Thursday, April 24, 2014
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This Nov. 9, 2012 file photo shows House Speaker John Boehner of Ohio gesturing during a news conference on Capitol Hill in Washington. It's entirely possible that lawmakers and the White House will reach a deal to avert an avalanche of tax increases and deep cuts in government programs before a Jan. 1 deadline. To do so, however, they'll have to resolve serious political and fiscal dilemmas that have stymied them time after time, despite repeated vows to overcome them. (AP Photo/Susan Walsh, File)
This Nov. 14, 2012 file photo shows President Barack Obama gesturing while answering a question during a news conference in the East Room of the White House in Washington. It's entirely possible that lawmakers and the White House will reach a deal to avert an avalanche of tax increases and deep cuts in government programs before a Jan. 1 deadline. To do so, however, they'll have to resolve serious political and fiscal dilemmas that have stymied them time after time, despite repeated vows to overcome them. (AP Photo/Carolyn Kaster, File)
Alan Krueger, chairman of the Council of Economic Advisers, said it was important for Congress to extend the current rates for middle class taxpayers "without delay, without drama" to avoid a drop in consumer confidence.
"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 said.
Meanwhile, the stock market edged lower in the morning as the outcome of the budget talks remained inconclusive.
Retailers such as Macy's, Target and Saks were down, amid fears that consumers might cut back this season. But the National Retail Federation reported earlier that 247 million shoppers visited stores and shopping websites during the long Thanksgiving weekend, up 9 percent from a year ago. They spent an average of $423, up 6 percent.
The White House report also said 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.
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 Boehner, 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.
Instead, they have advocated changes in the tax code that would eliminate tax breaks and loopholes that primarily benefit the wealthy. Several key Republican lawmakers have also said they would not be bound by a no-tax-increase pledge that they have adhered to in the past.
House Majority Leader Eric Cantor said Monday that 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.