Economic situation of the United States

(1981-2011)

Ronald Reagan

In officeJanuary 20, 1981 – January 20, 1989

40th President of the United States

REAGONOMICS

The four pillars of Reagan's economic policy were to:

1. Reduce government spending,2. Reduce income and capital gains marginal tax rates,3. Reduce government regulation,4. Control the money supply to reduce inflation.

HOW DID THE REAGAN TAX CUTS AFFECT THE U.S. TREASURY?• Total federal revenues doubled from just over $517 billion in 1980 to more

than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.

• As a percentage of the gross domestic product (GDP), federal revenues declined only slightly from 18.9 percent in 1980 to 18 percent in 1990.

• Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990. In inflation-adjusted dollars, this amounts to a 25 percent increase.

Other policies HOW DID REAGAN'S POLICIES AFFECT FEDERAL SPENDING?

• Federal spending more than doubled, growing from almost $591 billion in 1980 to $1.25 trillion in 1990. In constant inflation-adjusted dollars, this was an increase of 35.8 percent.

• As a percentage of GDP, federal expenditures grew slightly from 21.6 percent in 1980 to 21.8 percent in 1990.

• Contrary to popular myth, while inflation-adjusted defense spending increased by 50 percent between 1980 and 1989, it was curtailed when the Cold War ended and fell by 15 percent between 1989 and 1993. However, means-tested entitlements, which do not include Social Security or Medicare, rose by over 102 percent between 1980 and 1993, and they have continued climbing ever since.

• Total spending on all national security programs never equaled domestic spending, even when Social Security, Medicare, and net interest are excluded from domestic totals. In addition, national security spending fell during the Administration of the senior President Bush, while domestic spending increased in both mandatory and discretionary accounts

HOW DID REAGAN'S POLICIES AFFECT ECONOMIC GROWTH?

• This economic boom lasted 92 months without a recession, from November 1982 to July 1990, the longest period of sustained growth during peacetime and the second-longest period of sustained growth in U.S. history. The growth in the economy lasted more than twice as long as the average period of expansions since World War II.

• The American economy grew by about one-third in real inflation-adjusted terms. This was the equivalent of adding the entire economy of East and West Germany or two-thirds of Japan's economy to the U.S. economy.

• From 1950 to 1973, real economic growth in the U.S. economy averaged 3.6 percent per year. From 1973 to 1982, it averaged only 1.6 percent. The Reagan economic boom restored the more usual growth rate as the economy averaged 3.5 percent in real growth from the beginning of 1983 to the end of 1990.

George H. W. Bush

41st President of the United States

In officeJanuary 20, 1989 – January 20, 1993

Republican Party

George H. W. Bush lead one ofworst economy policy, but he

is an economist.

He involves form Republican Party

During his term inflation, unemployment and public debt has grown.

It was main reasons of his defeat in reelection.

Gross Domestic Product:$7,536 billions, increase during the term 6.5%

Federal Spendings:$1,615 billions, increase during the term 7.8%

Federal Debt:$4,987 billions, increase during the term 32.7%

Inflation:Overall inflation during the term 17.75%

Unemployment:Rate of unemployment reached 7.8%,and 14.2% of Americans lived in poverty.

ACHIEVEMENTS:

End of Cold WarUSSR collapse

Kuwait protectionReduction of weaponary

FAILURES:

Rise of unemploymentRise of inflation

Rise of public debt

Bill Clinton

42nd President of the United States

In officeJanuary 20, 1993 – January 20, 2001

• Clinton presided over the continuation of an economic

expansion that would later become the longest period of peace-time economic expansion in American

history

William Jefferson "Bill" Clinton served as the 42nd

President of the United States from 1993 to 2001

„Bill Clinton cut the military drastically. It’s called the peace dividend, one of those nice-sounding phrases, very devastating. It was a 25, 30 percent cut in the

military. President Bush has never made up for that. We – our Army had been at 725,000; it’s down to 500,000.”

Numerous military events occurred during Clinton's presidency. The Battle of Mogadishu also occurred in Somalia in 1993. During the operation, two U.S. MH-60 Black Hawk helicopters were shot down by rocket-propelled grenade attacks to their tail rotors, trapping soldiers behind enemy lines.

The table below shows the annual federal spending, gross federal debt, and gross domestic product

THE LOWEST UNEMPLOYMENT RATE SINCE 1969 AND MORE THAN 20 MILLION NEW JOBS. In 1992, when Bill Clinton was elected President, the American economy was barely creating jobs, wages were stagnant, and the unemployment rate was 7.5 percent. His bold, three-part economic strategy focused on three objectives: fiscal discipline, investing in education, health care, science and technology, and opening foreign markets. Today’s jobs release provides more evidence that this strategy is working:

The Unemployment Rate Was 4.2 Percent in 1999 -- the Lowest Since 1969. The unemployment rate was 4.1 percent in December bringing the average unemployment rate for 1999 to 4.2 percent -- the lowest since 1969. The unemployment rate has fallen for seven years in a row. It has remained below 5 percent for 30 months in a row. For women the unemployment rate was 4.1 percent -- the lowest since 1953

Taxes

Clinton's job approval rating ranged from 36% in mid-1993 to 64% in late 1993 and early 1994. In his second term, his rating consistently ranged from the high-50s to the high-60s.After his impeachment proceedings in 1998 and 1999, Clinton's rating reached its highest point at 73% approval. He finished with an approval rating of 68%, which matched those of Ronald Reagan and Franklin D. Roosevelt as the highest ratings for departing presidents in the modern era.

George W. Bush

43rd President of the United States

In officeJanuary 20, 2001 – January 20, 2009

• The economic policy of the George W. Bush administration was a combination of tax cuts, expenditures for fighting two wars, and a free-market ideology intended to de-emphasize the role of government in the private sector. He advocated the ownership society, premised on the concepts of individual accountability, less government, and the owning of property.

• When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this.

2008 economic crisis and recessionThe last year of Bush's second term was dominated by an economic recession. The National Bureau of Economic Research

(NBER) marked December 2007, the month with the highest payroll employment numbers, as the high point of American economic production with output declining from then on to the present.GDP declined by an annualized -0.5% in the third quarter and -3.8% in the fourth quarter of 2008.The two consecutive quarters of negative economic growth met the "rule of thumb" definition of a recession, confirming the NBER's declaration of a recession.

Bush responded to the early signs of economic problems with lump-sum tax rebates and other stimulative measures in the Economic Stimulus Act of 2008. In March 2008, Bear Stearns, a major US investment bank heavily invested in subprime mortgage derivatives, began to go under. Rumors of low cash reserves dragged Bear's stock price down while lenders to Bear began to withdraw their cash. The Federal Reserve funneled an emergency loan to Bear through JP Morgan Chase. (As an investment bank, Bear could not borrow from the Fed but JP Morgan Chase, a commercial bank, could).

The Fed ended up brokering an agreement for the sale of Bear to JP Morgan Chase that took place at the end of March. In July, IndyMac went under and had to be placed in conservatorship. In the middle of the summer it seemed like recession might be avoided even though high gas prices threatened consumers and credit problems threatened investment markets, but the economy entered crisis in the fall. Fannie Mae and Freddie Mac were also put under conservatorship in early September.

A few days later, Lehman Brothers began to falter. Treasury Secretary Hank Paulson, who in July had publicly expressed concern that continuous bailouts would lead to moral hazard, decided to let Lehman fail. The fallout from Lehman's failure snowballed into market-wide panic. AIG, an insurance company, had sold credit default swaps insuring against Lehman's failure under the assumption that such a failure was extremely unlikely.

Without enough cash to pay out its Lehman-related debts, AIG went under and was nationalized. Credit markets locked up and catastrophe seemed all too likely. Paulson proposed providing liquidity to financial markets by having the government buy up debt related to bad mortgages with a Troubled Asset Relief Program. Congressional Democrats advocated an alternative policy of investing in financial companies directly. Congress passed the Emergency Economic Stabilization Act of 2008, which authorized both policies.

Throughout the crisis, Bush seemed to defer to Paulson and Federal Reserve Chairman Ben Bernanke. He kept a low public profile on the issue with his most significant role being a public television address where he announced that a bailout was necessary otherwise the United States "could experience a long and painful recession."

Bush's Economic Mistakes

• Bush's Budget Blunders

• The Return to Deficits• Iraq• Tax Cuts for the Rich• Financial Regulation• Telling Us to Go

Shopping• Energy Policy• A State of Denial• The Muddled Bailout

• - 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.

President Bush has presided over the weakest eight-year span for the U.S. economy in decades,

according to an analysis of key data, and economists across the ideological spectrum

increasingly view his two terms as a time of little progress on the nation's thorniest fiscal challenges.

Barack Obama

44th President of the United States

Assumed office January 20, 2009