White House issues new warning on 'fiscal cliff'

[highplainsdem]

Source: LA Times

WASHINGTON -- On the heels of record sales over the Black Friday weekend, the White House warned that automatic federal tax increases set for next year could hurt the rest of the holiday shopping season and would likely crimp consumer spending by about $200 billion in 2013.

The report released Monday projects that if Congress fails to act and middle-income taxes rise, consumer spending growth could be sliced by 1.7 percentage points and economic growth overall would probably be cut by 1.4 percentage points in 2013. Those are not small numbers given that consumer spending drives about two-thirds of U.S. economic activity and that the American economy has been growing by just a little more than 2% since the recovery began in mid-2009.

The report from the White House Council of Economic Advisors looked only at the impending income tax hikes for taxpayers, including a higher alternative minimum tax. These tax increases are part of the so-called fiscal cliff -- a combination of mandated fiscal spending cuts and higher taxes that are slated to kick in next year and that on the whole would hit the economy by more than $500 billion and likely send the country back into recession into 2013.

-snipping paragraphs about record Thanksgiving weekend sales-

But the White House report warned that "the hard-earned rise in consumer confidence will be at risk if the middle-class tax cuts are not soon extended with a minimum of political drama."

-snip-

Read more: http://www.latimes.com/business/money/la-fi-mo-economy-fiscal-cliff-20121126,0,7839105.story

[AnotherMcIntosh]

1. 'fiscal cliff' = time for a Grand Bargain

[loyalkydem]

2. let the tax cuts expire

I can deal with that.

[JustABozoOnThisBus]

3. Sounds good to me

but some middle-class families might get bit by the Alternate Minimum Tax if the limit isn't bumped. So we shouldn't just "do nothing".

[JackRiddler]

11. Sure, do something about the "fiscal cliff" - in January!

The world doesn't end after this hyped-up "fiscal cliff."

All the tax cuts expire. The automatic cuts are made. But the effects are day to day until they are corrected. (All the cited figures are projections of what might happen if there is no deal for the entire year of 2013. It won't happen on the first day after this "fiscal cliff" chimera.)

Let the media and markets howl about for a couple of weeks - so what? Inevitably the smart money will see it as a buying opportunity, and up she goes again. (For a while, until real crises assert themselves, like the overburden of private debt.)

After the "fiscal cliff," it becomes possible to float a middle-class-only tax cut. Let the Republicans vote against that - they won't. Or enough of them will break to pass it.

Once that inevitably passes, let the Republicans float a further tax cut for the rich only. It will be hilarious.

After the "fiscal cliff" it becomes possible to individually restore spending in given areas.

The "Grand Bargain" during the lame duck session will be a disaster - Republicans will gain the best possible deal on cuts to earned benefits (a.k.a. "entitlements.&quot

Many smaller bargains that likely accomplish a much better result on the whole become possible in the new Congress, with the tax cuts already expired.

[patrice]

9. Me too. & Not sure why that's not PO's "ace in the hole". Can it really affect consumers THAT much??

[patrice]

12. I'm going to go find some of those charts showing how much these tax cuts are per income

bracket per year.

If the Middle Class doesn't have a reasonable amount to pony up in order to get security for Social Security and Medicare, we need to tear the whole thing down and start over, because there is no hope for it.

[patrice]

16. Change in Average Tax Rates From Extending Tax Cuts (% points by income quintile) :

http://www.theatlantic.com/business/archive/2010/08/breaking-down-the-bush-tax-cuts/61401/

[leftyohiolib]

4. sounds like it's going to get the shock doctrine treatment

[JDPriestly]

5. When I read that Social Security and Medicare are up for cuts,

I really don't want to shop at all. Talk about creating uncertainty in the economy. That's like a death sentence for many, many grandmothers and grandfathers.

[DJ13]

8. +1

The proposed cuts to SS and Medicare will impact consumer spending far more than increased taxes on the wealthy.

The wealthy save their money, the SS recipients spend theirs.

[patrice]

10. I hope you know there are "cuts" and then there are cuts to Medicare. Some of it NEEDS to be done

to get at the fat that not only does not support the quality of care, but also significantly degrades it.

The difference between "cuts" and cuts to Medicare will be the extent to which savings are pumped back into SERVICES, not administration and cronyism.

http://medicinesocialjustice.blogspot.com/

[JDPriestly]

17. They are planning the cuts to save money, not to improve service.

"They" are conservatives, Republicans, and they could care less about the poor and elderly.

[patrice]

18. I know for a concrete fact that those "they" are not the only "they" out there & there ARE

others whose precise purpose in their professional lives is to do the opposite of what you say. These "they", many, perhaps most, of them health care professionals themselves, are all about removing the impediments to quality direct person-centered care and ending the sorts of things that can and do cost them their jobs when they try to do the right thing for those in their care.

[freshwest]

19. This is what I have found to be true in real life, as well.

What we cannot have is another 2010. The Ryan budget of 2014 will look like the work of bleeding heart liberals then.

[Iggo]

6. Full speed ahead!

Tax the rich. Feed the poor.

[RC]

7. Always the next bottom line.

Nobody can see the long term. Just the next bottom line. Why?

Letting the bu$h tax cuts expire will ruin this Christmas for so many. But what about the next Christmas and the Christmas after that, when the economy picks up? Jobs, even Living-Wage-Jobs will be more plentiful? We can't worry about what is down the road, we need to worry only about right now. We can worry about later, later. We have to put out this fire right now. We can't be worrying about how to prevent those fires in the first place. No time! That cuts into the the time needed to fix this problem.

We must continue to diddle with the symptoms, least we accidentally deal with the root cause of something and actually fix a problem.
What will we ever do if we actually start to fix too many problems? What if we run out of problems to fix? How will we function then?
Oh, so much to worry about now, we can't worry about the future. Time is of the essence. Time is running out. There won't be a future if we don't fix this RIGHT NOW!!!!1!1 Forget the future and deal with this NOW!

[JackRiddler]

13. I'm sorry, that's nonsense.

Letting the bu$h tax cuts expire will ruin this Christmas for so many.

No it won't. It means that on a day-to-day basis they're getting slightly higher withdrawals in January, until the inevitable restoration of the middle-class rates to Bush levels after the new Congress is sworn in.

[RC]

14. Please read the rest of the post.

[JackRiddler]

21. Sure...

I was going to say, it's fine.

[patrice]

15. I agree with this, because IT'S ALL DEBT TO BEGIN WITH, so transfer some of the debt management

from those whom we cannot trust to use the debt correctly for the benefit of ALL and transfer it TO individuals, including the Middle Class, who CAN make their own decisions about their own budgets and the consequences thereto of insuring Social Security and Medicare reform by giving back the Bush Tax Cuts.

If the extra $1-2K per individual per year to the Middle Class (a benefit of the Bush Tax Cuts that is extremely disproportionately LESS than it is to >Middle Class) breaks MC people, they aren't really Middle Class in the first place, they apparently have OTHER issues besides taxes: they can transfer the deficit in their own budgets (created by that tax increase on them from ending Bush Tax Cuts) to other forms of credit that they DO control, that they CAN use or not as they decide, or just take the hit to their own budgets. Their decisions should be based upon what they are buying by giving back the Bush Tax Cuts; if deficit reduction at the Federal level is worth it - PLUS - permanent protection of Medicare and Social Security, I say DEAL.

It's *A*L*L* debt, so make decisions about our priorities and move it around.

[harun]

20. Seriously? You're going to play the Christmas card on this?

[underpants]

22. That's a "Duh" that sadly they had to actually state for our news bubble

tax cuts for the middle class is what is spurring the turnaround.

I read several headlines today that said "White House says...." instead of "White House states the obvious, ....."