Treasury Secretary Paul O'Neill was right--very right. What a missed opportunity. We wouldn't be in the fiscal mess we're in if O'Neill had won the argument.

This pasage is from Ron Suskind's book, The Price of Loyalty:

The package of tax proposals, led by the 50 percent cut in the individual tax on dividends, had been all but buried before the midterm elections; it came up infrequently and always in the past tense - what George Bush wanted to do but couldn't afford.

But after the Republicans won the midterms, O'Neill could sense a change in the White House, a smugness, a sureness. Now Cheney brought up the tax proposals again, how they would provide stimulus....

O'Neill jumped in, arguing sharply how the government was '"moving towards fiscal crisis," and "what rising deficits would mean to our economic soundness."

Cheney cut him off.

"Reagan proved deficits don't matter," Cheney said.

O'Neill shook his head, hardly believing that Cheney - whom he and Greenspan had known since Dick was a kid - could say such a thing.

He was speechless. Cheney moved to fill the void. "We won the midterms," he said. "This is our due."

O'Neill was run out of town. And we're paying the bill.

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Follow Chris Farrell at @cfarrellecon