George `Dubya' Bush's father, George Bush sr, famously described Ronald Reagan's monetary policy as "voodoo economics". History has justified the sobriquet but Bush jr seems determined to earn one of his own for his ambitious tax proposals. Paul Krugman is first off the blocks with "fuzzy math", or in the vernacular, dodgy sums.

The US is enjoying a massive budget surplus. The enormous deficit incurred by Reagan, who cut taxes and ballooned military spending, has been paid down by Clinton and Bush wants to do something with it. He proposes a trillion dollar tax cut spread out over 10 years and has sparked a massive debate in the US over tax cuts versus other uses for the cash. This kind of proposal puts Mr McCreevey's budget spats with the EU into the shade.

Gore's attempts to apply maths to the plan failed. And despite a cursory reading of Bush's programme revealing that the rich would do massively better the debate was moored to the shibboleth that all tax cuts are good rather than some are better than others.

Bush is proclaiming that giving the money back to the people is the only fair thing to do, as it is theirs in the first place. This has instant populist appeal (but not enough, as Al Gore won the popular vote) but is not simply about giving money back. According to Krugman, it's about shaping US economic policy way beyond George Bush's four-year term.

According to Krugman the tax debate is being fought out in the cultural arena and this is defined for both right and left as the legacy of Ronald Reagan, the patron saint of the new right. Reaganomics has defined the political landscape of the US in much the same way as Thatcherism has defined the British one. Cutting taxes has been the tune that the bulk of Western parties have danced to in the last few decades. Only now is the notion of forgoing tax cuts in favour of increased spending on services being openly championed.

New Labour's adherence to Tory spending plans for the first two years of Blair's government neatly illustrates the point.

The US context is more personal. According to the true believers, George Bush shouldn't have lost and this was because the electorate read his lips, saw his actions and voted accordingly.

Bill Clinton was a blot on the landscape and the tenacity with which he was pursued by rightwing gurus such as Kenneth Starr was as much about probity in high office as about teaching the uppity democrat a lesson for daring to interrupt the ongoing conversion of the US into a taxfree nirvana.

Bush's cleaving to his tax plan is as much about paying for the sin of his father as it is about taking cash from the overweening federal government and giving it back to the deserving rich.

While Krugman very enjoyably puts Bush's tax plan in its ideological context, the main thrust of his book is to attack in pure economic terms. Stripped of rhetoric, the sums just don't add up.

Krugman points out the bulk of taxes Americans pay are not income (PAYE) but payroll taxes, - the equivalent of PRSI.

Workers pay 15.3 per cent on the first $76,000 dollars earned. Most citizens do not earn that much so cutting income tax only benefits the rich. According to a Congressional study 80 per cent of US families pay more in payroll taxes than in income tax.

Payroll taxes pay for defence and other federal programmes such as roads but the biggest beneficiary is programmes for retirees, primarily Medicare and social security. According to the Krugman (and the figures) the Federal government has ceased to be the military state of the Cold War and has become a large retirement programme that does some military and humanitarian stuff on the side.

Therefore, cutting income tax benefits the well off (who don't need it) while making any meaningful difference to the bulk of people would mean tackling Medicare, political suicide whatever way you cut it.

The other argument trotted out by Bush is that the current slump can be rectified by tax cuts, the classic response. However, the bulk of Bush's tax cuts are back-ended, not scheduled to impact for about five years. His cuts will have no affect on the current economic climate. And no forecaster would attempt to describe the economic climate five years hence.

So Krugman and the figures demolish Bush's central arguments about giving the cash back to the people (and not just the rich) and also the tacklingthe-slump tack.

What Krugman suggest should happen is simple. Use it to bulk up the Medicare fund, which will be seriously overburdened when the babyboomers start to retire in the next decade or so.

This is an excellent book, sharply written and simply argued. Buy it.

comidheach@irish-times.ie