“Both individual and small business confidence is waning,” the letter states. “Until businesses and consumers can be confident that their taxes won’t rise next year, they will continue to refrain from investing, job growth will stagnate, and as a result consumer spending will remain subdued.”
Democratic leaders in the House and Senate are expected to discuss the fate of the Bush tax cuts in a meeting Thursday afternoon. However, action on the tax breaks is not expected to happen soon.
Finance Republicans warn in their letter that the lack of consumer confidence, caused by delayed action on the tax breaks, could lead to a double-dip recession.
“In order to inoculate the economy from additional uncertainty, we ask that you agree to mark up a bill in the Finance Committee this month that would extend 2001 and 2003 tax relief,” the letter states. “The simple act of holding a mark up increases the odds that taxes will not increase next year and illustrates that Congress is committed to doing whatever it takes to get this economy back on track.”
Barring congressional action, the Bush tax cuts will expire at the end of the year and create the largest tax increase in American history.
Republicans contend the coming increase will dampen demand and hinder the economic recovery that is currently struggling to survive.