links for 2007-06-27
The Small Place of Economists in a President's Mind

Justin Fox on the Washington Post's take on Cheneynomics

Compared to the rest, this is boring--but important:

The Curious Capitalist: Today brings us the economic-policy chapter of the big Washington Post series on how Dick Cheney runs America. It's not nearly as dramatic or sinister.... Economic policy is like that, I guess.

One big takeaway is that economic policy in the Bush administration is run not by the Treasury Secretary... but by the Vice President.... [P]olitical considerations, combined with a very facile supply-side view of how the economy works, that drove Cheney's thinking on the subject.... Cheney leaves behind on the economic front... persistent budget deficits (albeit, I always feel obliged to point out, much smaller deficits relative to GDP than those of the 1980s and early 1990s), an economy that's still growing and dynamic but has clearly seen better days, and a bunch of huge, as-yet unresolved problems, from the U.S. trade relationship with China to the future funding of Social Security and especially Medicare. Apparently Cheney was against the expensive new Medicare drug benefit, but he was accommodating enough to let the President have his way on that.

Oh, and one other interesting moment in the article. Ed Lazear apparently needed Cheney to tell him that the mortgage-interest tax deduction is popular:

When Edward P. Lazear, chairman of the White House Council of Economic Advisers, broached the idea of limiting the popular mortgage tax deduction, he said he quickly dropped it after Cheney told him it would never fly with Congress. "He's a big timesaver for us in that he takes off the table a lot of things he knows aren't going to go anywhere," Lazear said...

This is really too bad. One role of the CEA is to keep chipping away at issues that are not politically possible now, but may become so in ten years. Curbing the mortgage interest deduction is one of these.