The White House released a report recently projecting a loss in consumer and retail spending of $200 billion dollars. The White House said today in a press report that in Illinois, the loss in consumer spending would be $8.9 billion dollars.
This is a startling measure of the impact of Congress failing to pass the extension of the middle-class tax cuts. The report issued by the White House from from the National Economic Council and the Council of Economic Advisers (CEA), called “The Middle-Class Tax Cuts’ Impact on Consumer Spending and Retailers.” warns of the shortfall in consumer spending in 2013.
President Obama has stated that he is “committed to growing our economy from the middle out by ensuring a strong, secure, and thriving middle-class.” As the deadline that requires Congressional action on jobs, taxes and deficits by the end of the year, the warnings of inaction are becoming louder and more urgent.
While the President is committed to working with Congress to reduce the deficit in a balanced and responsible way, there is no reason to hold the middle-class families in Illinois hostage, while Congress debates tax cuts for the highest income earners, says the CEA.
The impact on middle-class Illinois families if taxes increase . . .
- A median-income Illinois family of four (earning $79,100) could see its income taxes rise by $2,200.
- 98 percent of Illinois families who make less than $250,000 a year and would not see an income tax increase under the President’s plan.
The bulk of economic activity comes from American families buying basic necessities like clothing and healthcare; durable goods like cars and furniture; and the food and gifts that millions will enjoy over the holiday season.
- The retail industry employs 14.8 million Americans – including 581,300 in Illinois – and has been a key part of the recovery. In the 40 months since the recession ended in June 2009, the retail industry alone has been responsible for more than 9 percent of overall employment growth and has added 438,000 jobs in the past 32 months.
- Over the course of this year, American consumers are on pace to spend around $5 trillion on retail sales. And with the start of the holiday shopping season, which accounts for close to one fifth of industry sales nationwide, retailers can’t afford the threat of tax increases on middle-class families.
Illinois’s economy can’t afford that right now, says the CEA. New analysis by the President’s Council of Economic Advisers (CEA) finds that:
- This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.3 percentage points in Illinois.
- Faced with these tax hikes, the CEA estimates that consumers in Illinois could spend nearly $8.5 billion less than they otherwise would have in 2013 just because of higher taxes. Consumers nationwide would likely spend nearly $200 billion less than they otherwise would have in 2013.
The President has called on Congress to act now on extending all income tax cuts for 98 percent of American families and not to hold the middle-class and our economy hostage over a disagreement on tax cuts for households with incomes over $250,000 per year. The impact in Illinois is serious, but the impact in the rest of America is just as serious.
The Senate has already passed this bill and is awaiting House approval. The President is ready to sign it.
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John is the author of an award-winning book, the 2010 Winner of the USA National Best Book award for African American studies, published by The Elevator Group Mr. and Mrs. Grassroots: How Barack Obama, Two Bookstore Owners, and 300 Volunteers did it. Also available an eBook on Amazon. John is also a member of the Society of Midland Authors and is a book reviewer of political books for the New York Journal of Books