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White House: Raising taxes would cut $200B from economy
The White House released a report Monday that argues that failing to extend tax cuts for the middle class would reduce consumer spending by $200 billion — four times the amount holiday shoppers spent on Black Friday weekend in 2011.
The report was released on "Cyber Monday," a move the White House hopes will add attention to its argument that Congress should approve extending Bush-era tax rates on households with annual income below $250,000 while raising taxes on those with higher income.
It is intended to add pressure on congressional Republicans, who have opposed raising any tax rates.
"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 White House said in an email Monday.
The new report comes as lawmakers return to Washington this week to begin negotiating a deal to avoid the looming “fiscal cliff.”
The report, issued by the National Economic Council and the Council of Economic Advisers, argues congressional Republicans should immediately extend tax cuts for all but the wealthiest Americans.
"The typical middle-class family will see their taxes go up by $2,200 next year, negatively impacting businesses and retailers across the nation," said the statement. "The president has called on Congress to take action and stop holding the middle class and our economy hostage over a disagreement on tax cuts for households with incomes over $250,000 per year."
Republican lawmakers argue raising taxes on wealthier households would stifle job growth. Moreover, Republicans want Obama to agree to significant budget cuts and entitlement reforms as part of an overall debt package.
During appearances on the Sunday talk shows, top legislators on both sides of the aisle signaled the dire consequences that would result from failing to strike a bargain.
"The election's over," Rep. Pete King (R-N.Y.) said on NBC's "Meet the Press" Sunday. "We have to show the world we're adults."
Some Republicans, including Sens. Saxby Chambliss (Ga.) and Lindsey Graham (S.C.), have also said they would be willing to violate the Americans for Tax Reform anti-tax pledge if Democrats counter with significant entitlement reforms.
"So I agree with Grover, we shouldn't raise rates. But I think Grover is wrong when it comes to [saying] we can't cap deductions and buy down debt," Graham told ABC News. "I want to buy down debt and cut rates to create jobs, but I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform."
The report is just the latest push by Obama to pressure Republicans.
Last week his campaign urged supporters to contact their elected officials in support of the president's plan. He also raised the issue in his weekly address on Saturday.
"We shouldn’t hold the middle class hostage while Congress debates tax cuts for the wealthy," the president said. "Let’s begin our work by actually doing what we all agree on. Let’s keep taxes low for the middle class. And let’s get it done soon — so we can give families and businesses some good news going into the holiday season."
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