Extending the Bush tax cuts for all income levels beyond year-end would add a "couple tenths" to US economic growth, while allowing the tax cuts to expire would result in "well over a percentage point" hit, Jan Hatzius, chief U.S. economist at Goldman Sachs told CNBC.
"If everything was allowed to expire, as is the current legislation at the end of this year, that would be a major impact," Hatzius said.
Both scenarios are conceivable, although Goldman's expects the administration's view will prevail, so tax cuts for lower- and middle-income taxpayers are extended, while tax cuts for those with higher incomes expire.
Hatzius believes the U.S. economy is in a soft patch, marked by sluggish demand, and that risks to the economy are to the downside.