White House issues new warning on 'fiscal cliff' [View all]

[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