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WHouse warns Congress to cooperate, protect growth

(AFP) / 26 November 2012

The White House urged Congress Monday to help avert a major fiscal crisis in a report highlighting how new tax hikes and spending cuts could deal body blows to retailers and consumer spending.

 “The President believes Democrats and Republicans should come together to renew middle-class tax cuts so families and businesses have more certainty at this critical time for our economy,” spokesman Jay Carney said on the release of the report on potential fallout if Congress fails reach a compromise.

“If Congress doesn’t act, middle-class families will see their income taxes go up on January 1st. The typical middle-class family will see their taxes go up by $2,200 next year, negatively impacting businesses and retailers across the nation,” Carney stressed on CyberMonday, a vital moment in the critical holiday shopping season.

Authorities in Washington were getting back to work at trying to stave off what has been described as a year-end “fiscal cliff”: a convergence of tax hikes and massive spending cuts, including slashes to military spending, which some experts say could bring dire economic consequences — possibly sparking another crippling economic slowdown.

Both Republicans and Democrats are well aware of the need for the country to get its fiscal house in order, as America tries to rein in a huge debt that has been growing bigger by the day and reduce deficit spending.

President Barack Obama “has called on Congress to take action and stop holding the middle class and our economy hostage over a disagreement on tax cuts for households with incomes over $250,000 per year,” his spokesman added.

The president is urging a “$4 trillion deficit reduction plan that asks the wealthy to pay a little more and preserves the investments we need to grow the economy,” Carney said.

“This is an important moment not just to avoid the fiscal cliff — but to lay the groundwork for an economy that will support a healthy middle class, restore economic certainty, and lead to long-term job growth,” he stressed.

Obama’s Council of Economic Advisers said in the report that US consumers could spend almost $200 billion less than they otherwise would have in 2013 just because of higher taxes.

“American consumers are the bedrock of our economy, driving more than two-thirds of the overall rise in real GDP over 13 consecutive quarters of economic recovery since the middle of 2009. And as we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can’t afford the threat of tax increases on middle-class families,” Carney said.

Obama has said that any deal he concludes would have to include an increase in taxes on wealthy taxpayers, something congressional Republicans so far have rejected.

Republicans insist that raising taxes on the wealthy would be counter- productive and only serve to slow economic growth and ensure that the country continues to be plagued by economic stagnation.

They insist that higher taxes would dampen spending and hiring and investment by business owners.

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