The economic policy adopted by several US administrations in the period 1999-2006 (v. Tab.) Was strongly affected by the recession that hit the country between autumn 2000 and summer of 2001. In the years leading up to this crisis, President B. Clinton had continued his commitment to ensure the consolidation of finances by pursuing the consolidation of the state budget. This policy had registered its greatest success in 2000, the year in which the balance of the public accounts (net of the heavy burden due to social security expenditure) had marked a surplus equal to 1.6% of GDP. These results were achieved thanks, among other things, to a strict application of the Budget Enforcement Act of 1990, which imposed stringent constraints on the discretionary expenditure of public administrations. Then, the collapse of share prices on the main world stock exchanges and the terrorist attacks of September 2001 they helped to stop the country’s growth and forced the newly elected president GW Bush to identify new priorities in his economic policy interventions. Therefore, expansionary fiscal policies and ‘accommodative’ maneuvers were put in place on the currency market which allowed a significant turnaround, allowing the US to resume the driving role of the world economy in the space of two years. The cost of these interventions weighed mainly on public finances, which marked a drastic deterioration, at both federal and local levels. To promote the consolidation of the state budget, starting from 2003-04,the Bush administration again changed the direction of its economic policy, declaring its intention to promote macroeconomic stability while respecting sustainable growth. In fact, it was the opinion of this administration that both the increase in the productivity of firms and the consequent and significant increase in corporate profits would have contributed to ensuring the expansion of investments, the growth of employment and more generally the development of the internal market., without having to resort to costly intervention by the state.
Beginning in 2001, the Bush administration’s fiscal policy was used as the main driver of stimulating economic growth. The permanent reduction of personal income taxes (Economic Growth and Tax Relief Reconciliation Act, June 2001), the introduction of other tax reliefs on transfers of property through donations and bequests, the alleviation of the tax burden on corporate dividends and capital gains (Jobs and Growth Tax Relief Reconciliation Act, May 2003), the introduction of a tax rebate for multi-income households, the increase in the child tax credit and the more liberal regulation for corporate investment were the main tools developed by Congress to promote domestic wealth creation.. At the same time, with regard to the expenditure of the state budget, the administration had to cope with substantial increases in urgent expenses for the defense and internal security sectors. On the other hand, already starting from the second half of 2003,the authorities worked to promote the consolidation of public finances, which in the meantime had deteriorated, by ensuring that the acceleration of employment and the improvement of corporate profitability offset the gradual attenuation of the impetus provided by economic policies. In 2005, the authorities expressed their intention to bring the deficit ratio to GDP back to 1.3 % by 2010. This objective was to be achieved through a drastic downsizing of discretionary spending – which began in 2000they had escaped the previous rigorous control – a simultaneous increase in the tax burden – allowed by the favorable prospects of economic growth and implemented according to criteria of progressivity – and the adoption of fiscal drainage mechanisms.
The consolidation of public finances could not be separated from the reform of the social security system: this revision was made impossible to postpone by the gradual aging of the population and by the increase in the costs of healthcare services. In particular, during 2005 the administration placed at the center of the political and social debate the need for a reform of the social security system that contemplated raising the retirement age and introducing a more favorable pension indexation mechanism for the workers of the less well-off classes. As for the health sector, the administration intervened in 2003with targeted interventions, such as the introduction of tax incentives aimed at favoring the underwriting of health insurance and the provision of tax concessions relating to health and assistance costs incurred by individuals. The restructuring of the sector was also started in 2005, with the redefinition of the division of fiscal responsibilities between the federal bodies and the State.
In response to the growing financial difficulties of major listed companies (such as the December 2001 bankruptcy of Enron, the first US company in the energy sector, and in July 2002of WorldCom, the second largest company in the telecommunications sector), the administration initiated a comprehensive regulatory reform on these companies, with the aim of ensuring that US companies regain the confidence of domestic and foreign investors. The reform was mainly based on three pillars: promoting the improvement of the discipline of financial markets, ensuring the revision of the procedures for evaluating company financial statements and, finally, developing self-regulatory standards and behaviors in private companies. In fact, for the specific purpose of guaranteeing the correctness of conduct in subjects operating on the financial markets and of giving greater reliability to the information on rating, the system of sanctions in cases of forgery, fraud and obstacle to justice.
Particular attention was paid to the agricultural sector. The agricultural support program for the period 2002-2007, outlined in the Farm Security and Rural Investment Act (May 2002) to replace the previous law of 1996, was inserted in a broad regulatory context that regulated various aspects such as rural development, trade, bioenergy production, research, environmental protection; in addition, new direct financing mechanisms for agricultural producers were introduced. This intervention, which particularly favored large landowners, placed foreign agricultural producers at a competitive disadvantage compared to those in the United States.
The monetary policy adopted by the Federal Reserve basically followed the orientations and guidelines pursued by the various administrations through fiscal policy. In fact, during the last years of the Clinton administration, the monetary authorities ensured control of liquidity, managing to keep inflation close to 2 % during 1999. Subsequently, with the Bush administration, the management of monetary policy ensured support for the economic recovery by reducing the target interest rate on federal funds. and the discount rate, while preserving price stability. This expansive monetary attitude, adopted quickly and intensely, made it possible to counteract the worsening of corporate profitability and the consequent decline in investments, avoiding the deterioration of consumer confidence. To implement this policy, extraordinary measures were approved in 2001 in order to ensure adequate levels of liquidity for the financial system. However, as of the second half of 2004,the monetary authorities tightened their maneuver by gradually raising the interest rate, not considering any imminent risks of deflation. Finally, in order to promote the credibility of the Federal Reserve, reduce the variability of prices on the financial markets and keep inflation expectations stable, during the period under review, and with particular vigor starting from 2005, it was decided to adopt a greater transparency in assessments and monetary policy decisions. In particular, the competent authorities made every effort to clearly define their inflation objectives and to disseminate money market data on a regular basis, inter alia by extending the time horizon of forecasts on price trends.
The commercial policy implemented by the US was the subject of numerous criticisms and discussions. In fact, on the one hand, the Bush administration declared its intention to promote world trade by appealing to regional agreements signed with Europe, Latin America and Asia, and to individual bilateral treaties; on the other hand, an almost constantly negative current account balance since the early 1980s pushed government bodies to resort to import limitation measures in sectors such as agriculture, wood, steel and textiles. The imposition of these trade barriers was strongly criticized by the international community as encouraging the use of protectionist practices on a global scale.