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The Rest Is Politics: US
The Rest Is Politics: US

How The War on Terror and Obama’s Bailout is Still Costing America

September 22, 2026 • 21m

Summary

⏱️ 6 min read

Overview

Anthony Scaramucci and Katty Kay examine how the George W. Bush administration's decision to fight wars in Iraq and Afghanistan while simultaneously cutting taxes, followed by the 2008 financial crisis and Wall Street bailout, created catastrophic debt that fell on working-class Americans. They trace how fiscal discipline established under George H.W. Bush and maintained by Bill Clinton was abandoned, leading to decades of deficit spending that eroded the financial buffer protecting ordinary citizens and fueled the anger Donald Trump would later harness.

The Legacy of Fiscal Discipline: From Bush Sr. to Clinton

The discussion opens with a critical examination of a lost era of responsible governance. George H.W. Bush passed 'pay-go' legislation in 1990 that required offsetting any tax cuts with spending reductions or funding new programs with tax increases. Bill Clinton maintained this discipline, implementing the largest tax increase in U.S. history despite Republican opposition, which created a $236 billion surplus and projected $5 trillion surplus by 2010. This bipartisan commitment to fiscal responsibility set the stage for what would become a dramatic reversal under the next administration.

  • George H.W. Bush passed pay-go legislation in 1990 requiring fiscal offsets for spending or tax changes
  • Bush broke his 'read my lips, no new taxes' pledge to adhere to pay-go during recession
  • Clinton implemented the largest tax increase in U.S. history with no Republican votes, requiring Al Gore's tie-breaking vote
  • This fiscal discipline created a $236 billion surplus and projected $5 trillion surplus by 2010
" We had to get Al Gore out of the Naval Observatory like O.J. in the Bronco. I remember CNN posting this. He was driving down Pennsylvania Avenue to go up to the Congress to cast the deciding vote on the tax increase. "
" The CBO said we were going to have a $5 trillion surplus by the end of 2010. And Bush said, well, I want to give it back to the American people. And Gore said, well, I'm going to spend it on infrastructure, the environment, and education. "

9/11 and the Shock That Changed Everything

Katty Kay provides crucial context for understanding the post-9/11 environment, describing the genuine fear and uncertainty that gripped Washington and the nation. The attack created a period of national unity, but also influenced decision-making in profound ways. George W. Bush, haunted by his father's 1992 loss after raising taxes, faced the twin pressures of responding to terrorism while maintaining his tax-cutting agenda. The memory of his father's political defeat combined with the trauma of 9/11 to create conditions where normal fiscal constraints were abandoned.

  • 9/11 created genuine fear of follow-up attacks and uncertainty about what would come next
  • The attack unified the country initially but this unity didn't last long
  • George W. Bush felt duty to succeed where his father failed by not raising taxes
  • Ralph Nader got less than 3% and Pat Buchanan 0.4% in 2000, suggesting no outside threat to conventional politics
" We had in our cupboard in Washington, D.C., a kind of emergency go pack in case there was going to be some kind of a nuclear bomb or some kind of a dirty bomb let off in the capital. We didn't know that that was it, that 9-11 was the sum total. "

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