WHEN DICK CHENEY SAID, "Deficits don't matter," economists took that as proof of the economic illiteracy of the Bush administration. But it turns out there is a case to be made that Cheney was onto something.

On the deepest level, the vice president was echoing, in slightly exaggerated form, an idea put forward a few years ago by Irving Kristol, the Godfather of the neoconservatives who have had such a wide-ranging effect on Bush administration policy. Kristol wrote then, and still believes, that "We should figure out what we want before we calculate what we can afford, not the reverse."

On the political level, treating deficits as a non-issue also proved a successful strategy. After all, despite the torrent of red ink that splashed across the national budgets during his first term, George W. Bush was reelected by a substantial margin. Among John Kerry's other failures was his attempt to saddle the president with the label "profligate."

Which brings us to the economic level. The deficits that Bush ran up in the years in which the country was teetering on the verge of a serious recession had the beneficial effect of righting the economy. In that sense, deficits not only didn't matter, but were a force for economic good.

But that was then, and this is now. The economy, growing at an annual rate of 3.5 percent to 4.0 percent, is hardly in need of further fiscal stimulus. Yet the budget that the president sent to Congress last week promises deficits as far ahead

The president claims that his $2.57 trillion budget is the first step on the road to fulfilling his campaign promise to halve the deficit by 2009, even if Congress agrees to make his tax cuts permanent and enacts still more reductions. That claim is completely unfounded. Indeed, if the White House team that drafted this budget were subject to Sarbanes-Oxley, criminal indictments would be flying.

Start with the fact that most of the spending reductions the president proposes will be rejected by Congress. The budget calls for the elimination or curtailment of some 150 programs. But last year the president proposed eliminating 65 programs for a savings of $4.8 billion--and Congress agreed to eliminate only four programs for a savings of less than $200 million. Although Congress is under some pressure to keep spending down, it is under even more pressure from the farm lobby, the business lobby, the veterans' lobby, the poverty lobby, and the oldies' lobby, to mention only a few groups that will fight Bush's cuts.

But even if the budget is adopted, it will not begin to cut into the federal deficit, for several reasons. First, spending on the largest items--Medicare, Social Security and the military--is scheduled to increase. Second, the budget does not include any money beyond this year's outlays for the wars in Iraq and Afghanistan. Third, it does not include the trillions that will be required if the president succeeds in persuading Congress to allow some participants to divert to private accounts a portion of the money they are now paying into the Social Security system.