Op-Ed Columnist: The 9/11 Bubble
December 2, 2004
By THOMAS L. FRIEDMAN
The Washington Post had a story on Monday that contained
possibly the greatest hint to a sitting cabinet secretary
to start looking for another job that has ever been
printed. The article reported, "One senior administration
official said Treasury Secretary John W. Snow can stay as
long as he wants, provided it is not very long."
Provided it is not very long!
Yo, Mr. Secretary, I'd say
someone in the White House wants you gone! If I were you, I
wouldn't renew any leases for more than a month at a time -
or buy any really green bananas for the office. And those
books you checked out of the Treasury library? Could you,
like, maybe return them in the next few days? You know,
just in case. I mean, it all depends on what the meaning of
I feel sorry for Mr. Snow. Reading your career obituary
over breakfast can't be much fun. But I feel even more
sorry for the country. I can't recall a time when the
Treasury Department has been so emasculated by a White
House. I went by the Treasury the other day and noticed a
big sign outside saying it was being remodeled. Why bother?
Who would know if it was gutted? The country would get more
fiscal benefit by renting out the Treasury rooms for
weddings, graduations and bar mitzvahs than it's gotten in
the past four years from any advice coming from there.
Here's a trivia question for you: Who is the deputy
Treasury secretary? It's a pretty important job, but I have
no clue who it is.
This is a time when we really need a strong Treasury
secretary capable of speaking up for fiscal sanity.
about to embark on a 10-year period in which recent tax
cuts and runaway spending are expected to add $5 trillion
to the cumulative deficit.
In my lifetime we will have gone
from the Greatest Generation to the Profligate
Generation to the Bankrupt Generation. Yes, I'm talking to you
20-year-olds. President Bush has called for sacrifice - but
not by his generation. He's passing the bill onto your
"The 9/11 crisis has been used as a license to spend and
cut taxes rather than to set priorities and focus our
resources on what is critically important to our nation's
security," said Robert Hormats, vice chairman of Goldman
And Congress has played right along, as have people like
Josh Bolton, Stephen Friedman and Gregory Mankiw - Mr.
Bush's key White House economic advisers. "You know that
all these guys know better," said Clyde Prestowicz, head of
the Economic Strategy Institute.
There have been lots of strong Republican and Democratic
Treasury secretaries in recent years: George Shultz, Nick
Brady, Jim Baker, Bob Rubin, Larry Summers. But right when
we really need one with common sense and the will to set
priorities, all indications are that this White House is
looking for someone even weaker than Mr. Snow.
David Rothkopf, a former Clinton Commerce Department
official who just wrote a history of the National Security
Council, said that President Bush is obviously "seeking
consensus and homogeneity. But the system works better when
the president gets choices. If everyone is on the same page
and it turns out to be the wrong page - you're really up a
The very reason Mr. Bush had the luxury of launching a war
of necessity in Afghanistan and a war of choice in Iraq,
without a second thought, was because of the surpluses
built up by the previous administration and Congress. Since
then, the Bush team has been slashing taxes in the middle
of two wars, weakening the dollar and amassing a huge debt
burden - on the implicit assumption that nothing will go
wrong in the future.
But what if there is another 9/11 or war of necessity?
We're cooked. The tax revenue won't be there, so the only
option will be more borrowing and a weaker dollar. But what
happens if the Chinese and other foreigners, who now hold
over 40 percent of our Treasury securities, decide they
don't want to hold these depreciating dollars anymore, let
alone buy more?
It is now clear to me that we have followed the dot-com
bubble with the 9/11 bubble. Both bubbles made us stupid.
The first was financed by reckless investors, and the
second by a reckless administration and Congress. In the
first case, the public was misled by Wall Street stock
analysts, who told them the old rules didn't apply - that
elephants can fly. In the second case, the public was
misled by White House economists, peddling similar
nonsense. The first ended in tears, and so will the second.
Because, as the dot-com bubble proved, elephants can fly -
"provided it is not very long."