George W. Bush's Monetary Offenses
NU Wire Investor
Published on: Wednesday, June 18, 2008
Written by: Cali Zimmerman

U.S. President George W. Bush is one of the biggest spenders ever to sit in the Oval Office. Earlier this year he proposed the first budget in history to top $3 trillion, with projections of a $400 billion deficit for Fiscal Year 2009. This is disturbing enough on its own, but especially when considering that he started his first term with a $284 billion surplus. Let's take a moment to consider some of the key monetary choices that our fearless leader has made during his time as Commander-in-Chief.

The war in Iraq

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When Ann Curry of NBC's "Today Show" said that Americans are "suffering" because of the recession caused by the war in Iraq, Bush was quick to respond: "I don't agree with that. I don't think so. I think actually the spending in the war might help with jobs, because we're buying equipment and people are working. I think this economy is down because we built too many houses and the economy's adjusting," he said.

Despite Bush's objections, this is one of the most expensive elements of his presidency. When the war began, the Bush administration estimated that the cost would not exceed $80 billion, according to The Wall Street Journal. In actuality, it has cost the U.S. $529 billion so far, averaging $341.4 million per day, according to the National Priorities Project. If, hypothetically, the U.S. had never gotten into the war in the first place, that $529 billion could have gone elsewhere to be used in ways that would have helped the economy in the long run: Education, health care or infrastructure, to name a few. The war in Iraq will cost us $3 trillion before we are through, according to an estimate by The Washington Post.

It may be debatable whether or not the war is the driving force behind the recession the U.S. faces, and there are experts who argue each side, but the American people largely seem to think it is a factor. In a recent AP Poll, 48 percent of respondents said that pulling out of Iraq would help the economy "a great deal" while 20 percent believed it would help somewhat. The war is fueling—no pun intended—escalating oil prices, which adversely affect the wallets of Americans nationwide. And when Americans pay more for fossil fuels, that money doesn't go back into our domestic economy; it gets exported, according to The Huffington Post, a news website and aggregated weblog.

Perhaps the massive expense would have been worth it if there was some conceivable benefit for the U.S. that came from our engagement in Iraq, but these benefits have yet to surface, at least for us; China seems to be doing rather well for itself in the wake of our war. In 2003, before the true cost had become apparent, The Wall Street Journal cited two potential benefits of the war in Iraq: A more stable Middle East and lower oil prices.

Let's take a moment, with the smug superiority of 20/20 hindsight, to quietly snicker.

The Medicare Act of 2003

Most people will agree that making it easier for seniors to access much-needed prescriptions is a laudable goal. There are plenty of arguments that have been levied against the Act itself—namely that it was a step towards privatizing Medicare—but that's a different argument for a different site, so let's just lay that aside and focus on the financial aspects.

When originally proposed, the Medicare Act of 2003 was estimated to cost $400 billion over 10 years. Shortly after the bill was signed into law, that estimate jumped to $534 billion. In 2005, the number rose again to $720 billion.

Now, it's understandable that price estimates aren't always exact; that's why they're called estimates. But the cost of the Medicare Act of 2003 was not just a little bit off, it was nearly double the cost that was quoted to Congress when it was proposed. When the budget is operating at a deficit, there just isn't room for an unexpected $320 billion increase.

The economic stimulus package

Granted, getting "free money" from the government is pretty exciting. Undoubtedly scores of people throughout the U.S. are eager to cash their checks and decide how to spend them. But it's debatable whether or not the stimulus package will actually be effective in the long term. There could be positive effects—a study conducted by Nicholas S. Souleles, finance professor at the Wharton School of the University of Pennsylvania, showed that a stimulus package in 2001 helped the economy recover from recession—but it remains to be seen whether that will be true this time around.

The economic stimulus package cost $168 billion. If it pans out and helps America avoid a recession, it could be worth the expense. But a poll showed that 25.6 percent of respondents intended to use the money to pay off debt, while 23.5 percent would save it. That means approximately half of economic stimulus check recipients won't be using the money to stimulate the economy. And if that's the case, then a sizeable chunk of that $168 billion will essentially have gone to waste.

It's possible that there would have been more effective ways to approach an economic stimulus package so that the money was spent as intended. "The most stimulus is from giving money to the unemployed. When you lose your job and you get a dollar, you spend it because you don't have any other sources of dollars. But the Administration has insisted that there be no unemployment insurance as part of the stimulus package," Joseph Stiglitz, an economist and professor at the Columbia Business School, said on "That's an example, I would argue, of the wrong direction."

Since it's still so early in the game, it's hard to say whether Americans will look back on the economic stimulus package with relief or cynicism. Only time will tell.

Is Bush single-handedly responsible for the recession? Of course not. That would be giving one man way too much credit. The bursting of the housing bubble and the accompanying subprime mortgage crisis are major contributors to our economy's sorry state. Of course, some argue that even this is at least partially attributable to the Bush administration for failing to do anything to avert the looming crisis that many economists warned about in advance. But, that aside, one man is virtually incapable of bringing an entire country to its knees.

Even so, it's impossible to ignore him as a significant variable in the equation.

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