US Economy: Evaluating Government Intervention After the 2008 Crisis

This essay provides an analysis of the US economic system, focusing on the significant downturn of 2008 and the subsequent attempts by the US government to correct the situation. It identifies the immediate causes of the downturn, including international trade imbalances, lax lending standards, and housing policies. The essay then outlines the various steps taken by the government, such as changes in mortgage loan regulations, economic stimulus efforts, and tax credits for home buyers and the unemployed. Finally, it assesses the effectiveness of these government interventions, concluding that they were only partially successful due to the reliance on taxpayer money and the inadequacy of assistance to compensate for consumer debt. Desklib offers similar essays and resources for students.

Running head: US ECONOMY
US ECONOMY
Name of the Student
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Author Note

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The U.S. economic system.
The United States can be stated to have a mixed economy. This means that it functions as
per the economic system which tends to comprise of the characteristics of both the capitalism
and the socialism. The mixed economic system is largely aimed at protecting the private property
and in addition to this, also aims to allow a sense of economic freedom in the usage of the
capital. However, it does not limit itself to this, and the government will be required to intervene
in the economic activities in order to ensure that the aims of the social objectives and the public
aims are also achieved at large. According to Kurtz et al. (2014), the government of the United
States has had a considerable role to play in the different economic affairs of the nation and there
have been man functions which have come under the direct influence of the public sector. In
addition to this, the economy of the United States tends to comprise of elements of the free
markets as well as the centrally planned economic controls.
The immediate causes of the significant downturn
The immediate causes of the significant downturn can be stated to be as follows:
 The International trade imbalance and tax lending standards increased and developed the
household debt which also made the real estate bubble burst.
 In addition to this, the housing policies of the government can also be stated to be quite
limited in nature (Smith et al., 2008).
 Moreover, the regulation of the non –depository financial institutions can be stated to be
largely limited and hence, with respect to this, debt regulations
 Due to the above given reasons, the United States economy faltered considerably and the
Great downturn of 2008 took place which brought about recession all around the globe.

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The attempts of the U.S. government to correct the situation
In order to overcome the situation of the 2008 economic crisis various steps and
procedures were adopted by the United States government in order to ensure that the economy is
able to attain its lost resources. Some of the immediate changes which were taken up by the US
government can be stated to be as follows:
1. Changes in the regulations which were largely concerned with the mortgage loans and
this lead to a number of economic stimulus efforts as well (Smith et al., 2008). The given
measure was adopted in order to ensure that the government spending or the tax
incentives were considered in order to revive the economy from the recession situation.
2. As a form of stimulus, the government made considerable payments to the different
financial service institutions in order to ensure that the risks could be minimized.
Moreover, the different tax credits to the different qualifying families was provided, the
funding’s for the capital improvement projects were balanced (Npr.org, 2018).
3. In addition to this, the government also provided a tax credit of $8000 to the first home
buyers and also gave subsidies for the unemployed workers.
Effectiveness of the government’s steps
According to Mastel (2016), it can be stated that the different steps which were adopted
by the government could be stated to be partially successful. This is because, although the
government paid out various incentives to the different house purchasers, car purchasers and
other related parties, however, it was unable to mitigate the entire effects of the recession
because, this incentive and subsidy which was being provided by them came in the form of taxes
which was being paid by the different citizens themselves. In addition to this, although assistance

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was provided to the different consumers as present in the United States economy, it was not
enough to compensate for their debts. Hence, it can be stated that the government was partially
successful in improving the overall Recession of 2008 caused by the financial blunders.

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References
Kurtz, S. M., Ong, K. L., Lau, E., & Bozic, K. J. (2014). Impact of the economic downturn on
total joint replacement demand in the United States: updated projections to
2021. JBJS, 96(8), 624-630.
Mastel, G. (2016). Antidumping laws and the US economy. Routledge.
Npr.org (2018). Operation twist-easy steps [online]. Available at:
https://www.npr.org/sections/money/2011/09/21/140643696/operation-twist-explained-
in-4-easy-steps (Retrieved on: 18 Feb. 2018).
Smith, V., Gifford, K., Ellis, E., Rudowitz, R., O’Malley, M., & Marks, C. (2008). Headed for a
Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an
Economic Downturn Results from a 50-State Medicaid Budget Survey for State Fiscal
Years 2008 and 2009. Washington, DC: Kaiser Commission on Medicaid and the
Uninsured.