Economy fears 'dismissed by Cheney' claim

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FURTHER damaging revelations about the internal workings of the Bush administration have been made by the former US treasury secretary, Paul O’Neill - this time about the economy.

Mr O’Neill claims that when he raised concerns of a looming fiscal crisis he was told "deficits don’t matter".

Mr O’Neill, who was fired in a shake-up of Bush’s economic team in December 2002, said in an interview with Time magazine that he tried to warn the vice-president, Dick Cheney, that growing budget deficits - expected to top $500 billion this fiscal year alone - posed a threat to the US economy.

Mr Cheney cut him off, according to the interview posted on the Time website yesterday. "Reagan proved deficits don’t matter," he said. Cheney continued: "We won the midterms (congressional elections). This is our due."

A month later, Mr Cheney told the treasury secretary he was fired.

The vice-president’s office had no immediate comment, but John Snow, who replaced Mr O’Neill, insisted that deficits "do matter" to the administration. "We’re not happy about the size of these deficits. They’re larger than they should be," Mr Snow told ABC’s This Week, adding that Mr Bush was committed to cutting them in half over the next five years.

Mr O’Neill likened Mr Bush at Cabinet meetings to "a blind man in a room full of deaf people", according to excerpts from an interview to be aired on CBS’s 60 Minutes.

Democratic presidential hopeful Richard Gephardt, a US congressman from Missouri, said he had a similar impression of Mr Bush, telling CBS’ Face the Nation programme: "He is a nice man. And he’s a smart man. But he doesn’t have experience. He doesn’t have knowledge. And he has no curiosity."

The commerce secretary, Don Evans, defended Mr Bush. "I know how he leads, I know how he manages... He drives the meetings, tough questions, he likes dissent, he likes to see debate," Mr Evans told CNN’s Late Edition.

Republican Mark Foley of Florida accused Mr O’Neill of taking "a Shakespearean approach to advance his career and his book sales. Not since Julius Caesar have I seen such a blatant stab in the back. Et tu, Mr O’Neill?"

It is not clear whether Mr O’Neill’s revelations will have any effect on Mr Bush’s chances of winning the presidential election this year.

The battle to win the Democratic presidential nomination continued in earnest yesterday, with Howard Dean’s position as the front-runner confirmed by a new poll showing him leading the field in Iowa with just over a week to go until the caucuses - his first serious test.

A Los Angeles Times poll showed Mr Dean had the support of 30 per cent of voters, leading Congressman Gephardt by seven percentage points.

Although Mr Dean’s lead was within the polls’ margin of error, the survey was particularly disappointing for Mr Gephardt who comes from neighbouring Missouri and won the Iowa caucus on his previous, unsuccessful, run for the presidency in 1988.

Mr Gephardt’s support among blue collar workers - the traditional Democratic base - has been eclipsed by Mr Dean’s ability both to appeal to many of those voters while maintaining his huge lead among college-educated voters.