this book is a great (and quick) read because it gives a clear explanation of social security, medicare, and other issues related to the national budget.Clear, concise, and easy to understand.
This is important. Everybody should read this book.
This book needs to be read by every voting American, even those who support the Bush tax cut. Author Paul Krugman clearly explains the economic and political environments in which this tax plan takes place and concludes, first, that the tax cut is not only a bad idea but might have serious consequences as the Social Security/Medicare system becomes strapped and second, that "at every stage of the debate Bush and his people have tried to obscure what they were really proposing."
"Fuzzy Math" is a book written for intelligent lay people. I personally read it in two sittings (it's only 122 short pages), then, thinking that I must have missed smething, went back and read it again. It turns out I missed nothing. Krugman breaks down complex economic concepts and explains them with great lucidity and a little bit of wit. It's really an easy read.
Krugman begins by explaining how Bush arrived at his tax cut as the centerpiece of his campaign, first as an antidote to Steve Forbes' "Flat Tax" crusade and second, to secure the support of the far right elements of the Republican Party. He then describes the efficacy of tax cuts as an economic tool, particularly as they might be used to stimulate a sluggish economy (never an issue for Bush until the economy suddenly turned sour). He concludes that this is best left to the Federal Reserve Board's manipulation of interest rates. He further compares "demand side" tax reductions, aimed primarily at consumers, with "supply side" cuts which are directed toward potential producers and demonstrates that despite the Reagan rhetoric, the economic recovery of the early '80's was demand side driven and that a real supply side expansion occurred during the late '90's happened despite Bill Clinton's upper bracket tax increase.
Nexy Krugman explains the Federal Budget, beginning with where the money goes and then where it comes from. He explains that we've gone from being a "military state" to a "retirement state". He admittedly caricatures that, based on federal spending "the federal government has become a large retirement community that does some military stuff and a bit of humanitarian stuff on the side". He also explains that our national retirement program is not fully funded (as is a private pension plan). Instead the current group of retirees is living off the contributions of the current group of workers and that enormous problems will begin when the number of retirees begins to swell as the number of workers begins to shrink (about 2011). This is aleo why privatization of Social Security/Medicare is a bad idea: it will simply pull the rug out from under the feet of the current group of retirees. He discusses the origins of the recent budget surplus andhow it was tied to the recent economic boom.
He then breaks down the Bush tax cut, explaining who gets what. Using figures from the Center on Budget and Policy Priorities and Citizens for Tax Justice (stats from conservative think tanks are unavailable) he concludes that about 40% of American families will get nothing or very little while the top 1% will collect about 45% of the benefits. He analyzes the Treasury Department's statistics in light of this data and exposes the hucksterism involved in the official Bush line. Unfortunately this is the only piont at which Krugman cites sources although he uses statistics elsewhere in this book. More citations would have given the book a little more authority.
Finally he proposes an alternative, a "smaller, faster, cheaper, better" cut that will get money into the hands of consumers faster and will be "front loaded" (benefits sooner) as opposed to Bush's "back loaded" (most benefits arrive much later) and so will have an immediate effect on the economy.
Krugman concludes with a swipe at the "utter dishonesty of the sales campaign".
There is no reason why every American citizen should not read this book. It explains what's going on in the tax debate and does so clearly and simply. In fact, bookshelves in any participatory democracy should be full of books like this.
Bush, Krugman, and the Market
by Steven Piraino. You are probably familiar with the recently passed Bush tax bill. You may also be familiar with Paul Krugman of Princeton University (formerly of M.I.T.), whose "New Keynesian" musings appear regularly on The New York Times editorial page. Recently, Krugman published his own critique of the Bush tax cut in a short, popular book entitled Fuzzy Math. To the author's credit, this book is brief, well-organized and tightly argued. Instead of aggressively pushing his own left-of-center political views onto the reader, Krugman spends most of the book exposing inconsistencies in the Bush administration's tax-cut sales pitch. He summarizes his own conclusions rather nicely: "Bush and his people . . . are radically understating the cost of their plan while overstating the money available to pay that cost. They have pretended that a plan that mainly cuts taxes for the extremely well off is basically a middle-class tax cut . . . And they have falsely sold the plan as an appropriate answer to a short run economic slowdown, when it is almost perfectly designed not to deal with that sort of problem." Much of this book is difficult to criticize on its own terms, as all of Krugman's claims have some merit. The Bush tax cut probably is less progressive and more "costly" than the Bush administration would have us believe. And, if anything, Krugman is not skeptical enough about the antirecessionary merits of using a tax cut to put money into consumers' pockets. This does not mean, however, that there is not a legitimate case for reducing taxes. As Krugman himself says, ". . . there is a case for tax cuts . . . though it is not the case the Bush administration is making." Unfortunately, the "legitimate case" that Krugman makes (and rejects) is weak and incomplete. The "correct" case for tax cuts, Krugman argues, is that tax cuts are a way to "induce people to work harder, save more, and take bigger risks." He then goes on to dismiss this case on the grounds that these benefits are unlikely to be dramatic. While superficially plausible, this analysis obscures the very essence of taxation and its costs. It is true that heavy taxation causes a variety of behavioral distortions, such as discouraging work, innovation, and investment. However, these distortions are not the costs of taxation, as Krugman suggests. They are the means that individuals employ to reduce the costs of taxation as much as possible. Furthermore, taxes are not costly because they reduce production; taxes are costly because they force individuals to consume a mix of goods that is less desirable from the standpoint of their own subjective preferences. This happens for two reasons. First, individuals behave differently in order to avoid paying a certain tax. As a result, goods that are taxed are underproduced. It is irrelevant whether or not the resulting mix of goods involves less labor, risk-taking, and investment than the mix of goods that would be produced on the free market. The important point is that the new mix is inferior to the old mix in relation to individual wants. Second, taxes transfer the command over resources from the private sector to the public sector. This is costly from the standpoint of individual wants. In the private sector, waste is minimized through the discipline of profits and losses. In the public sector, however, politicians acquire resources based on their ability to speak in public, smear opponents, and reward well-organized pressure groups. As a result, the spending projects financed by taxation generally bear little, if any, relation to the desires of consumers. Value-productive private ventures are starved of capital so that a whole host of useless or nearly useless "public goods" can be (over)produced. Consider, for example, the state of Massachusetts's infamous Big Dig transportation project (now running some $12 billion over budget), or the interstate highway splurge of the 1950s, or the pork-laden federal space program. Private investors would never pony up the extravagant sums that were necessary to fund these dubious projects, yet the list of public boondoggles goes on and on. Krugman's book makes essentially no attempt to defend politics as a means of resource allocation, making only the blithe assertion that "it's a value judgment, but I don't accept the idea that our government is too big and should be made much smaller." Krugman has the right to his own value judgments, but economics does have something positive to say about the market system-and that is that all parties necessarily benefit from the rights to voluntary exchange and association. This system stands in sharp contrast with the current political system, wherein resources are allocated with almost boundless disregard for consumers' wants. Whatever else can be said for such a system, the science of economics offers little or nothing to recommend it. If the Bush tax cuts bring us miles, yards, or even inches further from this system, a sound understanding of economics clearly strengthens, not weakens, their appeal.
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