The current financial crisis has affected millions of Americans [GALLO/GETTY]

As part of Al Jazeera's in depth look at the legacy of George Bush, the US president, both at home and throughout the world, noted economist Gerald Friedman examines his economic policies and how they have shaped the US economy for the last eight years.

Evaluating George Bush, the US president, and his first term in the White House, in October 2004, a group of 169 leading business economists concluded "that US economic policy has taken a dangerous turn under your stewardship".

In a public letter to the president, they wrote that "nearly every major economic indicator has deteriorated since you took office".

Real economic growth between the years of 2001 and 2004 was the lowest of any presidential term in recent memory; the unemployment rate increased, real average incomes dropped, bankruptcies increased, and the US became dependent on foreign capital to finance its exploding debt.

In short, these economists concluded that "your policy ... has not worked".

Economic stagnation

Unemployment may surpass seven per cent by the end of Bush's term [GALLO/GETTY]

Using the broadest measure of economic performance - the growth of the gross domestic product - Bush has presided over the worst economic performance of any president since Herbert Hoover, the US president during the Wall Street crash of 1929 and ensuing Great Depression.

Employment has also stagnated. The rate of job creation plummeted after 2000 to the lowest level in modern times, less than half the rate of the Bill Clinton administration in the 1990s.

Unemployment, under four per cent at the end of the Clinton years, reached 6.7 per cent in November 2008 and may surpass seven per cent by the time Bush leaves office in January 2009.

Economic decline and scarce employment has meant falling incomes for most, but not all, Americans. Productivity, or output per worker, has risen steadily during the Bush years, but little of this has gone to average Americans.

Workers shared in past productivity growth, but they have seen little of these gains since 2000. Instead, most income growth has gone to the rich.

Compared with the 1990s, the annual growth rate in corporate profits doubled in the Bush years at the same time that the growth rate in compensation fell by 70 per cent.

After rising by nearly one per cent a year in the 1990s, real earnings for non-supervisory workers fell under Bush, more workers are going without health insurance or pension coverage, and average family income is down nearly 10 per cent.

At the same time, rising profits and ballooning executive salaries have raised income for those at the top of the distribution.

As recently as the late-1980s, the wealthiest Americans, the richest 10 per cent, received one third of national income. Now they have almost half of total income, a level not seen since the Great Depression.

Pennies for the poor

Unions have been hit by stringent new regulations [GALLO/GETTY]

The Bush tax cuts, coming to more than two per cent of total GDP (gross domestic product), have been carefully targeted at the richest in the US.

While the poor receive pennies and middle-income Americans save barely two dollars a day, taxes on the wealthiest one per cent have been cut by $35,000, with taxes for the very wealthiest (the richest 0.1 per cent) falling by more than $120,000.

The Bush administration has tried to finance these tax cuts with spending reductions, cutting social programmes vital for needy Americans, including the elderly, the sick, the disabled, and children.

The White House also sought to revive economic growth, and inflate corporate profits, by reducing public regulation of business.

And the administration has launched a frontal assault on the rights of workers to belong to a labour union.

Unions have been harassed, smothered under new regulations requiring additional paperwork and reports to federal agencies packed with hostile ideologues.

Bush-appointed anti-union activists who now dominate the National Labour Relations Board which has issued rulings forbidding union organisation for millions of workers.

Deregulation frenzy

Lessons were not learned from the collapse of energy giant Enron [GALLO/GETTY]

It turned a blind eye, for example, to the financial shenanigans that brought down major companies such as Enron.

Ignoring that warning, Bush pressed on to deregulate the financial services industry both through new policy initiatives and by appointing lax and lazy regulators.

By feeding the financial boom, deregulation enriched Wall Street executives who walked away with billions in bonuses and profits while leaving the public to pick up the pieces in phenomenally expensive bail-outs of the banking sector.

Deregulation allowed insiders to mislead investors; once discovered, this deregulated fraud has undermined confidence in our banks and other financial institutions and ushered in one of the worst economic crises in US history.

Such a disaster has the Bush policy of financial deregulation been that even some prominent architects, including Alan Greenspan, the former chairman of the US Federal Reserve, have acknowledged that it was a catastrophic mistake founded on a flawed ideology.

Crash in standards

Will Obama, left, overcome the financial crisis he inherits from Bush? [AFP]

Now that we are in a severe recession, we may anticipate even sharper falls in living standards.

Bush's policies has contributed directly to this recent economic collapse, both through his policy of financial deregulation and by redistributing income away from working Americans.

Even the slow rate of economic growth under Bush has depended on unsustainable borrowing by workers whose income has not kept up with rising prices.

By squeezing workers' incomes, the Bush policy limited effective demand even while financial deregulation encouraged Americans to maintain consumption by reducing their savings and borrowing against their home equity.

In the past year, the debt-fed consumption boom of the Bush years has come crashing down in a financial crisis that now engulfs the world.

Weighted down by heavy mortgages, a growing number of US home-owners have defaulted, bringing down an over-leveraged and under-regulated financial structure.

The financial crisis then fed on itself when banks ceased lending to businesses, consumers, and even other banks, driving the economy down and leading to more foreclosures and further financial collapse.

Some of the worst presidents in the history of the US left their greatest failures behind them as a legacy to be addressed by better leaders who inaugurated a new era to US history.

This was the case, for example, for James Buchanan, followed by Abraham Lincoln, and Herbert Hoover, followed by Franklin Roosevelt.

We may hope that this country will be so lucky after George Bush.

Gerald Friedman is a professor of economics at the University of Massachusetts at Amherst.