This Is Rich

If you ever wondered just how the Bush administration manages to arrive at its tax breaks for the rich, O'Neill and Suskind give a rare up-close look. On November 26, 2002, O'Neill's working session at the White House on economic issues was joined not only by Bush and his top advisers but by Dick Cheney via a video screen. The topic was a second round of huge tax cuts for the wealthy. At one point, Bush pal Don Evans, the commerce secretary, declared, "Accelerating the rate cuts and eliminating double taxation of dividends is good policy." Cut taxes for the rich! Again! A gently put warning from then OMB director Mitch Daniels—"I think we need to balance concerns. . . . The budget hole is getting deeper . . . and we are projecting deficits all the way to the end of your second term"—brought "glares from the entire Bush political team," who were sitting across the table from O'Neill, Suskind wrote, and Daniels "paused, as though he'd been struck." The OMB director immediately contradicted himself and advocated the tax cuts.

After a little more back and forth, Bush piped up with a bit of devil's advocacy: "Won't the top-rate people benefit the most from eliminating the double taxation of dividends? Didn't we already give them a break at the top?"

But Karl Rove, the president's Rasputin, brought him back on track by reminding him to "stick to principle," one of Bush's favorite phrases. Rove easily talked Bush into sealing the deal—Rove's staff had already decided that Bush would announce the new tax cuts for the wealthy in mid December.

"Good," Bush said, as he began to stand up, signaling that the meeting was over. "What I'm hearing is that we roll out in mid December."

Forgotten was a question from Bush earlier in the meeting. "What are we doing on compassion?" he had asked absentmindedly. No one had answered.

Additional reporting: Ashley Glacel