Economy under George W. Bush

Democrats and Democratic speakers have proudly criticized George W. Bush's economic record to promote the party's call for "change" and to persuade voters that electing John McCain would mean a "third Bush term". Yet what good evidence did the Democrats suggest that the Bush administration has produced vast differences of income and wealth, high unemployment and large amounts of govt. debt.(likely resulting from the invasion of Iraq)

The following facts were taken from a factual assessment conducted by the International Monetary Fund, The Organization for Economic cooperation and Development, the World Bank, The International Comparison Program and the U.S. census bureau.

- Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period. The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the U.S. reached $41,813 (in purchasing power parity dollars) in 2005. This was a third higher than the United Kingdom's, 37% above Germany's and 38% more than Japan's.
- Household consumption. The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg's, out of 146 countries covered in 2005. The U.S. average was $32,045. This was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.
- Health services. The U.S. spends easily the highest amount per capita ($6,657 in 2005) on health, more than double that in Britain. But because of private funding (55% of the total) the burden on the U.S. taxpayer (9.1% of GDP) is kept to similar levels as France and Germany. The U.S. Census Bureau reports that 84.7% of the U.S. population was covered by health insurance in 2007, an increase of 3.6 million people over 2006. The uninsured can receive treatment in hospitals at the expense of private insurance holders. While life expectancy is influenced by lifestyles and not just access to health services, the World Bank nevertheless reports that average life expectancy in the U.S. rose to 78 years in 2006 (the same as Germany's), from 77 in 2000.
- Income and wealth distribution. The latest World Bank estimates show that the richest 20% of U.S. households had a 45.8% share of total income in 2000, similar to the levels in the U.K. (44.0%) and Israel (44.9%). In 65 other countries the richest quintile had a larger share than in the U.S....
- Employment. The U.S. employment rate, measured by the percentage of people of working age (16-65 years) in jobs, has remained high by international standards. The latest OECD figures show a rate of 71.7% in 2006. This was more than five percentage points above the average for the euro area. The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton's term of office, and is well below the euro zone average of 8.3% since 2000.


The evidence shows that much of the Democrat's criticism of Bush's economic record is mostly false. True that the economic slowdown now affecting most major countries will cause an increase in unemployment over the next few months, thanks to helpful policies pursued by the Bush Administration such as the Economic Stimulus plan and the Bailout plan the U.S. economy is not likely to reach the 7.7% peak of unemployment which occured during the last post recession year.(1992)

The main risk in electing Obama would be that he would go after a "social justice" strategy creating higher taxes on entrepreneurs, savers and investors, more government involvment in the economy and protectionist policies(such as revoking current trade agreements) to safeguard the jobs of his union backers in industries and public services. If so, the economic pain is likely to be more spread and extended.






Cause of Financial Crisis

1. Housing bubble forms. Intrest rates are down and Home prices are up.
2. Banks (Not George W. Bush) facing little risk relax lending standards and issue lots of mortgages to borrowers with shaky credit.
3. Worldwide investors buy the mortgages bundled into exotic securties.
4. Housing bubble deflates. (Spring 2007) Intrest rates shoot up and home prices go down. Borrowers default on loans.
5. Investment bank Bear Stearns has two hedge funds fail in July 2007. Markets tighten for securtities backed by other assests such as student loans.
6. Wall Street- Investors start to pull money out of institutions that have large mortgage holdings.
7. Federal Govt- March- Fearing collapse encourages finacially stable JP Morgan Chase to purchase Bear Stearns.
8. Govt.-Seizes control of thrift bank IndyMac after it fails and Freddie Mac and Fannie Mae which owned or guaranteed about half of the nation's mortgages and control of insurer AIG which has a large portfolio of risky securities.
9. Wall Street- Trading partners and customers desert investment bank Lehman Brothers forcing it into bankruptcy.
10. Banks start hoarding chash and shift investments to U.S. treasuries , gold and other safe places.
11. Federal reserve and other central banks pump $180 billion into money markets to stimulate short term lending.
12. Federal Govt.- Announces new agency to absorb hundreds of billions of dollars in bad mortgage.
13. Bush proposes bailout plan to payback large amount of bank mortgage market.

Jack