WASHINGTON — The National Retail Federation welcomed the House vote on legislation intended to avoid middle-class tax increases in the fiscal cliff, saying progress on the issue is critically important.
“Although this may not be the perfect solution to the fiscal crisis, what’s important is that Congress provide certainty going into the new year on tax issues that will impact every American,” NRF president and CEO Matthew Shay said. “Worries over the economy have already affected consumers during the holiday season. Worries coupled with actual tax hikes and spending cuts add up to a disaster our economy cannot afford.”
The House voted on “Plan B” legislation backed by Speaker John Boehner, R-Ohio. NRF has not taken a position on specific details of the legislation, but believes passage will help assure the public that lawmakers are addressing the issue. The vote will also move Congress forward in the legislative process as the December 31 deadline for action approaches.
Retail sales in 2013 are expected to increase between 2% and 2.5% if the fiscal cliff is avoided, according to an analysis conducted by NRF chief economist Jack Kleinhenz working with the economics firm Macroeconomic Advisors. If not, sales would be flat for the year, with negative growth during the first half of the year, the analysis said. A White House report released last month said consumer spending could take a hit of nearly $200 billion next year if middle-class tax cuts affected by the fiscal cliff are allowed to expire.
Shay said Congress needs to do more than just avoid the fiscal cliff.
“There are a number of issues facing the economy, retailers and consumers that require a commitment beyond the fiscal cliff,” Shay said. “We need to avoid going over the fiscal cliff, but Congress and the White House also need to develop long-term plans that will restore consumer confidence so that the business world can go back to investing capital and creating jobs.”