There was so much wanking going on in this interview that I had to pick my spot.
Lawrence Kudlow interviewed Dick Cheney on CNBC yesterday and it was all about his views on the economy. Kudlow tried to get Cheney to call Obama a "socialist," but he wouldn't bite on that one. I do have to give Kudlow a little credit here. He didn't just blow right past the part of our history where the Bush/Cheney administration almost destroyed the global economy, and he even put some of the blame on his guest.
Anyway, Cheney suddenly is now very worried about deficits since President Obama has been forced to pump massive amounts of money into the economy to try and save it from Cheney's handiwork. You may remember this little gem from Dick when he got into it with Paul O'Neil:
O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency.
O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired.
In this portion of the interview, Cheney elaborates on the economy as he sees it and is so terrified that President Obama has just ruined everything.
Transcript via Kudlow below the fold:
KUDLOW: But, in truth, isn't it fair to say that many of these policies, central planning policies, command and control interference policies, whether it's socialism-light or European market social kinds of policies, they really began under the Bush-Cheney administration, did they not? I mean, after all, Fannie Mae and Freddie Mac are under government ownership 80 percent. That began under your administration. The first General Motors loan began under your administration. And, of course, the great TARP program to allegedly prop up the banking system, which has turned out to be partly bank ownership, we don't know the last story on that. No one knows when TARP is going to ended. All these things really began under your administration. At what point President Bush, I believe, said we have to--we have to stop--we have to suspend free market capitalism in order to save free market capitalism. What's your take on that? How much blame of this shift to the left do you think the Bush-Cheney administration bears?
Mr. CHENEY: Well, I would--I would bust it up into two segments, Larry. I think there's no question but what the tail end of the Bush administration, Bush-Cheney administration, that we took steps specifically geared to try and free up the financial sector. There was the view reporting from economists, from the Fed, from Treasury and so forth that the credit system of the country had, in effect, frozen up or was close to it, and when you get into that kind of situation, the government is the only area of last resort with respect to trying to deal with those issues. You can't fall back on the private sector and say, `You take care of the nation's banking system.' That's a fundamental function of the government, the Federal Reserve, the Treasury and the FDIC, etc. All of those agencies have a major role to play there.
KUDLOW: But if I may...
Mr. CHENEY: If it's not working, then the federal government has to deal with it.
KUDLOW: But did you anticipate the degree of government control over the banks? No question throwing a safety net from Federal Reserve liquidity was appropriate. I don't think any economist left or right disagrees with that. On the other hand, what we've seen now is that this Congress has moved in to declare, for example, compensation and pay limits, repurchase agreements, dividend policies, merger and acquisition policies. You yourself know these things because you were a CEO of a big company once upon a time. Did you anticipate how Congress would move in to take control of the banks when you made these initial loans?
Mr. CHENEY: No, I don't believe we did. I don't recall any debate within the administration. There may have been some over at Treasury or someplace that focused on the extent of which government would try to control these institutions once they provided financing for them. You know, I've got experiences going back to the wage price controls in the Nixon administration where, in effect, we had what I think was a terrible mistake, in that case a Republican administration, where moved in and tried to control the wages, prices and profits of every enterprise in America. It was a huge mistake. We finally got out of it, but it took a long time to do it, and it does a lot of damage. One of the things we see now, you mentioned it, is the fact that government, in some cases Congress, in some cases the Obama administration, telling General Motors they've got to fire Rick Wagoner, making decisions that traditionally and historically have been made by the private sector.
KUDLOW: And running roughshod in the bankruptcy proceeding with Chrysler, running roughshod over the bond holders...
Mr. CHENEY: Mm-hmm.
KUDLOW: ...thereby abrogating contract rights. I mean, did you think, for example, when you made the first loan to GM and Chrysler, at the end of the administration, of your administration, did you think at that time the government would wind up owning 70 percent of General Motors? Some people now calling it Government Motors.
Mr. CHENEY: Well, some of us at the time wanted GM to go bankrupt, go to Chapter 11.
KUDLOW: Were you in that camp?
Mr. CHENEY: I was. The decision was made that, in the final analysis, since our administration was almost over and a brand-new team was about to take over that the president wanted, in effect, not to take a step that wasn't necessarily going to be followed by his successor, but rather to set up a situation which the new guys could address that issue and make a decision about what the long-term policy was going to be. And we came up with a short-term package, in effect, that got us through the--through the inauguration.
KUDLOW: What would you do differently now? Again, you, in some sense, I think a clear sense, that the Bush-Cheney administration laid the groundwork for this big government intervention. Mr. Obama is taking it further probably, perhaps, than you all might have, although one will never know. But what would you be doing differently right now?
Mr. CHENEY: Well, I think the budgets he submitted are way out of whack. I think what it does not only to the short-term deficit but long-term debt situation is very objectionable. I think the notion that we're going to get up to a point where the debt equity ratio for the country's going to be what, over 50 percent, 60 percent? I've seen even 80 percent at the end of a 10-year period of time.
KUDLOW: Some people are worried the United States is going to lose its AAA credit rating.
Mr. CHENEY: Well, that's got to be of concern. The last time that we had debt to equity ratios, or debt to GDP ratios was 1950...
KUDLOW: Yeah.
Mr. CHENEY: ...at the end of World War II after we'd fought a major war and obviously had major governmental obligations as a result of that. So I don't hear anybody in the administration expressing concern over that massive growth in the national debt and what's that going to mean long-term in terms of our currency, in terms of inflation.
Cheney at the end of the interview said that he was happy to have Colin Powell in the GOP. He walks back his previous statements.
Mr. CHENEY: Well, we're happy to have General Powell in the Republican Party. I was asked a question about a dispute he was having, I think, with Rush Limbaugh, and I expressed the consent, the notion I had that he had already left since he endorsed Barack Obama for president. But I meant no offense to my former colleague. I wasn't seeking to rearrange his political identity.
KUDLOW: So you welcome him back into the party.
Mr. CHENEY: We're in the mode where we welcome everybody to the party. What I don't want to do, in the course of trying to expand the overall size of the Republican Party and expand our base, is to talk away from basic fundamental principles.
