The Presidency of George H.W. Bush Notes

Bush 41 Presidency

  • Born in Massachusetts, lived in Greenwich, CT.
  • Naval Aviator during WWII, shot down twice (only survivor).
  • Yale graduate (economics), captain of baseball team (graduated in 2.5 years).
  • Moved to Texas, involved in the oil business.
  • Elected to Congress in 1966.
  • Ambassador to UN under Nixon.
  • Director of CIA under Ford.
  • Reaganomics: labeled as "Voodoo-economics".
  • VP from 1981-1989.

1988 Election

  • Bush ran against Michael Dukakis (Governor of Massachusetts) and won.
  • Dukakis described as radical left-wing liberal.
  • Bush promised to maintain the legacy of Reagan: peace, stability, etc. (soft on crime).
  • Foreign policy president: Kuwait war, Gulf war, re-unification.
  • Dan Quayle: VP.
  • First incumbent VP to be president since 1836.
  • Top priority: bring an end to federal budget deficits.
  • Addresses the liability to long-term economic health and standing in the world.

Problems with Deficit

  • Crowding-out effect: government borrows, increase interest rates, crowds out and reduce private sector investment.
  • Loanable funds market.
  • Monetizing the deficit (printing money).
  • Foreign investors lose confidence: The US cannot pay obligations, making it more expensive to borrow money, ditching dollars if you cannot pay debt dragging down value.
  • Reduced spending on federal programs that boost economic growth.

Bush's Domestic Agenda

  • Difficult to enact major domestic programs.
  • Low government spending to fight this.
  • Did not have revenue or political climate to take on big ventures.
  • Assuming the presidency: "Limited agenda".
  • Volunteerism.
  • Education Reform.
  • Anti-drug efforts.
  • "A thousand points of light, of all the community organizations that are spread like stars throughout the nation, doing good".

Budget Issues

  • Speech: "Read my lips, no new taxes".
  • Trying to balance budget plus reduce deficit without imposing additional taxes on American people (proposed gas taxes but was rejected).
  • Has to compromise with Congress (Democrats control).
  • After budget got shut down, Budget Reconciliation Act of 1990 leads to no new tax but "revenue increases".

Savings and Loan Crisis

  • Bailed out industry.
  • Thrift: go there and get a loan/mortgage to buy a house at a fixed rate.
  • Mortgages back story: Early 1980s starts.
  • Offer low rates to people (loans).
  • To attract deposits need to offer higher interest rates.
  • Unable to meet liabilities.
  • Liability mismatch problem: Paul Volcker raised interest rates --> 86-93 collapse.
  • Bailout of 5050 billion.

Latin American Crisis

  • Argentina, Brazil, Mexico economies doing well in the 60s and 70s.
  • Wanted to borrow money to invest in infrastructure --> 1980s high interest, becomes difficult for countries to pay back debt (impact currencies).
  • Brady Bands: offered banks credit enhancements in exchange for agreement to reduce debt.
  • Civil Rights Americans with Disabilities Act.
  • Elevators of 1990.
  • Environment Clean Air Act of 1990.

1992 Re-Election Bid

  • Lost to Clinton: Welfare Reform, healthcare reform.