Ara is a Journalism graduate who used to work for Countrywide and saw what was going on in the company during the mortgage crisis.
There has been a lot of discussion all over major news networks about a possible default if the debt ceiling is not raised. But the real reasons why the U.S. economy is still in "bad" shape are never revealed to the American public—or, at least, this type of news is not really reported accurately enough. Sure, the economy is not actually as bad as it has been in the past, but it's still not good enough for the middle class.
The real reasons for the bad economy are many, so let’s discuss them. Much of this essay is based on what this writer has read, seen, and heard for a period of many years going back to 2003, and therefore this article is biased. If you want to learn my original perspective on one of the most complex and troubling issues of our time, I encourage you to give this article a chance.
Why the Economy Is Still Struggling
- Negative Effects of Reaganomics
- Economic Blunders by the Bush Administration
- The Failed War on Terror
- Corruption in the Republican Party
- Risky Mortgage Loans
- The Influence of Wall Street on Politics
1. Ronald Reagan and His Reaganomics Agenda
My first point is that the slow decline of the middle class in the United States happened under President Ronald Reagan once Reaganomics became a major part of his agenda. Although I have been very harshly critical of the Reagan years, I realize that he was not a bad guy personally. He was just a bad president for the middle class.
Some of you may ask the question of what role Reagan had to play in the weakening of the economy. Basically, Reaganomics was part of what is known as the "trickle-down" theory. Still don’t believe me? Free-market capitalism makes the rich even richer and the poor even poorer.
What Is Reaganomics?
2. Economic Blunders by the George W. Bush Administration
President George W. Bush and Vice President Richard Cheney are also responsible for this mess. This might be hard for many of you to believe, but this is one of the real causes of the economic crisis here in America, which is one of the wealthiest countries on Earth.
Yes, the economic slowdown is also partially due to the loans that were not able to be paid off by many homeowners and the collapse of the subprime mortgage market. But the reality is that the Republican Party’s policies are responsible for the economic chaos that America is in right now, and that is very clear. The United States government spends more money each month than the revenues that it generates, so it is no wonder why the country is in debt. You cannot spend more money compared to the amount that you make and expect to be in good financial shape. No person or entity in any country can do that and expect not to face consequences.
Note: Even if George W. Bush was a bad President, at least he understood how the U.S. Constitution works. Even though I have been critical of George W. Bush for the state of the US economy, his presidency is not the only reason for the still-weak U.S. economy. At least he was responsible for Medicaid expansion.
Just after Bill Clinton left the White House, America had a huge economic surplus. People in this country had jobs and they could support their families. But with the arrival of George W. Bush in the nation’s highest office, Bush and his team of advisors made a series of blunders that have left the United States in exactly the shape it is in now.
Using free-market capitalism tactics combined with corruption, Bush and Cheney used a series of tax cuts which were shown to benefit only the wealthiest of Americans while middle-class incomes declined from 2001 through 2009. Actually, the U.S. deficit did not reach $1 trillion until 1981, which was the start of the Ronald Reagan presidency. The Republican Party’s main objective has been to make sure that the rich get richer while the poor continue to struggle. The GOP does not care about the average person. I know that this may sound biased to some readers, and it is, but this writer is attempting to present both sides of the story. If some of you are wondering about the Democrats’ role in this—don’t worry, we will get there.
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3. The Failed War on Terrorism
With the September 11th incident, Bush launched a worldwide war on terrorism. On October 7, 2001, U.S. forces went into Afghanistan to try to eliminate the Taliban and capture Osama Bin Laden, who is now dead. The US forces, along with the other NATO countries, are stuck in an unwinnable war that can never be won through the use of force. It is said that wars are won politically.
In March of 2003, the United States and the United Kingdom under then Prime Minister Tony Blair used a series of reasons to justify an illegal invasion of Iraq because they were concerned about Saddam Hussein having weapons of mass destruction. It is estimated that the US is spending $10 billion dollars each month to finance two lost wars, while 1 out of every 4 American children is now on food stamps, and additionally, 1 person out of 8 is on food stamps.
The failed war on terror is largely Dick Cheney's fault. Although Paul Wolfowitz is considered one of the architects of the second disastrous Iraq War, it was Cheney who was the real "mastermind" behind this, along with Bush Jr., who kept on asking for research on whether there was a Saddam Hussein and 9/11 connection! And this country has been able to maintain a high standard of living because of all this borrowing of money from other countries so it can finance its operations.
We Need to Withdraw From Iraq and Afghanistan
The United States cannot afford to keep spending this kind of money on these wars. It has been proven that you cannot spend billions of dollars on foreign wars and expect to have a healthy economy. Even James Madison understood this quite well. The facts are very clear. If the United States continues the wars in Iraq and Afghanistan while the rich continue to get richer, the country is going to face bankruptcy along with other serious social problems. The corporations have continued to have record numbers of profits while an extension of the Bush-era tax cuts resulted in the creation of only a small number of jobs.
The news media in this country broadcasts only what they want their citizens to hear. Wars are never good for a nation’s economy, and it is clear that the United States is no longer a first-world country like it claims to be. The US is becoming a country of the very rich or the very poor. The wars overseas, along with the horrible decisions to cut the taxes of the wealthiest Americans, have proven to be very costly. A nation that is on the verge of bankruptcy cannot ever be considered a first-world nation. Some people have even said that Mexico now has a better economy than the United States does.
The United States must withdraw all of its troops from both Iraq and Afghanistan as soon as possible. The wars in those countries have already been lost, and there is no way that the US army can win these wars against populations that have so much pride and they are willing to die for their country. It is time that these wars came to an end right now. Over 16 years of war in Afghanistan (as of October 2017) has not eliminated the Taliban, and force will never get rid of them. Almost 5,000 official US deaths in Iraq have not produced the so-called weapons that Bush and Cheney claimed that Iraq had. Instead, billions of dollars and many lives have been wasted for nothing while the US economy continues to suffer.
4. Irresponsible Republican Policies
The Republican Party of the late 20th and early 21st centuries is much different than the one that existed in the 1860s during the term of Abraham Lincoln. What a difference a period of 140+ years can make in a country! Many things can change, and there are many things in America that have indeed changed since that time.
It's Not Obama's Fault
It is time for the people of America to stop blaming Barack Obama for the economic mess in America. He inherited this situation, and it was never his fault. The real problem is the Republican Party—it's as simple as that. The Republican Party is extremely corrupt. A victory in the 2012 general election for the Republicans would have meant that America would go further into debt and be destroyed economically. The Republican Party’s terrible, irresponsible policies are some of the biggest reasons for the bad US economy—not Barack Obama's. It is time that the American public realized this.
5. Risky Loans Sold by Mortgage Companies
Another huge reason why the US economy is still struggling is the fact that mortgage companies, such as Countrywide Financial Corporation, sold and gave risky loans to their customers. These customers were convinced to accept these loans even though they could not pay them.
As someone who used to work for the company that was the largest mortgage lender in the US, I saw and heard what was going on in the company first-hand. This writer used to work for Countrywide Full Spectrum Lending Division in Southern California between 2004 and 2007 in the sales and processing departments. Due to irresponsible and risky behaviors of former CEO Angelo Mozilo and some of the people higher up in the company, many people lost their jobs and were forced to look elsewhere for work.
6. The Rising Influence of Wall Street in American Politics
These days, the rise of Wall Street and Corporate America has much to do with how the US economy is functioning. These corporations and lobbyists have a lot of say in who gets into the White House. Many members of Congress follow where the money will take them. This includes members of both major parties. Corporate America basically manipulates these politicians and tells them what to do, so it is fair to say that the Democrats are at least partially to blame for the tough times that we still face.
Statistics Show the Economy Is Struggling
Now let's look at some additional outside perspectives to see why the US economy is still not where it should be even in 2016 as we approach the Presidential election in November 2016. What follows is documented evidence and facts, not just me making claims to get points across.
- According to some statistics released by the Guardian newspaper in London in 2013, it was not looking good even at that time. One major problem is that wage-earners were seeing their earnings drop. Between 2009 and 2012, median wages in the US dropped by 2.8% (Herbst). And Herbst also says something in this article that Bernie Sanders has said many times: the middle class here in the US is declining!
- Another thing that people should really pay attention to is that the said unemployment rate at the time of 7.6% was not accurate. In June 2013, if we were to look at the unemployed population plus those that were looking for a job but gave up and those that are part-time workers but they want a full-time job, the figure was estimated to be at 14.3% (Herbst). If you do the math, that’s almost twice as high as the stated figure! Why is our media deceiving us? Maybe they don’t want us to be afraid, which may be a logical assumption at this point.
How Do We Fix It?
Some of you may be asking how we improve the US economy, although that’s not the focus of this article. The reality is that unless we make the US a more business-friendly environment, things will continue to be harder for young people, including this writer. And sadly, I have not really heard any real solid solutions from either of the major political parties on how to fix this massive problem.
Is It Really So Bad?
Is the US economy really as bad as some analysts say? I think so.
A chart released by the Bureau of Labor Statistics shows that “the United States economy continued to thrive in April, with the unemployment rate dropping to 3.6 percent,” (Advisors, 2019). This is the lowest official such rate since 1969, spanning 5 decades. This is certainly good news for the Trump Administration. By April, it is meant April 2019 and that little bit of news may be good but the Administration still has work to do to convince a skeptical American public.
In fact, according to an article on Vox, millions of Americans are still working part-time jobs when they would rather get a full-time job. That doesn’t sound like a healthy economy to me. So the question that some of us may still be asking is whether the US economy still bad in 2019. Well, it certainly isn’t as good as it should be.
- Advisors, C. O. (2019, May 3). Unemployment Rate Falls to Lowest Level in Nearly 50 Years; U.S. Economy Adds 263,000 New Jobs in April. Retrieved from White House Official Web Site: https://www.whitehouse.gov/articles/unemployment-rate-falls-lowest-level-nearly-50-years-u-s-economy-adds-263000-new-jobs-april/
- Herbst, M. (2013, July 24). 10 Reasons The US Economy is Stuck. Retrieved May 5, 2016
Biggest Reason for the Weak US Economy in 2016
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2016 Ara Vahanian