In the three years since the top rate of [personal income tax] was reduced from 30% to 13%, real flat tax revenue has risen by 79.7%. Russia's budget is relatively healthy. Tax compliance has improved. And incentives to work, save, and invest remain strong.

As always, Sowell gets it right by going to first principles, and to the evidence of what has happened in other countries that have done it Hillary's way:

"Universal health care" is a lovely phrase with political resonance in some quarters. But what does it mean concretely? ...since people differ in what they want, nothing can be "universal" without being mandatory. In other words, we are talking about forcing people to belong to whatever program the politicians and bureaucrats come up with, regardless of what the people themselves might prefer. Somehow, the notion seems to be insinuated that the government can do it cheaper and better. But name three things that the government does cheaper and better than private individuals and organizations. It would be no trick at all to name dozens of things that the government does worse and at higher costs...

How many of those who gush about "universal health care" know that the countries which have it also have waiting times to get treated that are several times as long as people in America wait to see a specialist or get an operation? Waiting not only means longer suffering, it can also mean that a treatable disease can become untreatable -- or even fatal -- because of the delay.

It's no surprise that Herr Doktorprofessor Paul Von Krugman doesn't like the Administration's claim to evidentiary privilege in connection with the Cheney energy task force. The Administration has advanced its constitutional policy arguments in the courts, and now before the Supreme Court. Reasonable minds may differ on those policies and the correct balance of constitutional imperatives -- but Herr Doktorprofessor has nothing to do with any of that. No mention of any of the policy arguments or balances or the constitutional structure that the Court must construe, or an informed citizen should consider, is mentioned by Herr Doktorprofessor. Indeed, he gives no indication that he even understands that any of those things matter -- or even exist.

So what? Why would one expect Herr Doktorprofessor to discuss or understand such things? He's a kind of economist, not a constitutional lawyer. He has absolutely no special claim to understanding what is driving this case -- despite his bizarre, amorphous claim to speak for "Those of us who have been following such things." He is neither trained nor a natural legal talent. But neither his complete lack of competence and facility in constitutional law, nor his lack of insight in this case in particular, keep his most recent column from arguing for a single, completely whacko conclusion:

"What Mr. Cheney is defending, in other words, is a doctrine that makes the United States a sort of elected dictatorship: a system in which the president, once in office, can do whatever he likes."

I'll be frank: His assertion is just nuts.

But rising rates are a tricky weapon for the Democrats, as Paul Krugman -- America's most dangerous liberal pundit -- is learning. In a New York Times column last week Krugman forecasted that 10-year Treasury bond yields will soar to 7% from their current 4.4%, and warned "...many American families and businesses will be in big trouble if interest rates really do go as high as I'm suggesting."

At the same time, though, the Democrats can't evade the reality that rising rates are strong evidence of the economic boom they've tried to deny and discredit. Even Krugman admits (between clenched teeth) that rates will rise "If the economy fully recovers — or even if investors just think it will..."

Krugman seems to find himself in the rather difficult position of arguing that "American families and businesses will be in big trouble" when "the economy fully recovers."

Fortunately for the Democrats, there's another way to spin rising interest rates: as the product of Bush's tax cuts and the present federal budget deficit. This gives Democrats the opportunity to retell their nostalgic myth about the prosperity of the late 1990s, kindled by low interest rates made possible when the Clinton administration brought "long-term budget deficits under control through a mixture of tax increases for upper-income families and spending restraint."

Krugman, an economics professor at Princeton, cites academic arguments in order to convert myth into fact:

"...there's no argument among serious, nonideological economists. For example, a textbook by Gregory Mankiw, now the president's chief economist, declares — in italics — that 'when the government reduces national saving by running a budget deficit, the interest rate rises.'"

Yes, it's true that Mankiw's textbook Principles of Macroeconomics does say that. It's even true that it says it in italics. But (with due respect to Mankiw), the myth is just a myth. The historical evidence simply doesn't bear out any such relationship -- indeed, it proves the opposite. When annual changes in debt are regressed against annual changes in interest rates, the result is a negative correlation -- precisely the reverse of what Krugman's politics (and Mankiw's theory) would dictate.

The chart below makes it crystal clear for anyone who wants to know the truth. From 1958 to 1974, rates rose while debt plummeted. From 1974 to 1982 rates soared while debt barely changed at all. From 1982 to 1993 rates collapsed while debt soared. After 1993, during the Clinton years, while debt fell sharply -- and again since 2001, during the Bush years, while debt has risen -- interest rates continued lower, moving in the same direction they'd been moving since 1982.

How could Krugman and Mankiw be so wrong? In Krugman's case, that's an easy one: he's just trying to score partisan political points, and the difference between right and wrong doesn't even enter into his considerations. In Mankiw's case it's a bit more subtle. He's dealing in the realm of abstract theory, in which propositions like the relationship between rates and debt can be considered in splendid isolation, without any of the complicating outside influences that inevitably interfere in the real world.

One such influence is taxes -- especially taxes on savings, such as the capital gains tax. The epoch of falling interest rates starting in 1982 coincides with a time of generally falling tax rates, starting with the Reagan revolution (and including a large cut in the capital gains rate forced on Clinton by a Republican congress in 1997). Of course Krugman would never mention it, but Mankiw's book says -- also in italics -- "if a change in the tax laws encouraged greater saving, the result would be lower interest rates..." 

Another influence on interest rates is inflation. Since 1958 inflation and interest rates have moved hand-in-hand -- the two are positively correlated to the same degree that rates and debt are negatively correlated. Krugman mentions rising inflationary trends in his column last week. But until then he had been wringing his hands about just the opposite -- deflation (as reader Brian Briody reminded me). Krugman wrote in his Times column just over a year ago that "the threat of deflation is worse now than it was a year ago. In fact, by some measures deflation is already here...Will it be all over the newspapers a year from now?" The risk of falling into what he called the "black hole" of deflation was exacerbated (you guessed it) by "the Bush administration...playing politics with fiscal policy."

For the record, in the same week I wrote in my SmartMoney.com column that "deflation is dead." As Krugman now implicitly confesses in last week's column, I was right and he was wrong. But no matter: another day, another black hole -- and another chance to blame Bush.

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