America and Its Deficits: Are We Broke Yet?

It was one of Dick Cheney’s more memorable lines. “Deficits don’t matter,” he told Treasury Secretary Paul O’Neill in 2002. Later, after O’Neill made the conversation public, Cheney elaborated that he meant this “in a political context,” not an economic one. But for most of Cheney’s time as Vice President, the claim held up pretty well in both contexts. Over O’Neill’s objections — he’d be gone soon anyway — the Bush Administration and Congress abandoned a bipartisan commitment to fiscal prudence that had held sway since the early 1990s and went back to running chronic deficits. The result was a growing economy and a second term for George W. Bush. (See George W. Bush’s biggest economic mistakes.)