In the beginning of his term, George Bush was faced with national debt left by the former president, Ronald Reagan. Primary economic policy of George Bush was to curb the deficit which was essential to secure his position as world leader.
His immediate task was to convince both the political parties to come into a consensus on reduction of deficit. While the Republicans believed that curtailing of government spending was best way of reducing deficit, the Democrats wanted to adopt a strict revenue policy for the same. In lieu of democratic majority, George Bush enforced a stronger tax policy. His policy alienated him from the republican congressmen and also reduced his popularity among masses, which bore the burden.
At the end of the 101st Congress, congressional members reached a decision of adopting a marginal tax increase rate. This would also terminate exemptions for taxpayers belonging to the higher income group.
In following financial year, the United States of America was faced with mild recession that continued for a period of six months. Several government programs on welfare were initiated and successful. The president agreed to provide more benefits to unemployed workers, the margin of which continued to increase in subsequent phase. Reorganization of several industries led to the lay off of several employees who were now unemployed.
While serving his second year in the office of the president, George Bush hardly engaged in furtherance of his economic policies. The year 1992 witnessed low inflationary rates and interest rates although unemployment problem had aggravated and reached 7.8%, the highest recorded since 1984. According to reports of Census Bureau, 14.2% of citizens of America were under the poverty line.
At the time of writing, events in the Ukraine had taken a rather dramatic turn. Russia had sent a 270 vehicle "aid" convoy to the Ukraine claiming that it is providing humanitarian assistance with the aid of the Red Cross. Red Cross spokespersons were saying that the Russians had barely mooted the project with them and they were certainly not on board, or not yet, anyway.
Mario I. Blejer is a former governor of the Central Bank of Argentina and former Director of the Center for Central Banking Studies at the Bank of England. Eduardo Levy Yeyati is Professor of Economics at Universidad Torcuato Di Tella and Senior Fellow at The Brookings Institution.
QFINANCE is a unique collaboration of more than 300 of the world’s leading practitioners and visionaries in finance and financial management, covering key aspects of finance including risk and cash-flow management, operations, macro issues, regulation, auditing, and raising capital.
Andrea Edwards has worked in marketing and communications all over the globe for 20 years, and is now focused on her passion – writing. A gifted communicator, strategist, writer and avid blogger, Andrea is Managing Director of SAJE, a digital communications agency, and The Writers Shop – a regional collaboration between the best business writers in Asia Pacific
James W. Harpel Professor of Capital Formation and Growth at the John F. Kennedy School of Government in Harvard University. Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research.