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.
The US Federal Reserve this week has moved one step closer to lifting interest rates by ending its controversial bond-buying program. This begins a long-anticipated process that will take many months to complete: the metamorphosis of a dove into a hawk.
This leaves us with the question of a date for an actual rate hike – a moment economists expect surveyed by CNBC expect will be in July 2015, a month later than previously forecast.
Vice President and Director of the Global Economy and Development Program at the Brookings Institution. Former Turkish Minister of State for Economic Affairs. Head of the United Nations Development Program (UNDP) from 2005-2009.