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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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Comment Preferences

  •  Tip Jar (30+ / 0-)

    "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." —Warren Buffett

    by Joan McCarter on Mon Nov 26, 2012 at 12:16:12 PM PST

  •  I hope Air Force One is gassed up and ready (2+ / 0-)
    Recommended by:
    avsp, denig

    to take the fight on the road.

    "Lets show the rascals what Citizens United really means."

    by smiley7 on Mon Nov 26, 2012 at 12:33:50 PM PST

  •  I like the title of this thread (4+ / 0-)
    Recommended by:
    smiley7, avsp, denig, a2nite

    Christian Conservatives are always talking about the left's "war on Christmas." Nice job using their language against them.

  •  i was about to write a diary about this (1+ / 0-)
    Recommended by:
    denig

    -You want to change the system, run for office.

    by Deep Texan on Mon Nov 26, 2012 at 01:03:58 PM PST

    •  more (1+ / 0-)
      Recommended by:
      denig

      Under the President’s proposal, the 98 percent of American families with incomes of less than $250,000 per year would continue to benefit in full from the income tax cuts expiring at the  end of 2012, including:

      - The doubling of the Child Tax Credit to $1,000 per child, and the extension of the credit to millions of working families that previously could not benefit from it.

      - The 10 percent tax bracket, which will provide middle-class couples with a tax cut of up to $890 next year.

      - Marriage penalty relief, which reduces or eliminates marriage penalties for nearly 38 million couples.

      - Lower tax rates on up to $250,000 of income ($200,000 for single filers).

      - Under the President’s plan, the income tax rates for high-income households would return to what they were under President Clinton, when the economy created nearly 23 million new jobs, we went from deficit to surplus, and businesses and investors did very
      well.

      -You want to change the system, run for office.

      by Deep Texan on Mon Nov 26, 2012 at 01:07:09 PM PST

      [ Parent ]

      •  more (1+ / 0-)
        Recommended by:
        denig

        The President’s proposal and legislation introduced by Congressional Democrats would provide certainty for the 114 million middle-class families whose taxes will go up on January 1 if Congress does not act.  Without Congressional action:

        - 114 million  middle-class families will see their federal income taxes increase by an average of $1,600.  

        - A typical middle-class family of four will see their taxes rise by about $2,200 as a result of losing the combination of the expanded child credit, marriage penalty relief, and the 10 percent bracket.

        - Over 35 million families will receive a smaller Child Tax Credit, and millions of low- and moderate-income working families with children will lose access to the Child Tax Credit altogether.  

        - 11 million middle-class families will no longer get help paying for college from the American Opportunity Tax Credit.

        - Small businesses will be able to claim immediate tax deductions for only $25,000, rather than $250,000, of new investment.

        -You want to change the system, run for office.

        by Deep Texan on Mon Nov 26, 2012 at 01:14:05 PM PST

        [ Parent ]

    •  examples (2+ / 0-)
      Recommended by:
      denig, Flying Goat

      Examples of Middle-class Families that Will See Their Taxes Rise If the Middle-class Tax Cuts Are Not Extended

      - Example 1: A typical middle-income family of four: a married couple with two children with income between about $50,000 and $85,000 would see a $2,200 tax increase.

      o A tax increase of  $1,000 because the Child Tax Credit will fall from $1,000 to $500 per child.

      o A tax increase of $890 because of merging the 10 percent tax bracket into the 15 percent tax bracket.

      o A tax increase of $310 because of the expiration of marriage penalty relief that provides a larger standard deduction for married couples.

      Total Tax Increase on this Family if Congress Fails to Act = $2,200

      - Example 2: A married couple with a 15-year-old at home and a 19-year-old in her second year at the state university; the couple’s income is $80,000.

      o A tax increase of  $550 because, instead of being able to claim the $2,500 American Opportunity Tax Credit to help with college expenses, they will only be able to claim the Hope Credit worth $1,950.

      o A tax increase of $500 because the Child Tax Credit will fall from $1,000 to $500 per child.

      o A tax increase of  $890 because of the disappearance of the 10 percent tax bracket.

      o A tax increase of $310 because of the expiration of marriage penalty relief that
      provides a larger standard deduction for married couples.
      Total Tax Increase on this Family if Congress Fails to Act = $2,250

      - Example 3: A middle-income family with three young children: a married couple with three children with income of $75,000 would see a $2,700 tax increase.

      o A tax increase of $1,500 because the  Child Tax Credit will fall from $1,000 to $500 per child.

      o A tax increase of $900 because of merging the 10 percent tax bracket into the 15 percent tax bracket.

      o A tax increase of $300 because of the expiration of marriage penalty relief that provides a larger standard deduction for married couples.

      Total Tax Increase on this Family if Congress Fails to Act = $2,700

      -You want to change the system, run for office.

      by Deep Texan on Mon Nov 26, 2012 at 01:12:25 PM PST

      [ Parent ]

  •  It has become obvious that Republicans in (5+ / 0-)

    Congress do not care jack squat for the middle class. They have spent four years actively working against economic recovery.

    Despite the pain it will cause some, the only solution is to let all the tax rates return to 2000 levels. If the 'Pubs won't then pass legislation cutting taxes for 98% of Americans, that's their lookout, not Obama's.

    Pardon our dust. Sig line under renovation.

    by Crashing Vor on Mon Nov 26, 2012 at 01:37:57 PM PST

  •  Just emailed my idiot Senator Toomey....can't (0+ / 0-)

    wait to dump him in 2016........he is from the teabagger class of 2010. Lots of Rs to dump from that class in 2016.

  •  God forbid retail Xmas spending drop (0+ / 0-)

    Whatever will we do.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Wed Nov 28, 2012 at 06:55:58 PM PST

  •  The new GOP clown car (3+ / 0-)
    Recommended by:
    I love OCD, randallt, JML9999

    Pardon our dust. Sig line under renovation.

    by Crashing Vor on Wed Nov 28, 2012 at 06:58:15 PM PST

  •  The war (0+ / 0-)

    In all the years under Clinton, Bush and Obama in which the
    Democrats actually had control of Congress, I missed the year in which they attempted to forcefully address the issue of the AMT. Was that part of a Democratic war on taxpayers? Could it be that there is instead a bipartisan war on taxpayers, for the simple reason that Congress wants the money, and the AMT is where the real bucks are.

  •  The Republicans declared war on Americans (0+ / 0-)

    when we elected a black guy with skills instead of mavericky white dude with no clue.  They won't stop until we sweep 2014, so we'd better get busy now!

    I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

    by I love OCD on Wed Nov 28, 2012 at 07:03:50 PM PST

  •  what a great report (0+ / 0-)

    It makes the complete case.  Any delay is just irrational politicking.

    I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

    by Satya1 on Wed Nov 28, 2012 at 07:10:43 PM PST

    •  Let me gently push back on the "complete" case (0+ / 0-)

      I wish that the CEA estimates cited by the diarist had included some mention of the impact that higher tax rates might have on business profits and, ergo, employment.

      I will be quick to add that I expect the answer to be "not much"; if it takes just 4 more cents to make a dollar, I'm pretty sure that the widgets will still come down the line.

      Nonetheless, we are remiss if we don't address/confront the chief plaint of the Repiblic party, that raising taxes on the wealthy will diminish job opportunities. Surely those predictions have been made, just as those reported herein predict the impacts on the 98% if faced with tax increases.

      "It may be true that the law cannot make a man love me, but it can keep him from lynching me, and I think that's pretty important." Martin Luther King Jr.

      by Arabiflora on Wed Nov 28, 2012 at 11:30:00 PM PST

      [ Parent ]

      •  It may be in the orginal report (0+ / 0-)

        and the diarist didn't mention it.

        The subject was touched on in the study done by the Congressional Research Service, Congresses own analysis group:

        http://www.dailykos.com/...

        The key idea being IIRC that if higher income earners aren't taxed but needed taxes instead fall on middle income earners, middle income earners have fewer resources to buy goods and services.  A higher tax on higher income earners doesn't hurt business profits or the economy.

        I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

        by Satya1 on Thu Nov 29, 2012 at 07:18:41 AM PST

        [ Parent ]

  •  Increase Wages and Salary of Middle Class (1+ / 0-)
    Recommended by:
    wsexson

    What absolutely kills me, is how everyone goes on and on about how important it is for the middle class to have a tax cut, which is, what, about 4% of their income, while you hear very little if any talk about increasing the wages and salary of the middle class.  

    Over the last 30 years :

    Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.
    So, tax cuts give the middle class $2000, while income equality would give us $42,000.  Gee I wonder which one would be better for the economy?

    Poor man wants to be rich. Rich man wants to king. And the king ain't satisifed until he rules everything. B.Springsteen

    by howd on Wed Nov 28, 2012 at 07:31:14 PM PST

    •  I'm trying to get on board (3+ / 0-)
      Recommended by:
      wsexson, DSPS owl, howd

      with the "keep taxes low on the middle class thing," but I'm really conflicted. I mean, I like government services. I want government to be funded appropriately, by all citizens. That includes middle-income folks. Why would we not want to return everyone to Clinton-era tax rates- at a minimum- and work to fund government fully?

      The notion of Democrats fighting to keep taxes low- on anyone- is really strange to me. People who need financial support should get it, from the government, in excess of the taxes they pay.

      But I know this position is not in vogue and is considered "counterproductive"- or just plain wrong. I wish I could understand why.

  •  Hahahahaha (0+ / 0-)
    The White House Council of Economic Advisor's report, released Monday, attempts to harness the confluence of fiscal curb negotiations....
    fiscal CURB negotiatioins

    Snort.


    A child of five would understand this. Send someone to fetch a child of five. -- Groucho Marx

    by Pluto on Wed Nov 28, 2012 at 08:18:27 PM PST

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