The reigning feeling amongst many home owners is that the government should not be using their money to bail out lenders and borrowers, claiming the current mess that majority are finding themselves in is of their own creation. This has ranged on for long, whether the federal government is in order to bail out irresponsible lenders and borrowers. Those that voiced their concerns and criticism of the program said it would set a bad precedence that the federal government would be stepping in to aid poor lenders and irresponsible borrowers.
Those in support of the program believe that it is the duty of the government to prop up troubled Americans and industries. To many, the bail out is like creating a moral hazard. People are bound to continue with their irresponsible financial behaviors. Why did the government take such a bold initiative in spite of the open criticism of the program? A look at the bailing out of a similar nature, the Long Term Credit Management, can help explain this better. There are a number of industries that are just too important to the economy for the government to watch as they go under.
This particular bail out was to avert a possible collapse of the financial markets. There is a mortgage crisis underway and it has led to untold ripple effects to the economy. By the time Bush proposed the bail out, close to a hundred lenders had been pushed under. The banking industry has been having it rough and that could have spiraling effects. The bail out was necessary for the thousand of lenders and borrowers and also for the economy. It is undeniable that the United States economy has taken a big slump. Presidents George Bush tenure in office has been marred by controversies and uncanny fiscal and monetary policies.
The causes of the slump are controversial with some decrying the Iraq war and Bush blaming it on the current mortgage crisis. Controversial though is Bush’s remedy to the crisis. The tax cut has been decried by some as inappropriate. President Ronald Reagan in the 1980s introduced similar cuts to help foster a rapid economic growth, a plan that did not work. Then, it was widely criticized as the economy performed badly shrinking by 2%. This was the same criticism leveled against Bush’s tax cuts. It is important to note that the cuts have recorded a relative level of success.
Though the economic benefits and the impacts that have been brought forth by the cuts may not be clear, they have saved taxpayers millions of dollars. There are those that claim that they could have been more effective had they been combined with a cut on government spending. The tax cuts were necessary. With the economic recess spiraling over from Clinton’s tenure, the federal government needed to raise more revenue. With the tax cuts and the reduction of the government role in the economy, majority of the people have been paying more attention to the market mechanisms and making productive decisions and investments.
The tax cuts have had an effect of spurring growth of job opportunities. In spite of the criticism, the tax cut may remain one of the greatest economic policies of Bush tenure in office (Robert Freeman, 2003). The Corporate Average Fuel Economy (CAFE) is a regulation introduced and enacted in 1975. It was a legislation that was a response to the oil embargo. The current standards introduced by the Bush administration, the Energy Independence and Security Act of 2007, have tightened the standards however have tightened standards in response to the demands by the public.
These standards however have received considerable criticism from the auto manufacturers with majority failing to comply and opting to pay the penalty. In spite of this raging criticism, the CAFE standards though having weaknesses, have achieved their one major objective of reducing consumption of fuel in the United States. References Robert Freeman, May 30, 2003. Bush’s Tax Cuts A Form of National Insanity. Retrieved on 9th June 2008 from: http://www. counterpunch. org/freeman05302003. html