I have to admit an error--a rare thing, I agree.
I have been skeptical--nay, completely incredulous and disbelieving--at the claims by Bruce Bartlett and others taking the offensive against Paul O'Neill who claim that the Bush steel tariff was really O'Neill's fault:
Although Mr. O'Neill portrays himself as the principal opponent of steel tariffs, in fact he was AWOL at a critical moment. According to a Sept. 19, 2003 report in the Washington Post, at a crucial meeting of the economic team, tariff opponents were abandoned by Mr. O'Neill, who sent an underling in his place. Lacking the stature of the Treasury secretary to beat down tariff supporters like Commerce Secretary Don Evans, the opponents essentially lost by default. Mr. O'Neill would have us believe that he was the only honest man in an administration of sycophants. Another interpretation would be that he was simply ill-suited to the job he had been given, too used to being the boss and incapable of taking direction, too interested in doing things his own way instead of the way his boss wanted them done, and too easily led to believe that outspokenness is the same thing as honesty.
I found that claim that O'Neill had soft-peddled his (and Treasury's) opposition to the steel tariff to be simply non-credible. No institutional, bureaucratic, or policy motive was ever given for O'Neill's going "AWOL"--performing the bureaucratic equivalent of failing to show up to fly your Air National Guard jet. So I discounted the story as simply another piece of misinformation from someone in the Bush administration with an axe to grind. And now I find that I was wrong.
According to p. 220 of Ron Suskind (2003), The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill (New York: Simon and Schuster: 0743255453), Paul O'Neill had indeed promised somebody that he and Treasury would not be a big voice in opposition to the steel tariff in the NEC/NSC processes, but would instead lay low and be quiet. The somebody whom Paul O'Neill had promised this to was Richard Cheney. The idea was that Cheney (and Bush) needed to make an important decision on steel tariffs, and their ability to make this decision would be greatly handicapped if the NEC took a near-unanimous consensus position on the issue. Hence Cheney asked O'Neill to express his concerns and his position to Cheney privately--to go around the NEC/NSCZ process--so that it would be possible for Cheney (and Bush) to go against O'Neill's position if Cheney decided it was politically necessary. And O'Neill by-and-large complied. Hence the surprise and disappointment of the CEA and OMB when Treasury did not show and did not argue against the steel tariff.
So I conclude that Bartlett is correct: O'Neill was AWOL from the side of the angels in the internal Bush administration debate over the steel tariff.
But Bartlett is wrong to blame this on O'Neill's incompetence: it was due to O'Neill's willingness to do Cheney's bidding. It's a sign not that O'Neill's story of what happened is erroneous. It's a sign of O'Neill's willingness at a remarkably late date to try to be a team player.
And I also conclude that Bartlett is very, very wrong about another aspect of the situation. Bartlett says that Cheney's domestic policy advisor, Cesar Conda,
...is... critical of Mr. O'Neill's portrayal of the debate surrounding the imposition of steel tariffs in March 2002. [O'Neill] clearly implies that Vice President Cheney supported the tariff decision, when in fact he opposed it. At the meeting O'Neill refers to, Cheney was simply acting as an honest broker, keeping his personal views private. Vice President Cheney generally made his views known to the president only in one-on-one meetings, so as to facilitate discussion in open meetings...
This is false for any meaning of "opposed" with which I am familiar. If you are "opposed" to a policy, you don't undertake a special intervention to keep the normal policy-development process from coming to a consensus that said policy is a bad idea. Cesar Conda is lying through his teeth to Bruce Bartlett.
It is worth keeping this in mind in evaluating Cesar Conda's other statements--like his denial of Paul O'Neill's assertion that George W. Bush worried that giving more money to rich people through high-end tax cuts might be a bad idea.
Posted by DeLong at January 19, 2004 05:00 PM | TrackBack
I find that the main difference between us goddamn liberals and the other side is that when we're confronted with actual evidence that actually makes sense and actually holds up under scrutiny, we tend to admit we're wrong, modify our opinions and move on.
I wish a few more people on this planet would do the same thing.
In recent entries you've spoken of the tremendous GDP growth. I can't seem to pin down exactly _how_ this number is calculated. To me, that means everything.
A friend of mine's 15 employee company is shutting down. They built an application for EDS and seem to have been quite successful at it. Now EDS is shipping the project to India. The company's employees get to spend the next two months training the people who are replacing them. At the conclusion of the training period the trainees all go back to India.
So at this moment, I find it pretty hard to believe that the economy is doing fantastically well. If EDS sells consulting services based on that application, do the sums paid to the overseas development shops factor into our GDP? It's part of EDS' sales, sure...but didn't help anyone here. In fact, EDS seems to go out of their way to screw over every domestic worker they can get their hands on.
This is the second friend I've had whose division/company has been shut down by them and sent overseas.
Posted by: Ross Judson on January 19, 2004 06:09 PMRoss, Pardon but why is your friends company doing the training. Seems to me they should just shut down and leave EDS flounder.
Posted by: Eli Rabett on January 19, 2004 07:58 PMThis "honest broker" jargon seems to be proliferating exponentially. Am I the only one finding it annoying, especially when half the time it means "dishonest broker"?
Posted by: Matt on January 19, 2004 08:34 PMSo O'Neill makes his case to Boss Cheney and loses. Cheney tells O'Neill if he strikes out the steel tariff he is off the team. So O'Neill sends a relief pitcher. I am not sure how that makes O'Neill AWOL?? He made the pitch to Cheney and lost.
Who can blame him for signing up for the Bono Africa tour with all the lack of influence he had in DC.
Indications are clear that Bush Inc still does not know why there economic policy has not been working.
Posted by: bakho on January 19, 2004 09:07 PMEli Rabett:
"Ross, Pardon but why is your friends company doing the training. Seems to me they should just shut down and leave EDS flounder."
I can think of two reasons off the top of my head:
1) Because two more months' of payments beats 0.
2) Because there are some clauses in the
contract.
3) Because if the guy does this, he can't use the EDS liason managers for references, for possible future contracts. If he doesn't have any other good set of references, he *needs* their good word about him.
Posted by: Barry on January 20, 2004 04:06 AMBartlett also does not give due respect to Mitch Daniels who was the first to speak against this tariff in the meeting described on page 67(?) of Suskind's book. After all, how often do we find places to give credit for Mr. Daniels taking a principled position?
Posted by: Harold McClure on January 20, 2004 06:26 AMAnother DeLong error : -
"soft-peddled", not O'Neill. You'd say "soft-pedaled", I'd say "soft-pedalled"
Posted by: dave heasman on January 20, 2004 09:31 AMThe sums paid to India are subtracted from net exports, but they will be added back to GDP in one way or another:
- back to net exports, if the money is spent on US goods and services (say Indians buy Boeing jet)
- to private investment, if the money is used to finance capital spending and construction projects (say Indians buy stocks and bonds of US corporations, and mortgage-backed securities)
- to private consumption, if the money is used to finance consumer debt (say Indians buy securities backed by credit card receivables)
- to government purchases, if the money is lent to the US government and spent on a new toilet seat at the Pentagon (say Indians buy newly issued Treasury bonds)
Of course the Indians don't have to do these things directly. They may use the money to buy Japanese cars and then the Japanese use it to buy the Boeing, or they may buy Treasuries from a domestic US investor who then uses the proceeds to buy mortgages. But you get the idea.
So the bottom line is, there is no negative effect on GDP from trading with India, assuming the Federal Reserve is doing its job of keeping demand up. A net positivie effect will remain from the usual gains to trade from specialization.
Posted by: Daniel Lam on January 20, 2004 11:40 AMOf course, Ross doesn't want to think about the fact that IT workers are *overpaid* in general, and that that reduction of H-1B visas means that instead of importing the coders to the US, where of course they would consume goods and services, now they stay in India, consuming goods and services there.
Be careful what you wish for, you might just get it.
That said, Dell tried to move some help desk operations to India, but had to ditch the idea because it worked out badly. Maybe the same thing will happen to EDS.
Come to think of it, I work with several people who used to work for EDS. FWIW, they don't want to work that company again.
Posted by: eric on January 22, 2004 06:27 AM