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The Economy - A National Security Legacy of Failure
PRESIDENT BUSH: Wait, what did you just say? You're predicting $4 a gallon gasoline?...
That's interesting. I hadn't heard that.” - February 28, 2008
America’s economic performance and its position as a world leader are inextricably linked. Our success in two World Wars and the Cold War was largely due to America's industrial might at home and our ability to mobilize the world's largest manufacturing power for wartime production. In peacetime, our economic growth and innovation were the envy of the world and underscored the American promise of personal and societal liberty and opportunity for all.
When President Bush came to office, he enjoyed a significant surplus and a strong economy. Eight years later the administration leaves an economic legacy that has undermined America’s strength and competitiveness. After helping plunge the United States into its worst financial crisis in more than half a century, President Bush failed to show international leadership, undermining America’s position in the world. Moreover, President Bush failed to address healthcare reform, energy security, broadband policy, or education funding doing grave damage to America’s competitiveness. There is no question that the President’s economic policies have made us weaker both at home and abroad.
Bush Administration Oversaw the Worst Economic Crisis Since the Great Depression
Bush’s poor policies and his personnel choices aggravated the financial crisis. “Bush's early personnel choices and overarching antipathy toward regulation created a climate that, if it did not trigger the turmoil, almost certainly aggravated it.” Moreover, the administration ignored warning signs. “The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown…The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.” [AP via FOX News, 12/01/08. IHT, 9/20/08]
The Bush administration’s ineffective and inconsistent response to the crisis has failed to calm capital markets or improve the economy. As late as 2007, the President publicly quoted Treasury Secretary Paulson saying, “This is far and away the strongest global economy I've seen in my business lifetime.” Following the collapse of Lehman Brothers, the President said, “In the long run, I'm confident that our capital markets are flexible and resilient and can deal with these adjustments.” Once the president and the administration realized that there was a problem, their response was inconsistent and poorly managed. When a financial rescue package was first being discussed, President Bush opposed it, only to turn around days later and call for $700 billion. According to a GAO report, once an agreement was reached there was no accountability as the bailout money was distributed without an adequate “oversight and monitoring function.” [CNN, 8/8/07. Washington Post, 9/15/08. USA Today, 2/28/08. IHT, 9/25/08. Fox Business, 12/2/08. GAO, 12/08]
Bush's Economic Policies Have Reduced America's Influence in the World
America’s economy reinforces its position in the world and the recent financial crisis is undermining our strength. “America's economy underpins our position as the world's most powerful nation. Our success in two world wars and the Cold War was largely due to America's industrial might at home and our ability to mobilize the world's largest manufacturing power for wartime production.” However, for eight years the Bush administration allowed our financial markets to leverage themselves toward disaster. At the same time, its profligate military spending on a war in Iraq that should never have been waged has left us in a tenuous global position. [IHT, 9/20/08. Cincinnati Enquirer, 10/18/08. AP via FOX News, 12/01/08]
The Bush administration’s inability to balance budgets has weakened our position vis-à-vis China. “The run-up of U.S. debt testifies to the shift of the global economic center of gravity. The $127 billion budget surplus Bush took over will melt into what is projected to be a record deficit of $482 billion in the year starting Oct. 1.” “During the same span, China's holdings of U.S. government securities mushroomed to $504 billion from $62 billion. China is now the second-biggest U.S. government creditor behind Japan, with $584 billion.” [Bloomberg, 9/15/08. Reuters, 9/09/08. NY Times, 9/14/08]
There are national security elements to failed industries, such as the auto industry. As Former NATO Commander Wesley Clark wrote in the New York Times, “aiding the American automobile industry is not only an economic imperative, but also a national security imperative. When President Dwight Eisenhower observed that America’s greatest strength wasn’t its military, but its economy, he must have had companies like General Motors and Ford in mind.” [NY Times, 11/17/08. NSN, 10/6/08]
In the age of American capitalism, global leadership during the economic crisis has come from elsewhere, undermining America’s credibility. The contours of what beame the global consensus response appear to have originated with the UK government and were initially opposed by the U.S. “The sweeping measures began early Monday as Britain pledged to spend billions in taxpayer money to shore up battered banks. The British Treasury said the initial steps could be worth $64 billion to three banks. In effect, the moves mean the partial nationalization of those institutions: the Royal Bank of Scotland, HBOS and Lloyds TSB.” “As recently as Sept. 23, senior officials had publicly derided proposals by Democrats to have the government take ownership stakes in banks. The Treasury Department’s surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance.” The Bush administration’s inability to lead the globe has been evident for the past seven years. It was most evident during the invasion of Iraq but has been evident in other critical issues such as crafting an international response to global warming. The financial crisis is simply the latest example. [NY Times, 10/13/08. NY Times, 10/12/08]
Bush's Policies Have Undermined American Competitiveness
Lack of health care reform is affecting the U.S. economy, and hurting our global competitiveness. James Kvaal at the Center for American Progress assesses that American healthcare is “far and away the most expensive health care system in the world” and has consumed “an increasing share of our nation’s resources,” a share that is expected to grow larger in years to come. The report also finds that “rising health care costs put a particular burden on U.S. businesses, which have been the primary source of health coverage for nearly 75 years. Today, the majority of Americans—158 million people—receive health coverage from their job or a family member’s job. Higher health insurance premiums translate directly into higher labor costs, forcing employers to cut back their workforces. A 20 percent increase in health insurance premiums would cost 3.5 million workers their jobs.” Additionally, “[r]ising health care costs will drive up taxes and premiums, eating up 95 percent of the growth in per capita gross domestic product between 2005 and 2050.” These findings have clear and troubling implications for the U.S.’s global economic position, making the need for reform all the more important. [CAP, 12/09/08]
The president’s policies have led to unpredictable and high-spiking energy prices, which have hurt our economy. The U.S. has become more dependent on foreign oil each of the last eight years. The president’s foreign policy has also had a direct effect on gas prices. Since the invasion of Iraq, there have been repeated attacks on Iraqi oil pipelines, facilities, and personnel, and production has stagnated at prewar levels. The invasion of Iraq also increased the threat of terrorism by creating a training, recruiting and fundraising magnet for Islamic terrorists in the heart of the world’s most vital energy producing region. In addition, there have been frequent terrorist attacks on oil installations in the Middle East. These often spur mini-spikes in oil prices, increasing fears of vulnerability. [NSN, 5/08. Institute for Global Security, 3/27/08. NY Times, 5/11/08. Senate Joint Economic Committee, 11/11/07. CSIS, 11/30/04. Reuters, 5/31/08. Yemen Observer, 4/05/08. Fox News, 9/15/06. BBC, 2/24/06]
The U.S. is the only industrialized state without national broadband policy, falling behind other countries. “In the first three years of the Bush administration, the United States dropped from 4th to 13th place in global rankings of broadband Internet usage. Today, most U.S. homes can access only "basic" broadband, among the slowest, most expensive, and least reliable in the developed world, and the United States has fallen even further behind in mobile-phone-based Internet access. The lag is arguably the result of the Bush administration's failure to make developing these networks a priority. In fact, the United States is the only industrialized state without an explicit national policy for promoting broadband.” [Foreign Affairs, May/June 2005]
An educated population is critical to maintaining American competitiveness. John Podesta and Cynthia Brown of the Center for American Progress write that “The intense competition of the global economy demands that all of America’s young people receive the kind of education they need and deserve.” The system is plagued by inequality. Fareed Zakaria writes that “This will, over time, translate into a competitiveness problem, because if the United States cannot educate and train a third of the working population to compete in a knowledge economy, this will drag down the country.” President Bush’s only major education initiative, No Child Left Behind, generated controversy for its emphasis on testing, and failed to receive sufficient funding. “Sen. Hillary Rodham Clinton (N.Y.), who voted for the bill in 2001, has since criticized its impact and vowed to ’end the unfunded mandate known as No Child Left Behind.’” In the midst of the current financial crisis, it is critical that education remain a priority. Without it, America’s competitiveness will decrease over time, undermining our place in the world and eventually threatening our security. [CAP, 8/1/08. Foreign Affairs, May/June 2008. Washington Post, 1/8/08]