Ten Years Ago Today: Bush Fires Economic Team. Cheney Says, 'Deficits Don't Matter.'

Ten years ago today on December 6, 2002, the Bush Administration fired its top two economic advisers: Treasury Secretary Paul O'Neill and White House economic adviser Lawrence Lindsey due to the continuing lagging economy (when Bush took office, unemployment was 4.2%. In Dec of 2002... more than a year after 9/11... the rate jumped from 5.7% to 6.0% in one month). In November of 2002, when O'Neill, a "deficit hawk", tried to warn Vice President Dick Cheney that growing budget deficits... expected to top $500 billion that fiscal year alone... posed a threat to the economy. Cheney cut him off, saying, "You know, Paul, Reagan proved deficits don't matter."

O'Neill was replaced with CSX (the freight train company) CEO John Snow, also a "deficit hawk", yet appointed the unenviable task of convincing the public (ie: Wall Street) that "deficits don't matter".

It is worth remembering on this tenth anniversary just how we got here. When the Bush Administration took office 22 months earlier, they were handed a balanced budget in which the government was actually collecting more in taxes than it needed to run the federal government. Less than two years later, O'Neill was warning of a HALF-TRILLION DOLLAR deficit for 2003. The surplus revenue under Clinton was used to start paying off our Debt which had exploded under Reagan and the first President Bush. Presidential candidate George W. Bush actually campaigned on the fact that because we were collecting more in taxes than it takes to run the government, that means we were being "overtaxed", telling cheering crowds, "It's not the government's money, it's YOUR money!", and therefore deserved a "tax cut"... the much heralded "Bush Tax Cut" that we are fighting over today, despite the fact that the original premise in support of them... a budget surplus... hasn't existed in over 12 years.

Think about this: How do we EVER pay off the Debt if the moment we take in enough in taxes to start paying it off, Republicans use it as an excuse for tax cuts?

Blast from the past: July 2006
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