In 1981, David Stockman, Ronald Reagan’s budget director, invited the financial journalist William Greider to the White House and told him that the President’s controversial and far-reaching tax-cut package was a “Trojan horse” designed to reduce the top tax rates on the wealthy. Greider reported this comment in The Atlantic Monthly, and the flap that ensued prompted James Baker, Reagan’s flinty chief of staff, to summon Stockman to his office. “My friend,” Baker began, “I want you to listen up good. Your ass is in a sling.” The only way for Stockman to save his job, Baker explained, was for him to have lunch with the President. “The menu is humble pie. You’re going to eat every last mother f’ing spoonful of it. You’re going to be the most contrite sonofabitch this world has ever seen.” Just in case Stockman hadn’t got the message, Baker added, “When you go through the Oval Office door, I want to see that sorry ass of yours dragging on the carpet.”

Several years later, after Stockman left the White House, he wrote a best-selling book, “The Triumph of Politics,” in which he recalled the encounter with Baker and lamented the fact that Reagan’s political advisers refused to sanction cuts in spending programs to pay for the tax reductions. The book remains an essential source for understanding why the first round of supply-side economics left the federal government trillions of dollars in debt. Now it has a successor: “The Price of Loyalty,” by the former Wall Street Journal reporter Ron Suskind, which recounts the experience of Paul O’Neill, George W. Bush’s first Treasury Secretary.

O’Neill is hardly a dispassionate observer. In December, 2002, after two uncomfortable years on the job, during which time he earned a reputation as a maverick, he got a call from his old friend Dick Cheney, who told him that he was being fired. Suskind’s book is O’Neill’s reply to this indignity—a third-person memoir that bristles with resentment at his treatment. But, self-serving though the book may be, it offers enough inside information to be a damning read.

The media’s attention has focussed mostly on O’Neill’s not very revealing revelation that the Administration was plotting from week one to remove Saddam from power, but the bulk of the tale concerns domestic policy. O’Neill provides a vivid and detailed account of how, in just three years, the Bush Administration transformed a healthy budget surplus into a deficit that this year is likely to reach five hundred billion dollars. O’Neill is often described as a moderate; in fact, he is a fervent believer in the free-market approach to almost everything. His ambition, when he left the chairmanship of Alcoa for the Treasury, was to replace Social Security with a system of private-investment accounts. He supported tax cuts, too, but he thought that the Administration’s $1.6-trillion giveaway should be contingent on the state of the economy. Suskind discloses that O’Neill and the Federal Reserve chairman, Alan Greenspan, tried to persuade the President to accept a set of “triggers,” which would limit the scope of tax cuts if the fiscal outlook worsened, as it soon did. “I won’t negotiate with myself,” Bush told O’Neill when he brought up the idea. “It’s that simple.”

Having worked with Richard Nixon, Gerald Ford, and the elder George Bush, O’Neill was astonished at this President’s casual approach to governing. (“Pablo . . . whatta ya got?” he would ask when O’Neill entered the Oval Office.) O’Neill quickly concluded that a small group surrounding the President made most of the key decisions. It consisted of Karl Rove, Bush’s political adviser; Karen Hughes, his communications adviser; Andrew Card, the White House chief of staff; and Dick Cheney, whom O’Neill had known for almost thirty years. As Stockman’s book made clear, the Reaganites, however much they may have misled the public, were true believers engaged in an ideological crusade to reinvigorate the economy. By contrast, most of the senior members of the Bush Administration come across in Suskind’s book as political opportunists with no real interest in economics. They are much more concerned with delivering goodies to the President’s political base of wealthy corporate executives and conservative activists, regardless of long-term consequences.

Very occasionally, Bush questioned whether he was going too far in pandering to the rich and the right wing. “Are you proposing that we accelerate all the tax cuts, or just for those in the middle?” he asked his senior officials in late 2002. “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?” The White House’s economic experts, who had been hired for their conservative views, were momentarily taken aback. “Mr. President, remember the high earners are where the entrepreneurs are,” Glenn Hubbard, then the chairman of the Council of Economic Advisers, said. “It’s also about the supply side,” Lawrence Lindsey, who headed the National Economic Council, added.

O’Neill watched all this with anguish. Shortly before he was fired, he confronted Cheney about the Administration’s latest proposal to cut taxes by another six hundred and seventy-four billion dollars over ten years, pointing out that the country was “moving toward a fiscal crisis.” The Vice-President stopped him. “Reagan proved deficits don’t matter,” he said. “We won the midterms. This is our due.” In fact, Reagan didn’t prove anything of the kind. Early in his first term, Congress was forced to adopt emergency tax increases and spending cuts to restrain the ballooning budget shortfall. Despite this remedial action, it wasn’t until the early nineties, when George Bush Senior and Bill Clinton raised taxes, that the nation’s finances were put in proper order, opening the way to the longest economic expansion on record.

This year, absent a major shift in policy, budget deficits will exceed those incurred in the Reagan era. As a result, the country faces the prospect of higher interest rates, lower investment, a spending crunch in Congress, and, quite possibly, a financial crisis as international investors lose faith in the ability of the Treasury to finance the imminent retirement of the baby boomers. The White House, under the guise of providing a necessary short-term stimulus to the economy—the short term being a period that ends on Election Day—has stored up a lot of trouble for the future. Our breezy President, if he is reëlected, may well find himself ruing his refusal to heed O’Neill’s warnings.