9/11 Anniversary 2012: Why The Great Recession Would Have Happened Even If the Terror Attacks Had Not


The presidency of George W. Bush will forever be intertwined with the terrorist attacks that Tuesday morning in 2001. But had terrorists not attacked the financial structure in New York, causing on that fateful day the decade’s first recession, would the economy have been stronger now than it actually is?

Under such an alternate universe the World Trade Center would have survived, Wall Street would not have taken a shock plunge in 2001, global markets would not have responded to such a plunge, and consumer confidence would have remained as steady as it was in the Bill Clinton and very early George W. Bush years.

But, in this alternative universe a sinister event would still have happened. Had 9/11 not occurred, and Bush did not have to focus his presidency on issues abroad or national security, we would likely have seen massive economic deregulation to the degree that it would have created an even deeper economic black hole than we see today.

Here’s why.

Less than a year after his controversial general election win, the events of 9/11 forced Bush to shift his presidency substantially from the home front toward security and national defense concerns.

And while some have appropriately attempted to tie many of our current fiscal problems to the terrorist attacks of 9/11, it is very likely that the financial crisis would have happened had the attacks not occurred.

Now more than 11 years after he first took office, few people remember that Bush won the presidency after campaigning heavily on domestic issues, such as changes to national educational policy, the potential for exploring stem cell research, and Social Security reform.

But while the prioritizing of such issues can be thought of as routine for modern-day presidential candidates, placing many of these domestic issues as a priority during the early days of Bush’s tenure as president is particularly interesting, as Bush has become the epitome of a Republican president. The devoutly Christian Southern-bred son of a politician who spoke with a drawl and wore cowboy boots had to significantly slide to the center of the political spectrum during his presidential campaign; even employing a campaign slogan of “compassionate conservatism.”

Bush was also the epitome of politician who was plugged into, and sympathetic towards the nation’s big businesses. The Harvard MBA-educated, former businessman who made millions prospecting in oilfields would, most likely, have sought to find ways which he could have slashed taxes, provided incentives, circumvented regulation, and generally made life very easy on corporations. Indeed, in the early days of his first term he opted not to ratify the Kyoto Protocol, as he felt it would hinder American industry.

Some argue that the 9/11 attacks played a major role in our current financial woes. They say that the markets crumbled after the attack, and they took years to recuperate, that we entered two wars, and spent hundreds of billions that we did not have — money which, in theory, could have been distributed amongst our nation’s infrastructure.

However, the terror attacks did not set the spark which would inevitably spell disaster for our economy. That was, instead, deregulation. It was financial instruments such as subprime mortgages, collateralized debt obligations, and the practically limitless ability for businesses to leverage funds which doomed our economy. This is demonstrated by the fact that our markets lost more points after Congress rejected a $700 billion bailout plan at the onset of the financial crisis in 2008, than it did after the markets re-opened after the 9/11 attacks.

In fact, had 9/11 not occurred, and Bush did not have to focus on the efforts of his presidency on issues abroad, we would likely have seen further deregulation which would have translated into a deeper hole for our nation’s markets when the bottom eventually fell out of such unsustainable financial practices.

Many people made a lot of money on these practices (primarily through the purchase of credit default swaps). And had the necessary opportunities presented themselves, much more money could have been made within a continually deregulated economy. The business-friendly Bush would have likely taken steps to make sure that such practices as those which accompanied these “financial WMD’s” were easier for businesses to utilize. Meaning that even more money would have been invested in such practices, and that our situation would be even more dire now.

Would we be in our fiscal situation had 9/11 not occurred? Such conjecture is as difficult to predict as it is thought provoking. As is the case with the 9/11 attacks themselves, many variables went into the development of the current financial crisis. Yet it is always incredibly easy to speculate after much of the damage has been done.