Today brings us the economic-policy chapter of the big Washington Post series on how Dick Cheney runs America … One big takeaway is that economic policy in the Bush administration is run not by the Treasury Secretary, as it was in the Clinton years (at least after Lloyd Bentsen retired), but by the Vice President. Which at least seems better than having it run by some junior political aide in a cubbyhole office in the West Wing, although from the Post account it looks like it was mostly political considerations, combined with a very facile supply-side view of how the economy works, that drove Cheney’s thinking on the subject … In any case, the legacy Cheney leaves behind on the economic front are persistent budget deficits … an economy that’s still growing and dynamic but has clearly seen better days, and a bunch of huge, as-yet unresolved problems, from the U.S. trade relationship with China to the future funding of Social Security and especially Medicare. Apparently Cheney was against the expensive new Medicare drug benefit, but he was accommodating enough to let the President have his way on that.
Cheney “runs America”? Shouldn’t that be – is in the process of ruining America? I really like the line “a very facile supply-side view of how the economy works” as most devotees of the Laffer free lunch version of supply-side economics have an incredibly facile view that denies the existence of a crowding-out effects. After all – if “deficits don’t matter”, the Medicare drug benefit can’t be all that expensive as we got to cut taxes at the same time.