Reduction of taxes implemented during President George W. Bush’s administration is behind the failure of the Congress Super Committee whose objective was to reduce the huge budget deficit of $15,000 billion, and U.S. debt. In June 2001 President Bush has adopted one of the most radical measures in the history of U.S. tax. A decade later, the tax cuts is considered the cause for the failure of negotiations between the two American political parties, Democratic and Republican, which were supposed to reduce the debt that accumulated in the ten years that followed, notes the Guardian.
Republicans rejected any agreement that did not provide the actual increase of income tax, and Democrats wanted a higher tax rate for families with taxable income of more than $250,000 a year. Politicians have only agreed that a compromise is necessary and that tax cuts had more negative than positive consequences. “This will be the most important debate of 2012. Tax cuts were inappropriate, excessive and irresponsible. Reduction of taxes, when you prepare for war, is pretty stupid and was based on overly optimistic forecasts that proved incorrect”, said Simon Johnson, professor and former IMF chief economist.
In a recent report by the Center on Budget and Policy Priorities concluded that the government expenditure budget made by the Obama administration is not the main reason for the current budget deficit. “The causes are the economic crisis, the program of tax cuts passed by President Bush and the wars in Afghanistan and Iraq, and this actually explains the entire deficit”, concludes the institution.
Most Americans have not benefited from tax cuts, according to its calculations. Tax cuts benefited in average only 2.2% for those who earned between $40,000 and $50,000, compared with those who earned over a million dollars, who were able to save the equivalent about 6.2%. Super Committee failure will trigger automatic cuts in defense budget and internal costs.