POLICY AND ANALYSIS
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President George W. Bush’s and President Obama’s economic policy
The US economy had experienced a series of depression in the past years but it was worst hit by the major terrorist attack of the September 11, 2011 that not only shook the nation but also the world at large. The realities of the recession started hitting the nation officially in December 2007, signaled by the collapse of the housing market and subsequent losses on mortgage related financial assets which in turn resulted to great stress and significant turbulence in the financial markets. All this resulted to an overall fall in the broader economic activity. In an attempt to respond to the worsening economic conditions, the administration lowered the federal funds rate by half the percentage point and as the crisis intensified, Bush’s government instituted the federal tax cuts on all the tax payers (Palley, 2011). The recession came to an end in June 2009 but the resultant economic weakness continued to be experienced in the nation with significant high rates of unemployment levels. There were severe job losses, a fall in family incomes and a rise in poverty levels which impacted negatively on the social life of many Americans. The economic environment also suffered severe losses in terms of drastic fall in investments due to uncertainties in the economy’s future. The adverse effects and subsequent fall in the trading activities led to significant falls in the nation’s gross domestic product. The political atmosphere was not left at peace either. The impact of the economic conditions played a major role in the election outcomes. In particular, election of president Obama into presidency ranked as the most important political effect of the great recession. The American voters had punished the Republicans for the ongoing recession in 2008 and were still willing and ready to punish the Democrats for the slow economic recovery experienced in 2010. John Boehner who was the new Republican Speaker of the House argued in his election night victory speech, that the people of America had in fact send an unmistakable message to President Obama to change course by reducing the size of the government, cutting spending and assisting small businesses and the president simply interpreted it as a reflection of the economic frustration experienced at the time (Bartels, 2014). In an attempt to curb the intensified contractions in the economy, the U.S. government adopted a two-pronged strategy by bailing out those financial institutions that were distressed and increasing its expenditure in the economy so as to stimulate business activities. The government also adopted the ownership policy since many private sectors were facing the risk of failure due to the financial crisis. The bailout program was extended by the Congress in the President Obama’s administration by enacting more tax cuts and increasing government spending which Obama claimed would create more jobs (Scheiber, 2012). President George W. Bush’s and President Obama’s fiscal policy of tax cuts and government spending had tremendous impact in the America’s economy. The first policy response to the recession took place under the administration of George W. Bush through a large injection of government spending for the purposes of purchasing the non performing financial assets from the ailing banks. The second boldest fiscal stimulus policy, the American Recovery and Reinvestment Act was passed under President Obama’s administration which included one-third government investments, one-third tax cuts and one-third aid to the citizens who were most directly affected by the recession. The overall fund appropriated amounted to $787 billion. Many American families received relief payments in form of unemployment insurance and many investment projects were put underway to improve infrastructure right from bridges, roads, clean energy manufacturing and even smarter electrical grid. A stress test action was taken to evaluate the health of the largest financial institutions and to secure their confidence by putting them on a more secure footing. This led to a decrease in the credit spreads and substantial rise in the stock prices. In a bid to stabilize the housing market and prevent foreclosures, the Treasury and the Federal Reserve worked together to reduce the mortgage interest rates which in turn resulted to lower payments for millions of Americans who had refinanced their homes. The policy interest rates were reduced to nearly zero to increase the lending capacity that had gone down due to the crisis (Wilson, D. J. (2012). The fiscal policy of tax cuts and increased government spending was very effective at the time since there was no other better way to deal with the recession that was threatening to bring down the economy of Americans. The tax cuts, clean energy provisions, income support payments and the overall state fiscal relief led to positive results such as increase in jobs and economic growth. The income support and tax relief helped many families to get through the hard times and by supporting demand, the severity of the recession was lessened to a great deal. The government aid to states and firms through grants, loans and contracts was very vital as it helped to revive investments and brought to life many small businesses which spurred trading activities and job creation (Caballero, 2013).
Although the effectiveness of the specific elements of the policy can be debated, the policy response was highly effective in general. The financial crisis could not have been settled if the policy makers had not taken such drastic and aggressive measures. The economy could have fallen down and the tax payers could have been worse hit by the recession (Chodorow-Reich, Feiveson, Liscow, & Woolston, 2012).

References
Auerbach, A. J., Gale, W. G., & Harris, B. H. (2010). Activist fiscal policy. The Journal of Economic Perspectives, 141-163.
Bartels, L. M. (2014). Ideology and retrospection in electoral responses to the Great Recession (pp. 185-223). New York, Oxford University Press.
Caballero, G. (2013). Effects of Fiscal and Monetary Policy in the Great Recession. Economies, 1(2), 15-18.
Chodorow-Reich, G., Feiveson, L., Liscow, Z., & Woolston, W. G. (2012). Does state fiscal relief during recessions increase employment? Evidence from the American Recovery and Reinvestment Act. American Economic Journal: Economic Policy, 118-145. Palley, T. (2011). America’s flawed paradigm: macroeconomic causes of the financial crisis and great recession. Empirica, 38(1), 3-17.
Scheiber, N. (2012). The escape artists: how Obama's team fumbled the recovery. Simon and Schuster.
Wilson, D. J. (2012). Fiscal spending jobs multipliers: Evidence from the 2009 American Recovery and Reinvestment Act. American Economic Journal: Economic Policy, 251-282.