US economy without 9/11

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Deleted member 1487

What if for some reason the 9/11 attacks don't happen, let's say there is a lucky break and the FBI rounds up the attackers first, so then no Afghanistan war and Bush isn't able to go into Iraq. So the US doesn't have any major wars during the '00s. What does that mean for the US economy?
 
Some sort of economic crisis is going to happen with or without 9/11 and the wars, granted, no wars may delay it to 2009 or 2010. The lack of that isn't going to stop the banks from merging, thus becoming to big to fail, nor is it going to stop them from making risky loans. Plus, the housing bubble was decades in the making.

Bush is probably a gridlocked one term President without 9/11 as well, so no second tax cut and no unfunded prescription drug program probably softens the blow of the economic downturn to.
 

TinyTartar

Banned
I'd honestly say that the economy would be scantly affected. It would mean that there would be less deficits ran up by the government, but if you actually look at it, the war funding was not all that huge of a factor in the deficits. The GOP Congress of the time was an irresponsible one in terms of controlling the budget, and the DeLay era earmarks used to keep people in line were not cheap.

You'd still get a 2001 tax cut, Enron falling apart and Sarbanes-Oxley in response. The economy would do reasonably well until about 2006, where we'd likely see a Democrat President have to deal with the housing bubble. I don't think that they'd handle it differently than Bush when the crash inevitably occurs, and it would, as I'd say it was in the making since 1976. They might handle the recovery with more money than Bush was willing to spend and able to get Congress to accept. The far left and far right of both parties would still be opposed, but with a friendly Congress, the President would have no issues.
 
I'd honestly say that the economy would be scantly affected. It would mean that there would be less deficits ran up by the government, but if you actually look at it, the war funding was not all that huge of a factor in the deficits. The GOP Congress of the time was an irresponsible one in terms of controlling the budget, and the DeLay era earmarks used to keep people in line were not cheap.
True, though the Republicans won't retake the Senate in 2002 and may even lose the House, meaning they can do less damage 2003 and after (e.g. no 03 tax cuts). Facing a fully Democratic Congress, and without the distraction of a war, Bush might see deficits go down significantly later in his administration.

Now, as to the effects of all this on the economy at large, well that's a question that's endlessly debated in one form or another.
 
... housing bubble. ... was in the making since 1976. ...

Certainly. The attitude that anyone can make a fast buck in residential real estate has been around a long time. It was feeding unreasonable speculation in the 1970s. My father went into the business around 1975 & I got a good look at the housing frenzy that went with the inflationary 70s. There was a lower grade recession or cooling at the end of the 1970s, another larger bubble and collapse circa the late 1980s, & then the latest collapse of the previous decade. I dont see much as has been learned, particularly since the safety features in place in the 1940s. 1950s & 60s have been removed or altered. Closing out the abused Savings & Loan sector post 1987 was offset by some unneeded deregulation of the mainstream banking industry.

The core problem is to many investors and business managers are convinced high and speedy returns can be had without attention to value added, exhaustive research, product value, tangible assets, ect... a dangerously large portion of the investment sector consists of what amount to pyramid schemes & way to many people dont see a problem.
 
You'd still get a 2001 tax cut, Enron falling apart and Sarbanes-Oxley in response.
But without September 11th, people might have the energy and attention to look more broadly at the problem, and potentially for more full-going remedies. Maybe.

If CNN, for example, had resurrected the story of LTCM (Long Term Capital Managrmrnt) from around 1998(?) with an hour long special. And the story takes legs and another outlet argues with them, etc., that might potentially change everything and you avoid the banking bubble.
 
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I'm a Keynesian. You might want to consider being a Keynesian yourself. This used to be economic orthodoxy. Kind of like asking someone if they believe in plate tectonics. Well, of course I believe in plate tectonics.

One thing I like about the theory is that it tells us we should do different things depending on whether they're good times or bad (generally, be counter-cyclical).

So, without all of the Bush tax cuts, the economy grows less fast. But then, when bad times hit, we have the available resources to do a greater amount of deficit spending.
 

Deleted member 1487

I'm a Keynesian. You might want to consider being a Keynesian yourself. This used to be economic orthodoxy. Kind of like asking someone if they believe in plate tectonics. Well, of course I believe in plate tectonics.

One thing I like about the theory is that it tells us we should do different things depending on whether they're good times or bad (generally, be counter-cyclical).

So, without all of the Bush tax cuts, the economy grows less fast. But then, when bad times hit, we have the available resources to do a greater amount of deficit spending.
Is there the political will though?
 
Bush much to his great dismay later in life will still win a second term as the tax cut will stimulate the economy enough by election day along with the normal economic cycle.

The second term is still going to be a wreck as he is going to push SS and Immigration reform which will be unpopular and he will have to deal with a major city underwater, major scandals among the congressmen in his party and possibly the mega economic crisis, though the exact timing might be off it was the speculative oil bubble of course that slowed things down enough for people to realize the shit that went on.

The Taliban, al-Qaeda and Saddam still going to be major irritations to the WH, but without a 911 equivalent occurring I don't see the Taliban and Saddam being targeted with more then punishing bombings (though likely more then Clinton did). The same for al-Qaeda and other jihadists unless they hit something big.
 
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we (the US) has spent almost $2 Trillion on the War on Terror and associated War in Iraq and associated military and aid spending... while we cut taxes in spite of raising them in just about every other war the US has ever fought..

$2 Trillion folks is a crap load of money even for our economy. All of that is in the national debt too. Toss in massive tax cuts, huge economic losses from the Recession (and thus losses in revenue), Medicare prescription spending (which is huge) and a few other odds and ends, plus of course the desperate bid to halt the Recession from becoming catastrophic and there you go.

No 9/11 would at least have saved us $2 trillion and forced the Bush Administration to focus on domestic concerns instead of waving the flag and sounding charge.

But the housing bubble, particularly the trading of questionable stocks and other monetary assets built on that, is the real killer. I am not certain how much 9/11 affects that other than by diverting our attention from the issue until is was too late.

Ibn Ladin was an evil bastard, but you have to admit for a few million dollars he did massive damage to the West with 9/11, not even counting the housing bubble and economic depression that resulted.
 

GarethC

Donor
There will still be an Iraq war.

It is a compelling option - Saddam is legitimately a bad person and removing his evil is righteous and moral; the disparity in capability is even greater than in 1991 so it will not be costly in terms of casualties and thus reputation, but a bloody shirt rallies support for the incumbent administration and a short, victorious war stems the tide of revolution; Iraqi oil will no longer be embargoed by the UN and a successor regime will partner with American companies in its extraction, not French or Russian ones as Saddam had done.

How hard can it be?
 
There will still be an Iraq war.

It is a compelling option - Saddam is legitimately a bad person and removing his evil is righteous and moral; the disparity in capability is even greater than in 1991 so it will not be costly in terms of casualties and thus reputation, but a bloody shirt rallies support for the incumbent administration and a short, victorious war stems the tide of revolution; Iraqi oil will no longer be embargoed by the UN and a successor regime will partner with American companies in its extraction, not French or Russian ones as Saddam had done.

How hard can it be?

getting past Congress hard and for that matter most Americans.
 
I think we are confusing public government debt with private traded and owned debt. Without the war on terror and the shock to the system that was 9/11, the Bush economy would likely have preformed better through 2001-2008 and arguably the bubble would have popped sooner than it did IOTL.
 
There will still be an Iraq war.

It is a compelling option - Saddam is legitimately a bad person and removing his evil is righteous and moral; the disparity in capability is even greater than in 1991 so it will not be costly in terms of casualties and thus reputation, but a bloody shirt rallies support for the incumbent administration and a short, victorious war stems the tide of revolution; Iraqi oil will no longer be embargoed by the UN and a successor regime will partner with American companies in its extraction, not French or Russian ones as Saddam had done.

How hard can it be?

Depends on what Saddam does and no downing one airplane and killing two pilots isn't enough for a pre-911 Bush.
 
Is there the political will though?
Bush's bailout Oct. '08 and Obama's Feb. '09 were both arguably Keynesian, although with the bitter pill aspect of having to bail out the same loutist bankers who got us in the mess in the first place.

And to Mr.brightside's question of people in better position to ride out the downturn? I'd say yes. With smaller deficits under Bush, there's both more resources and confidence to more aggressively run the Keynesian approach.

* What would have been popular in '09 was infrastructure projects, even though per Paul Krugman you can't ramp these up quickly enough to make any kind of real difference. What would have also been popular, once you stabilize the immediate situation, would be in a lawful and orderly way to begin to break up the big boy banks.
 
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Deleted member 1487

Bush's bailout Oct. '08 and Obama's Feb. '09 were both arguably Keynesian, although with the bitter pill aspect of having to bail out the same loutist bankers who got us in the mess in the first place.

And to Mr.brightside's question of people in better position to ride out the downturn? I'd say yes. With smaller deficits under Bush, there's both more resources and confidence to more aggressively run the Keynesian approach.

* What would have been popular in '09 was infrastructure projects, even though per Paul Krugman you can't ramp these up quickly enough to make any kind of real difference. What would have also been popular, once you stabilize the immediate situation, would be in a lawful and orderly way to begin to break up the big boy banks.

The issue isn't resources for Keynesianism even now with our larger debt, its always political will; when Clinton took office in 1993 he was told he couldn't do any spending because of the huge debt (from the Reagan years), which Gingrich made him pay down and then Bush took office and Cheney said Reagan taught us deficits don't matter (with the corollary of except when Democrats are in power). So stimulus would probably face an uphill battle against the GOP that would do everything to sabotage it could, just like it did in 2009-10. They'd use the debt/deficit argument then too no matter how big the debt actually is.
 
The issue isn't resources for Keynesianism even now with our larger debt, its always political will; when Clinton took office in 1993 he was told he couldn't do any spending because of the huge debt (from the Reagan years), which Gingrich made him pay down and then Bush took office and Cheney said Reagan taught us deficits don't matter (with the corollary of except when Democrats are in power). So stimulus would probably face an uphill battle against the GOP that would do everything to sabotage it could, just like it did in 2009-10. They'd use the debt/deficit argument then too no matter how big the debt actually is.

The U.S. public of the Reagan years which only rewarded Reagan for racking up deficits and the U.S. public of the Bush 41 years very much punished Bush 41 for rising taxes and helping to lower deficits (and likely cost him the election) had a bigger impact on first term Bush then anything Cheney had to say.

Now if Bush had to do it over again starting at 911 I think he would have raised taxes after 911 and did his stimulus through war spending and done some other things quite a bit differently, but back then he was just too focused on winning a second term and not falling victim to the fate that befell his father to see the big picture.
 
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