WASHINGTON — Allowing tax cuts on middle class families to expire could result in almost a billion-dollar reduction in consumer spending in Hawaii in 2013.

That’s according to a new analysis by President Barack Obama’s Council of Economic Advisers. The state-by-state breakdown of the impacts of the Bush-era tax cuts was released by the White House late Wednesday as part of Obama’s effort to convince Congress to extend the cuts for middle class Americans while allowing them to expire for top earners.

The full report is titled “The Middle-Class Tax Cuts’ Impact on Consumer Spending and Retailers.”

Here are some of the other Hawaii-specific findings:

  • A median-income Hawaii family of four (earning $83,000) could see its income taxes rise by $2,200.
  • 98 percent of Hawaii families make less than $250,000 a year and would not see an income tax increase under Obama’s plan.
  • The tax increase and decline in consumption could slow the growth of real GDP by 1.4 percentage points in Hawaii.

The tax cuts, first passed under President George W. Bush in 2001 and 2003 and since extended, are set to expire at the end of the year if Congress does not act. That’s part of the so-called “fiscal cliff” — the other part being automatic across-the-board spending cuts known as the sequester — dominating discussion in Washington, D.C.

UPDATE: Carl Bonham, professor of economics and executive director of the University of Hawaii Economic Research Organization (UHERO), said the White House’s estimates made sense to him.

“If we go down this road and don’t solve tax problem and sequestration, Hawaii is going to go into a recession just like rest of the county,” he said. “The tax increases are big part of that, but the sequestration is really a problem for Hawaii as well with the cuts in federal spending.”

“It’s already a drag on the economy,” Bonham said. “It’s already contributing to the U.S. economy and therefore to some extent Hawaii’s economy growing more slowly than we would have otherwise.”

He added: “The uncertainty this creates is just going to get worse.”

Bonham said UHERO’s expectation is that Congress will resolve the fiscal issues because “it’s the only rational thing to do…but it’s still Washington.”

Congress is negotiating during the lame-duck session to find a compromise on both components of the fiscal cliff. Obama has signaled he will only accept a deal if it includes a tax increase for the wealthiest Americans, and Republicans, led by House Speaker John Boehner and Senate Minority Leader Mitch McConnell, are seeking reforms of entitlement programs like social security.

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