Eight Years Wasted, the Economic Failures of the Bush Administration Essay

Eight years wasted. That is the description that befits the George W. Bush administration of the United States between 2001 and 2008. Nevertheless, this is not a case of unfair criticism of the Bush administration, as noted by Republican Senator John McCain who served in Bush’s era (Curl). According to McCain as he campaigned for the presidency in 2008, Bush spent a lot of the United States’ resources on the war in Iraq, which consequently led to a massive economic downturn (Curl). The most obvious impacts of Bush’s actions are reflected in the changes in rate of unemployment, inflation, money supply in the United States, and shifts in foreign exchange rates as well as interest rates (National Organization for Women). Unemployment The rate of unemployment has particularly been worrying since the period between 2000 and 2001 when Bush took the leadership of the United States (OECD). According to Shi and Stevens, the rate of unemployment has been fluctuating rapidly since 2000 when it was about 4. 0 percent (59). Within over a year of Bush’s leadership, the unemployment rate shot up to 5. 8 per cent in 2002 (59). Women and their families were particularly affected by the high rate of unemployment, as they would rarely make ends meet at the start of the Bush administration. In fact, according to the National Organization for Women, the year 2001 marked the period of massive job loss among women in over 40 years (National Organization for Women). Along this line, the Institute for Women’s Policy Research reported that in the period between 2001 and 2004, women workers lost over 300,000 jobs (National Organization for Women). In the same breadth, unemployment rates among single mothers rose of an already bad situation of 9. 5 per cent to a worse level of 10. 2 per cent (National Organization for Women). Statistics from GPO Access show a grim picture of the increasing levels of unemployment since the year 2000 when the United States presidential election that ushered in President George Bush was held. In the figures provided, overall civilian unemployment rate fluctuated from 4. 0 per cent in 2000 to 6. 7 percent in November 2008, which marked the end of the Bush administration (Table 1). Along the same line, the same trend in unemployment rate was noticed among different age groups, fa Another aspect of the Bush administration’s failure is an uncontrolled increase in inflation. At the beginning of the Bush administration in 2001, there was a notable decline in the prices of all items and services as compared to the preceding year. Perhaps this was because of the effort by Bush to fulfill campaign promises. The truth of the matter is that after 2001, the prices of all items went up, declining only slightly in 2003. Since then, there was a notable fluctuation in the prices but overall, the prices remained at an all time high. In fact, the 4. 1 per cent change in price of items (Table 2) was the highest margin to have been recorded since the 6. 1 per cent rate recorded in 1990 at the height of the Gulf War (Irwin and Dan. ). The high prices of commodities and services noticed during the Bush Administration not only affected the financial positions of many families but also influenced the people’s access to essential services such as healthcare (Atkinson and Hutto). According to Hanke, the 2003 United States census showed that any family of three lived on a mean of $51 a day. This figure was arrived at using an assumption that childcare and healthcare services were fully financed by the government (United States Department of Labor). Nevertheless, this was not the case for most families, as they had to rely on their own means to support themselves. In the context of high cost of commodities and services and with particular reference to childcare and healthcare services, many families had to spend as much as over 20 per cent of their incomes in pursuit of these services (Robinson). According the New York Times, the Bush administration cut funding programs for many essential programs such as childcare, which were particularly appropriate for single parent households (The High Cost of Health Care). This move was done as the administration aimed at improving and expanding other unpopular programs such as promotion of marriage (United States Bureau of Statistics). However, the downside of this point is that as focus was shifted to newer programs, the already existing programs suffered an even heavier blow in terms of the exorbitant costs that had to be incurred (The High Cost of Health Care). According to Shi and Gregory, the highest number of individual without healthcare services was recorded in 2003 (60). This is because most attention was diverted to acquisition of other essential commodities and services such as food and housing (The High Cost of Health Care). Yet president Bush still insisted on funding the war to oust President Saddam Hussein from power in Iraq. This action can be considered as a case of misplaced priority because whereas President Bush was busy pursuing the United States foreign policy, local affairs (which perhaps needed more attention) were thrown into disarray. Money Supply During the Bush Administration, the supply of money increased, but with some fluctuations. For instance, the total value of the United States currency, traveler’s checks, demand deposits and other checkable deposits rose from $1087. 4 billion to a high of $1473. 1 billion in October 2008 (GPO Access). The high supply of money does not imply that the United States economy improved in the period of eight years. Rather, it is an indication the value of the United States dollar could have depreciated (Crutsinger and Aversa). Thus, the large sums of money released to fund the war in Iraq in 2003 did not add any impetus to the United States economy (Crutsinger and Aversa). Instead, the economy became vulnerable with reference to a weak dollar against other world currencies. In spite of the increase in the sum of currency, there was an increase in debt of domestic nonfinancial sectors from $18,183. 6 billion in 2000 to $32,436. 5 billion in 2006 . This means that nonfinancial institutions increasingly had to borrow during the era of George W. Bush. It therefore no wonder that the United States was crippled by a great financial crisis only comparable to the Great Depression towards the end of Bush’s reign, the overriding factor being that the United States government had spent so much money on defense and war in Iraq and Afghanistan at the expense of internal development. Foreign Exchange As mentioned above, there was a significantly high supply of money in the United States, which characteristically led to depreciation of the United States dollar. In addition, the period was characterized by a high rate of inflation, implying that considerably larger sums of money would be used in buying commodities that would have been bought inexpensively in the earlier period (Atkinson and Hutto). On the international scale, the high cost of United States commodities meant that importers had to pay lots of money to acquire the goods, which ultimately lowered the level of international trade between the United States and other countries (Table 3). Consequently, the United States dollar fluctuated against other world currencies such as the Japanese yen, the Sterling Pound, Chinese yuan and the Australian dollar (Atkinson and Hutto). For instance, the Sterling Pound exchanged at between $1. 9548 and $2. 0442 in 2007 (Table 3), which was a very large variation. The strong dollar against the yen between 2001 and 2002, which was the beginning of the Bush administration, discouraged importation by Japan from the United States (Atkinson and Hutto). At the same time, citizens of the United States opted to import valuable items such as automobiles at the expense of the locally manufactured ones, thus putting the United States automobile industry in the quagmire in which it is today (OECD). The consequence of this is that major competitors such as the Japanese automakers have adversely affected local automakers such as Ford, and the whole industry has been earmarked for revival in the Economic Stimulus Package (OECD). Interest rates Government bond yields and interest rates generally declined between 2000 and 2008. For instance, the value of bills at auction declined steadily from $ 5. 85 to $1. 01 in 2003, but steadily rose from $1. 38 to $4. 73 in 2006 (GPO Access). The low price of bonds meant that banks were in a position to purchase more government bonds, thus diverting their attention from other financial service users such as borrowers (Crutsinger and Aversa). Ultimately, banks were forced to impose high interest rates on the loans they offered to the public, implying that most small business holders and individuals were crippled by a massive credit crunch (Crutsinger and Aversa). The ensuing credit crunch adversely affected the United States economy particularly towards the ends of the end of the Bush administration (Crutsinger and Aversa). Banks were most affected by the financial woes and this necessitated the Bush administration to consider taking ownership of various banks in a bid to protect them from collapsing (Crutsinger and Aversa). This move was however also ill planned, as it would result in unnecessary government expenditure, resulting into higher inflation in the United States (Hanke). In addition, there was no assurance that with the government’s acquisition of the banks, their performance would improve (Hanke). Conclusion Even though the world witnessed a massive economic recession, the woes in the United States stemmed from the fact that the Bush administration spent excessively on the war in Iraq and Afghanistan, which generally weakened the performance of most local institutions. The underperformance in various sectors was shown in high rates of unemployment, high inflation, fluctuating levels of money supply and foreign exchange rates as well as high bank interest rates. The combined effect of the various phenomena led to a crisis in the entire United States economy, thus making the Bush administration one of the worst leaderships of the United States. References Atkinson Robert D and Julie Hutto 18October 2004. 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