OK

Holiday ornament with a shopping cart symbol.
The White House Council of Economic Advisor's report, released Monday, attempts to harness the confluence of fiscal curb negotiations and the critical shopping season to put more pressure on Republicans over their continuing to take middle class tax cuts hostage. It makes a pretty convincing case that continued economic growth is going to depend on continued spending of the 98 percent. The key findings:
  • Allowing  the middle-class tax rates to rise and failing to patch the Alternative Minimum Tax (AMT) could cut the growth of real consumer spending by 1.7 percentage points in 2013. This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.4 percentage points, which is consistent with recently published estimates from the Congressional Budget Office.
  • Faced with these tax hikes, the CEA estimates that consumers could spend nearly $200 billion less than they otherwise would have in 2013 just because of higher taxes. This reduction of $200 billion is approximately four times the total amount that 226 million shoppers spent on Black Friday weekend last year. As Figure 5 shows, this $200 billion reduction would likely be spread across all areas of consumer spending.
Here's that figure:
Chart showing estimated decline in 2013 consumer spending if middle-class tax cuts are not extended.
The report also points out that: the retail industry "employs 14.8 million Americans," and "has been responsible for more than 9 percent of overall employment growth" since the recession ended in June 2009; allowing the tax cut for the 98 percent to expire could "cut the growth of real consumer spending by 1.7 percentage points in 2013," and cut the growth of real GDP by 1.4 percent; and, that "consumers would likely spend nearly $200 billion less than they otherwise would have in 2013 because of higher taxes."
This reduction of $200 billion is approximately four times larger than the total amount that 226 million shoppers spent on Black Friday weekend last year, or roughly the amount American families spent on all the new cars and trucks sold in the U.S. in the last year.
The report also provides the reminder that the holiday shopping season accounts for about one-fifth of total retail sales, and that consumer confidence—and spending—tracks to consumer confidence which also tracks to whether or not Republicans are taking the economy hostage. Their example: "in the midst of the debate over the debt ceiling last year, sentiment plunged to its lowest level since the end of the recession."
Graph of consumer confidence since January, 2006 showing sharp dip during debt ceiling fight
In other words, more "political drama" from Republicans over tax cuts for the wealthy is endangering an economic recovery that depends on whether or not 98 percent of us feel like we can spend money this holiday.

Your real War on Christmas, then, is being waged by Republicans.

Originally posted to Joan McCarter on Mon Nov 26, 2012 at 12:16 PM PST.

Also republished by Daily Kos.

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