According to Bush, how might the Gulf War make America's economic situation worse? Higher oil prices and higher defense costs would reduce the fiscal deficit problem. Higher oil prices and higher defense costs would anger people by necessitating higher taxes. Higher oil prices and higher defense costs would mean slower growth and more debt. Higher oil prices slow our growth, and highe defense costs would only maketour fiscal deficit problem worse. That deficit was already greater than it should have been - a projected \( \$ 232 \) billion for the coming year. It must - it will - be reduced. -President George H. W. Bush, September 11, 1990

In the statement provided by President George H. W. Bush, he outlines several potential economic consequences of the Gulf War. Let's break down the key points: 1. **Higher Oil Prices**: The Gulf War could lead to increased oil prices due to instability in the region. Higher oil prices can have a ripple effect on the economy, leading to increased costs for consumers and businesses. 2. **Higher Defense Costs**: The military engagement in the Gulf War would likely result in increased defense spending. This additional expenditure could strain the federal budget. 3. **Impact on Economic Growth**: Both higher oil prices and increased defense costs could slow down economic growth. When consumers and businesses face higher costs, they may reduce spending, which can lead to slower economic expansion. 4. **Fiscal Deficit**: Bush mentions that the fiscal deficit was already projected to be \( \$ 232 \) billion for the coming year. The combination of higher oil prices and defense costs would exacerbate this deficit, making it more challenging to manage. 5. **Need for Reduction**: Bush emphasizes the necessity to reduce the fiscal deficit, indicating that the economic situation could worsen if these factors are not addressed. In summary, Bush suggests that the Gulf War could worsen America's economic situation through higher oil prices and defense costs, leading to slower growth and an increased fiscal deficit.