Clock ticking as lawmakers fight over fiscal cliff
WASHINGTON (AP) - White House economists warned Monday that the uncertainty of a potential hike in taxes next year for middle class taxpayers under the looming fiscal cliff could hurt consumer confidence during the crucial holiday shopping season.
In a new report that coincides with Congress' return after the Thanksgiving holiday, the White House says that if lawmakers don't halt the automatic increase in taxes for households earning less than $250,000, consumers might even curtail their shopping during the current holiday season.
"As we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can't afford the threat of tax increases on middle-class families," the report says.
The study by President Barack Obama's National Economic Council and his Council of Economic Advisers also says a sudden increase in taxes for middle-income taxpayers would reduce consumer spending in 2013 by nearly $200 billion, significantly slowing the economic recovery.
The figures echo estimates by private forecasters and by the Congressional Budget Office.
Congress and Obama have until the end of the year to avoid across the board tax increases that would do away with rates set during the administration of President George W. Bush and restore higher tax rates in place during President Bill Clinton's administration when the economy was robust and the federal government had a budget surplus.
Many middle income taxpayers also would be exposed to automatic tax increases under the Alternative Minimum Tax, which is designed to guarantee a certain level of tax payment by wealthier taxpayers.
According to the report, a married couple earning between $50,000 and $85,000 with two children would see a $2,200 increase in their taxes.
Obama wants the Bush-era tax rates to remain at their current level for households earning less than $250,000. He is calling on Congress to increase taxes for families earning more than that threshold.
Obama's plan is part of an overall deficit reduction package that would increase tax revenue by about $1.5 trillion and reduce spending by a similar amount over 10 years.
Congressional Republicans, led by House Speaker John Boehner of Ohio, have said they are open to including discussions about additional revenue but have balked at any plan that raises tax rates on the wealthy. They argue that the higher rates would also hit some small businesses, stifling economic growth.
House Majority Leader Eric Cantor said Monday the urgency of finding solutions intensifies as the end of the year approaches.
"If we don't do anything, on Jan. 1, 2013, there's a lot more people paying a lot more," the Virginia Republican said on MSNBC.
Cantor said the rapidly approaching deadline accounts for the more serious tone to the debate, but also reaffirmed the GOP's opposition to raising tax rates for the wealthy. "We've got to have the president step up and say, here's my position on how we reform these entitlements and start managing down the deficits," he said.
"What should be on the table is a recipe to fix the problem and not give away growth," Cantor said, when asked whether Republicans would agree to have increases in tax rates considered.
"We were re-elected to fix the problems, get the economy going again," he said. "Well, the president got re-elected and we know at the end of the year taxes are going to go up on everybody, rich and poor alike," if no action is taken to avert the hikes.
In a new report that coincides with Congress' return after the Thanksgiving holiday, the White House says that if lawmakers don't halt the automatic increase in taxes for households earning less than $250,000, consumers might even curtail their shopping during the current holiday season.
"As we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can't afford the threat of tax increases on middle-class families," the report says.
The study by President Barack Obama's National Economic Council and his Council of Economic Advisers also says a sudden increase in taxes for middle-income taxpayers would reduce consumer spending in 2013 by nearly $200 billion, significantly slowing the economic recovery.
The figures echo estimates by private forecasters and by the Congressional Budget Office.
Congress and Obama have until the end of the year to avoid across the board tax increases that would do away with rates set during the administration of President George W. Bush and restore higher tax rates in place during President Bill Clinton's administration when the economy was robust and the federal government had a budget surplus.
Many middle income taxpayers also would be exposed to automatic tax increases under the Alternative Minimum Tax, which is designed to guarantee a certain level of tax payment by wealthier taxpayers.
According to the report, a married couple earning between $50,000 and $85,000 with two children would see a $2,200 increase in their taxes.
Obama wants the Bush-era tax rates to remain at their current level for households earning less than $250,000. He is calling on Congress to increase taxes for families earning more than that threshold.
Obama's plan is part of an overall deficit reduction package that would increase tax revenue by about $1.5 trillion and reduce spending by a similar amount over 10 years.
Congressional Republicans, led by House Speaker John Boehner of Ohio, have said they are open to including discussions about additional revenue but have balked at any plan that raises tax rates on the wealthy. They argue that the higher rates would also hit some small businesses, stifling economic growth.
House Majority Leader Eric Cantor said Monday the urgency of finding solutions intensifies as the end of the year approaches.
"If we don't do anything, on Jan. 1, 2013, there's a lot more people paying a lot more," the Virginia Republican said on MSNBC.
Cantor said the rapidly approaching deadline accounts for the more serious tone to the debate, but also reaffirmed the GOP's opposition to raising tax rates for the wealthy. "We've got to have the president step up and say, here's my position on how we reform these entitlements and start managing down the deficits," he said.
"What should be on the table is a recipe to fix the problem and not give away growth," Cantor said, when asked whether Republicans would agree to have increases in tax rates considered.
"We were re-elected to fix the problems, get the economy going again," he said. "Well, the president got re-elected and we know at the end of the year taxes are going to go up on everybody, rich and poor alike," if no action is taken to avert the hikes.
Let it go over the cliff.
Obama's gotta love this. If congress does nothing (likely), he demagogues the Rs on killing the economy with the help of the MSM, taxes go up (but not enough to actually balance the budget), military spending gets cut, he get to ride in proposing tax cuts for the middle class (allowing more class warfare, and further damaging the deficit, making a bigger crisis for him to "solve"), and keeps many folks focused on things other than the congressional spending problems, the impending entitlement crisis, his international incompetence. There really isn't much down-side for HIM in going over the cliff, even if there is for the rest of us.
@RN1 The best thing for Congress to do is go Bat crap crazy and give Obama 100% of what he wants and More! so when the fiscal avalanch hits it will be the Democrats fault.
@RN1 I have to disagree with the downside not pointing in Obama's direction if nothing gets done.. I find him 100% responsible.
@ObsidianOne Unfortunately, the majority who voted for him don't comprehend that.
 @ObsidianOne  @RN1 Oh, I'd agree with you that he and the Dem leadership are responsible. And several million others will, too. But it will be a minority, and the MSM narrative will be that it's all the obstructionist Republican's fault, and most people will believe it.
http://thehill.com/blogs/blog-briefing-room/news/269279-poll-public-would-blame-gop-more-than-obama-if-fiscal-cliff-talks-fail
Sad, but that's how it would likely roll.
Looks like about the same 4 years as the first 4 years, talk about doing something and more talk about doing something, ya 4 more years of hope and pocket change....
We send the same people back once again and hope for different results (again!) I'm sure that will work this time! If not lets just keep sending them back until they get it right.
We decide to get into two wars that last 10 years each and give our citizens tax cuts at the same time. Much of the money borrowed came from social security. Now we are in debt? The US spends 41% of the money spent on military by all of the countries in the world. Over $700 billion per year. That doesn't include VA benefits now and future.
http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures
Take the sequester.
My observation is the D's are not budging from increased taxes whether it's from a rate increase or loophole limits. The R's know this is their stance. SO...why not go over the cliff? If Obama and the D's haven't put anything on the table in regard to spending cuts, won't this automatically enact the spending cuts which are the other half of the deal?  The D's better start talking about cutting spending. Otherwise, I hate to say it, but I think we will go over the cliff.
This is the result of going for a half-assed compromise for everything - which, when we sift through all the carnage at the end of the scrap, is a half-assed solution. Welcome to four more years of "more of same".
I bet the minority voting block in this country never thought of that one when they helped re-elect Obama - its always about saving one's OWNÂ butt for one's selfish purposes - never mind about the country's condition as a whole...
 @Throbbinhood Yes, if only those minorities had voted for the candidate whose religion says all non-white people are going to hell because of their skin color. How "selfish" of them.
@Sutekh Yeah - that was really part of Romney's platform. What a ridiculous non-sensical comment to make.
The fiscal cliff is moot compared to the fiscal avalanche we have looming that nobody can do a thing about it. when it happens the fiscal cliff will be but a pot hole on I-5. The fiscal avalanche is were other nations stop buying up our debt. and those that have bought up our debt dump it. Sending us in to Uber inflation the complete loss of the US dollar. it will be the death of the economy.
They are arguing over who is first to kick the can down the road. The chances of anything meaningful happening to solving our debt problem are slim to none.
Well I as I see it we take in the gov't that is aprox 2.4 trillion in taxes. we as the gov't spend 3.7 trillion. What we need to do is cut 1.3 trillion in spending across the board wipe it out. problem solved. Would it be painful yep as about as painful as a losing your job right during the holiday season and then having top rammen instead of christmas goose. It has to be done. spend only that which we take in. ban any new taxes live with in our means till we pay off our debts as a nation.
 @wynooheeman It is human nature to want to spend more than you have. There are always shiny new things you want. Ask any four-year-old with a full toy-box if there is another toy he wants. Ask anyone with a nearly maxed credit card if they need to go out to dinner because "they can afford the payment." The Senate hasn't passed a budget in three years - it's a SPENDING problem, not a revenue problem.
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I find if darkly humorous that the left always harps about "sustainability," yet NEVER apply that to the things that we absolutely DO have control over, such as entitlement and spending programs that have utterly predictable FAIL written all over them (and, indeed, are failing all over the world as I type). And yet the left wants to make them even MORE unsustainable by lowering eligibility requirements and boosting taxes, further crushing the people supporting the system with their taxes. Cognitive dissonance at it most glaring.
If Congress had done it's job instead of just kicking the can down the road we would of not had to deal with this. Since 2010 when the GOP won a majority in the House of Representives very little got done other than a huge amount of bickering. I hear talk of working together but I am not so convinced that the bickering is over. I am expecting a last minute "Deal" that will simply delay the problem and not fix it.
@Charl317 Remember that we the people elected Congress. They are there to stop the spenders from doing more damage. They love spending other peoples money. I say we cut their salaries until the problem is resolved!!!
@Charl317 you talk about Congress not doing anything as a bad thing. lets flip your logic on its head. lets say it was a Republican in the White House and republican congress and republican senate. and they rubber stamped everything. Would you be up in arms? say they cut 1.3 trillion from the budget across the board? would that make you mad? say they passed things that hurt the nation more then helped wold you be up set? yes you would. The founding fathers made this nation on a two party grid lock system. to keep the Governement small and not spend us to oblivion. like the last two presidents have done. grid lock is good!
 If you are not for going over the fiscal cliff you are for kicking the can down the road.
Well, Obama Talked the talk during the election. " Bi-partisan lawmaking. Working together across the isle." Lets see if he can walk the walk. My guess is no, but I'd like to be surprised...
If anyone is going to mess this up it will be Boehner.
 @mstipton Depending on which of several dozen possible messes to be the worst one, maybe, maybe not.
@mstipton Yes by compilation and folding like a lawn chair. He needs to say screw the fear of losing votes and hold his ground and let the thing happen. We as a nation need to hit rock bottom. Cut 1.3 trillion in spending over night!