When Clinton left office and the Bush presidency started, the federal government was running a surplus. Projections shows a surplus of $5.6 trillion over the next ten years. Plans were underway to pay off the national debt. Debt clocks were removed on Times Square. They no longer made sense. An economic euphoria was underway.
But Bush had other plans. Recklessly irresponsible tax cuts and silly rebates cost the country $1.6 trillion over the next ten years. And even before 9/11 happened, he had his mind on the invasion of Iraq. He spent the next few years setting the stage for that and finding excuses to do it.
Regarding the deficit, when Bush left office, the White House had forecast a deficit of $407 billion for 2009, and experts expected it to hit $482 billion.
Regarding the debt, when Bush took office, the national debt was $5.73 trillion. When he left, it was $10.7 trillion. That’s a difference of $4.97 trillion.
Of course, since then, in the past two years under Obama, we have now reached a debt of $14.5 trillion, roughly the size of our gross domestic product – which puts us in the same league as other highly indebted countries like Italy or Belgium.
Be those facts what they may, in the beginning of 2001, when Bush took office, a surplus of $5.6 trillion was expected. Bush appointed Paul O’Neill to the position of Secretary of the Treasury. O’Neill had served under Nixon and Ford, had spent 15 years as the CEO of Alcoa, and was about to retire when Bush knocked on his door. O’Neill took the job, partly out of a sense of duty, partly because of the glamor of the job.
Treasury is the oldest – the first appointment made by George Washington himself – and the most venerable of the cabinet offices. It was and is a public trust, literally. Alexander Hamilton, one of the greatest geniuses of his era, sat in the chair first, a special chair.
The book The Price of Loyalty is a chronicle of the first two years of the Bush administration from the point of view of Paul O’Neill.
O’Neill is a highly analytical, financially and politically savvy person, who values most of all candor, truth and honesty. He believes in the principle of the honest broker, intellectual discourse and the best and brightest ideas winning. This turned out to be in stark contrast with Bush’s style. Bush hid behind a very tight circle of idealogues like Karl Rove, Karen Hughes and Dick Cheney, and decisions were made based on principle and ego, rather than on merit, value, responsibility and common sense.
Very quickly, O’Neill realized that he was dealing with a president who appeared to not even listen to him, let alone make an effort to understand him. Soon, the rift grew deeper.
O’Neill was good friends with Alan Greenspan, Don Rumsfeld and Colin Powell, and he sensed that they all too went through the same difficulties, in their own ways.
We all know how it ended. After not quite two years, Bush fired O’Neill. The idealogues couldn’t handle somebody who spoke the truth and pointed out that the emperor wore no clothes.
The Price of Loyalty is a good read, a revealing view behind the curtains of the Bush administration, and an explanation of how it was possible that a country with a surplus and a booming economy was run into the ground in eight years, and almost didn’t make it through the calamitous market collapse of 2008. The idealogues have us believe that Bush had nothing to do with it.
If it wasn’t him, then who?
The Price of Loyalty has some worthwhile insights.