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January 22, 2008

The Wise Economic Stewardship Of Dick Cheney

This seems like a good moment to remember this section of The Price of Loyalty by Ron Suskind:

As the meeting in Mr. Cheney's office progressed, it became clear that the vice president was ready to weigh in on what the president should do to bolster the economy, and his standing with voters worried about the economy, as the second half of his term began. A package of tax proposals, led by a 50% cut in the individual tax on dividends, had been all but buried since Mr. O'Neill took his stand against it in early September...

After the midterms, though, Mr. O'Neill could sense a change inside the White House...Now Mr. Cheney mentioned them again, how altering the double taxation of dividends would provide some economic stimulus. Mr. O'Neill jumped in, arguing sharply that the government "is moving toward a fiscal crisis" and then pointing out "what rising deficits will mean to our economic and fiscal soundness." Mr. Cheney cut him off. "Reagan proved deficits don't matter," he said.

Mr. O'Neill was speechless, hardly believing that Mr. Cheney -- whom he and Mr. Greenspan had known since Dick was a kid -- would say such a thing. Mr. Cheney moved to fill the void. "We won the midterms. This is our due." Mr. O'Neill left Mr. Cheney's office in a state of mild shock.

Without the Bush administration's giant tax cuts for the richest people in America, the government would have more room to maneuver now. The options that remain today are less palatable.

Another important effect of the tax cuts is that a fraction of them will be used by recipients to support political resistance to any constructive actions to deal with our current problems. So it really was a win-win-win.

—Jonathan Schwarz

Posted at January 22, 2008 10:14 AM

Another important effect of the tax cuts is that a fraction of them will be used by recipients to support political resistance to any constructive actions to deal with our current problems.

Will we do the same? Will we take even 10% of the $800 we'll be getting from the hated George W. Bush and donate it to American Friends Service Committee, or Iraq Vets Against the War, or the Green Party or Code Pink?

Damned if I haven't talked myself into donating the entire $800 to IVAW and UFPJ. It's blood money, and I want no part of it. Who's with me?

Posted by: SteveB at January 22, 2008 11:48 AM

SteveB: How about that phonecall? (1-202-225-0100)

Posted by: Mike Meyer at January 22, 2008 11:55 AM

Not everyone gets the $800 windfall.

Today's shenanigans by the Fed is mocked on Economist's View.

For those of you who do not enjoy riding the roller coaster, let me submit that you are living at precisely the wrong point in history.

I feel the roller coaster coming for the upper class; you know -- those people that were previously immune to the bad effects of globalization.

Posted by: Ted at January 22, 2008 06:37 PM

Dick Chennye should forget about enconomy and leave it to me.

Posted by: alanj878 at January 23, 2008 04:17 AM

Know the key phrase in the piece? "...Mr. Cheney--whom he and Mr. Greenspan had known since he was a kid...."
They all know each other, they're all part of the "in crowd," they all work together. The rest of us don't have a prayer.

Posted by: Rosemary Molloy at January 23, 2008 07:45 AM

On NPR this a.m. I heard a Republican congressman from New England somewhere say that a stimulus package with money for the poor wouldn't help because America gets so much stuff from China now.

Sort of like starving people don't deserve money because they'd be too weak to reach up and pay for their package of hohos.

Posted by: Bob In Pacifica at January 23, 2008 09:17 AM

What's amazing is that the div tax cut, which was/is basically a gummint infusion of cash in equity markets to prop up div paying equities, didn't result in a much higher Dow, which is particularly dividend-heavy. This should have been a clue that the economic picture was far less rosy than it appeared on the surface.

I'm afraid the only cure to this dilemma, created in large part by Greenspan's near-zero interest rates in the early aughts coupled with absolutely zero lender oversight, is contraction, default, and collapse of lender, borrower, and those who bought the bundled pigs in a poke. It surely isn't a return to the low interest rates which acerbated the prob in the first place.

Federal deficit spending would have been a somewhat effective counterbalance if the budget weren't already in deficit. A tax rebate is just untargeted deficit spending under an alias.

Posted by: cavjam at January 23, 2008 10:57 AM