One of the periods that saw a significant increase in U.S. debt and a decline in its economy was during the presidency of George H.W. Bush, father of George W. Bush. However, the solution to this challenging period came almost magically under Bill Clinton, who later became associated with what is called the "American Golden Age."
When George H.W. Bush won the presidency, it seemed he couldn't believe it himself, so he started experimenting with various economic policies, most of which failed. This led to a massive increase in U.S. debt, reaching $2.2 trillion!
His popularity declined, with approval ratings dropping to just 22%. Feeling pressured, Bush sought drastic solutions to revive his popularity and the U.S. economy. He found his solution in launching a global war to boost his influence and attempt to pay off the debts.
Gulf War Leaks and Consequences:
Leaked documents suggested that George H.W. Bush sent U.S. Ambassador April Glaspie to meet with Iraqi President Saddam Hussein, hinting to him that Kuwait was manipulating Iraq's economy. Subsequently, Saddam invaded Kuwait, leading Kuwait to seek help from the U.S., offering generous financial support in return. European fears of a possible Saddam attack on other Gulf states further fueled support for Bush.
Bush formed a military coalition with 34 countries to help Kuwait. The cost of the war for the U.S. was estimated to be $3 trillion in the long term, according to Linda Bilmes, a lecturer at Harvard University. However, Kuwait couldn't repay the war costs due to the enormous losses it suffered, including the burning of thousands of oil wells.
Decline of the U.S. Economy:
After the war, U.S. debt ballooned to record levels, harming trade, industry, and per capita GDP, which reached its lowest point in half a century. As a result, George H.W. Bush lost the next presidential election amidst widespread public anger and calls for his prosecution.
The American Golden Age:
Then came Bill Clinton, who historians call leading the "American Golden Age" (1992-2000). Clinton focused his election campaign on the economy and began immediately upon taking office to repair the deteriorating U.S. economy.
Clinton's Economic Policies:
Education Reform: Clinton launched a fierce battle with teachers' unions to implement competency tests for teachers, leading to improved education quality and increased public awareness.
Economic Policies: Clinton appointed a professional economic team, successfully lowering interest rates on loans for small investors and encouraging investment. He removed tariffs on most goods and supported innovative industries.
Social Reforms: Clinton raised taxes on the wealthy and reduced them for the middle class and low-income earners, benefiting 15 million families. He also introduced reforms in children's healthcare and increased the minimum wage and pensions.
Results of Clinton's Reforms:
Thanks to his policies, poverty rates decreased, unemployment dropped, the U.S. stock market flourished, and the debts accumulated under George H.W. Bush were paid off, leading to a trade surplus of $559 billion. During Clinton's era, the U.S. became a global powerhouse and a symbol of modernization and globalization.
Post-Clinton Era:
Despite Clinton's successes, his term ended with some personal scandals. He was followed by George W. Bush, who became entangled in new wars, such as the Afghanistan and Iraq wars, plunging America back into a debt cycle. After him, Barack Obama's more measured policies contributed to a decline in American global dominance. Nevertheless, the U.S. remains a superpower and a leading force on the international stage.
Lessons Learned:
The American experience, despite its flaws, remains one of the most inspiring for countries looking to study successful models of development and progress.