Monday, November 21, 2011

The Bush-era tax cuts that sank the supercommittee

The tax cuts have proved to be the kryptonite that defeated supercommittee set up to tackle the US's $15tn deficit

In June 2001, president George W Bush signed into law one of the most sweeping changes in US tax history. More than a decade later the cuts are being blamed for the collapse of bipartisan talks aimed at tackling the debt mountain the built up in the decade that followed.

The Bush-era tax cuts are set to expire at the end of next year and have proved to be the kryptonite that defeated a bi-partisan "supercommittee" set up to find ways to tackle the US's $15tn deficit. Republicans dug in against any agreement that did not extend current income-tax rates, Democrats held out for higher rates on families with taxable income over $250,000 a year.

Away from Washington the senior economists – and even some senior Republicans - seem to agree that a compromise was needed and that the tax cuts had done more harm than good.

"This is going to be the big debate for 2012," said Simon Johnson, professor of entrepreneurship at MIT's Sloan School of Management and former chief economist of the International Monetary Fund (IMF).

The tax cuts were "inappropriate, excessive and irresponsible," he said. "Cutting taxes when you are going to war is a pretty silly thing to do," he said. "They were based on extremely optimistic projections that turned out not to be correct. If you don't extend them, the amount of additional cuts you need to make to reach a sustainable debt level are pretty small. If you do extend them, make them permanent, you are looking at a very big adjustment."

In a recent report the non-partisan Center on Budget and Policy Priorities concluded government spending under president Barack Obama was not the prime reason for today's massive deficit. "The fact remains, the economic downturn, president Bush's tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years," the center concluded. Read more...


  1. This is one fact you'll never see on Fox News.

  2. This is so true! The Democrats cannot stand the idea that Americans should pay lower taxes. The Bush tax cuts made taxes more fair for married people and lower income workers and this is something the Democrats cannot stand. The Democrats will not give up until every American is strangled and on welfare. Vote the bums out.

  3. we should just spend whatever the new money printer they bought can spit out, as fast as possible...and get it over with. then when fantastically indebted, we can follow greece, ireland, portugal, italy etc and rid ourselves of elected officials and replace them with technocrates sent in from brussels or the UN, IMF, WB, or even china and the Uk and japan-our creditors-also we can sell national assets, just like the mentioned countries and also as trump's show mainstreamed the idea and as was mentioned by some washington officials last yr..america for sale, the cost of debt.

    they'll probably let the tax cuts expire..then take that revenue and spend triple that amount..LOLOLOL
    better vote...with technocratic gov...there's no voting-ever. so vote, for old times may be the last lolol


Everyone is encouraged to participate with civilized comments.