Cheney Responds to Greenspan

Jeff Bercovici asks what I make of Dick Cheney's (unprecedented?) op-ed in the WSJ today. The answer, I think, is pretty easy when you come across its standard recitation of supply-side principles:

Even at a lower rate of taxation, the hard work and productivity of Americans is generating more tax dollars than ever before.

Mark Thoma actually rebutted this last night before the op-ed even appeared, with an excellent and punchy blog entry entitled "Uh, No, Your Tax Cuts Didn't Pay for Themselves". "The tax cuts made the deficit worse," he writes. "End of story." Which makes it rather hard to take seriously Cheney's assertion that "no other president has spent more time or political capital trying to avert a fiscal disaster that everyone knows is coming".

The fact is that fiscal disasters can't be averted on the spending side of the ledger alone: if you're serious about fiscal policy, you often have to raise more revenue as well. This is known as a tax hike, and as Bush 41 learned to his cost, it can be politically suicidal for a Republican. But that doesn't make it bad fiscal policy.

Frankly, I don't trust any of Cheney's statistics, either: he illustrates "nearly six years of uninterrupted economic growth", for instance, by citing the number of new jobs created since August 2003, and his examples of rising tax revenue since 2005 conveniently ignore the decimation of tax revenues which was caused by the Bush tax cuts.

But I think the best person to answer Jeff's question is not me, but rather Alan Greenspan, the man to whom Cheney is responding. And it just so happens that I have Greenspan's answer right here.

Your book criticizes the Republican Congress and the Administration for abandoning small government principles. Is Dick Cheney part of the problem or part of the solution?I don’t really know. I mean you have to understand how profoundly impressed I was with Dick Cheney during the Ford Administration. And he and I remain very close in the years subsequent. Indeed, he was the only person who showed up at both my 50th and 70th birthday parties. And I still hold him in high regard. There’s an extraordinary intelligence there. He has very good judgment on issues… I do know that other than the issue that we had on the deficit [whose importance Cheney downplayed] that he had very much the same ideas as I had. I have no reason to believe his views from the Ford administration have changed.

Make of that what you will.