Wednesday, March 29, 2006

Brad DeLong Disagrees with Andrew Samwick (or so he claims)

Samwick is enthusiastic about the appointment of Joshua Bolten as White House chief of staff. In fact, Samwick almost seems to hope that Bolten will be a game changer and pull out an amazing second quarter comeback for team Bush (oh god we haven't even reached half time of the second Bush II administration).

Brad writes "I don't understand Andrew's enthusiasm for Bolten" but what did he write about Bolten game changer *before* Bolten was named chief of staff.

Hmm lets ask google to search Brad's old URL for bolten and "game changer" .

One hit http://econ161.berkeley.edu/movable_type/2004_archives/000303.html

which I edit ruthlessly

What's the Antonym of "White House Aide?" (Things Worse Than I Could Have Imagined Department)

An aide is somebody who works for you who helps you--who does odd jobs, who provides you with information, who advises you about issues on which you need advice. What do you call somebody who provides you with misinformation? What is the antonym of the phrase "White House aide"?

It turns out that, at least as far as economic policymaking is concerned, things inside the Bush White House were worse than I had imagined possible--even though I thought that I had already taken account of the principle that things are generally worse than you imagine.

Let me tell a story:

[snip] if the higher deficit is expected to persist indefinitely into the future, then interest rates are likely to rise between 0.5% and 1.0%."

And then the reporters would call Glenn Hubbard, [snip] And he would answer, "If you increase the government's deficit next year by $200 billion, and then erase that deficit and return spending and taxes to their previous levels the following year, then interest rates are likely to rise by an insignificant amount--0.03%." Except that Glenn would not say the words in italics to anyone except himself [snip].

Got the distinction? Short-term deficits have next to no effect on interest rates. Long-term deficits have substantial effects on interest rates. Got it? Good. The reporters certainly didn't.

The reporters would then write their stories, [snip]

And we would sigh, and curse the ineptitude of the press corps. But we would take comfort from one thing. [snip] at least internal administration decision making was not being fed misinformation. [snip]

But now it turns out that we were wrong. [snip] From the shorthand stenographic transcript of the November 26, 2002 White House meeting of George W. Bush with his economic policy and political staffs contained in Chapter 8 of Ron Suskind's The Price of Loyalty:

"Glenn [Hubbard] thinks that a deficit of $200 billion pushes up interest rates by just three basis points [or .03 perent]," [Deputy Chief of Staff] Josh Bolten interjected, bringing things back to the key issue of whether the dividend tax cut was affordable.


OK OK Brad is consistent. He thinks that Josh Bolten is an anti-aid from the negaverse and he has proof.

update: I am partly showing off that I knew that bolten would be hammered in a post which contained the phrase "game changer." It was Hubbard claiming that eliminating double taxation of dividends would be a "game changer". However, I was disappointed by the link above, which didn't include the really juicy part about what a hack and tool was head of OMB. Finally I found the post here

It is a quote from "The Price of Loyalty". My memory was faulty however, the total hack and tool director of the OMB at the time was Mitch Daniels. The total hack and tool Josh Bolten was then deputy chief of staff. I apologise to the two total hacks and tools for the error. The quote from the book via Brad is

O'Neill thought as he looked over at [Mitch] Daniels.... He knew Daniels was focused on the perils of rising deficits, but it would take gumption to air those concerns in a room full of tax cut ideologues.

"I think we need to balance concerns," Daniels said.... "You need to be out front on the economy, but I am concerned that this package may not do it. The budget hole is getting deeper... we are projecting deficits all the way to the end of your second term." From across the table came glares from the entire Bush political team. Daniels paused.... "Ummmm. On balance, then, I think we need to do a package... accelerate the rate cuts and the double taxation of dividends..." O'Neill looked with astonishment at Daniels... turn 180 degrees in midsentence.


The quote convinces me that Bush could have done worse when hiring a new chief of staff.

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