[House Document 106-130]
[From the U.S. Government Publishing Office]



106th Congress, 1st Session - - - - - - - - - - - House Document 106-130


 
               THE PRESIDENT'S VETO MESSAGE ON H.R. 2488

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

 HIS VETO OF H.R. 2488, THE ``TAXPAYER REFUND AND RELIEF ACT OF 1999''




  September 23, 1999.--Message and accompanying bill referred to the 
         Committee on Ways and Means and ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-011                     WASHINGTON : 1999

To the House of Representatives:
    I am returning herewith without my approval H.R. 2488, the 
``Taxpayer Refund and Relief Act of 1999,'' because it ignores 
the principles that have led us to the sound economy we enjoy 
today and emphasizes tax reduction for those who need it the 
least.
    We have a strong economy because my Administration and the 
Congress have followed the proper economic course over the past 
6 years. We have focused on reducing deficits, paying down debt 
held by the public, bringing down interest rates, investing in 
our people, and opening markets. There is $1.7 trillion less 
debt held by the public today than was forecast in 1993. This 
has contributed to lower interest rates, record business 
investment, greater productivity growth, low inflation, low 
unemployment, and broad-based growth in real wages--and the 
first back-to-back budget surpluses in almost half a century.
    This legislation would reverse the fiscal discipline that 
has helped make the American economy the strongest it has been 
in generations. By using projected surpluses to provide a risky 
tax cut, H.R. 2488 could lead to higher interest rates, thereby 
undercutting any benefits for most Americans by increasing home 
mortgage payments, car loan payments, and credit card rates. We 
must put first things first, pay down publicly held debt, and 
address the long-term solvency of Medicare and Social Security. 
My Mid-Session Review of the Budget presented a framework in 
which we could accomplish all of these things and also provide 
an affordable tax cut.
    The magnitude of the tax cuts in H.R. 2488 and the 
associated debt service costs would be virtually as great as 
all of the on-budget surpluses the Congressional Budget Office 
projects for the next 10 years. This would leave virtually none 
of the projected on-budget surplus available for addressing the 
long-term solvency of Medicare, which is currently projected by 
its Trustees to be insolvent by 2015, or of Social Security, 
which then will be in a negative cash-flow position, or for 
critical funding for priorities like national security, 
education, health care, law enforcement, science and 
technology, the environment, and veterans' programs.
    The bill would cause the Nation to forgo the unique 
opportunity to eliminate completely the burden of the debt held 
by the public by 2015 as proposed by my Administration's Mid-
Session Review. The lamination of this debt would have a 
beneficial effect on interest rates, investment, and the growth 
of the economy. Moreover, paying down debt is tantamount to 
cutting taxes. Each one-percentage point decline in interest 
rates would mean a cut of $200 billion to $250 billion in 
mortgage costs borne by American consumers over the next 10 
years. Also, if we do not erase the debt held by the public, 
our children and grandchildren will have to pay higher taxes to 
offset the higher Federal interest costs on this debt.
    Budget projections are inherently uncertain. For example, 
the Congressional Budget Office found that, over the last 11 
years, estimates of annual deficits or surpluses 5 years into 
the future erred by an average of 13 percent of annual 
outlays--a rate that in 2004 would translate into an error of 
about $250 billion. Projections of budget surpluses 10 years 
into the future are surely even more uncertain. The prudent 
course in the face of these uncertainties is to avoid making 
financial commitments--such as massive tax cuts--that will be 
very difficult to reverse.
    The bill relies on an implausible legislative assumption 
that many of its major provisions expire after 9 years and all 
of the provisions are repealed after 10 years. This scenario 
would create uncertainty and confusion for taxpayers, and it is 
highly unlikely that it would ever be implemented. Moreover, 
this artifice causes estimated 10-year costs to be understated 
by about $100 billion, at the same time that it sweeps under 
the rug the exploding costs beyond the budget window. If the 
tax cut were continued, its budgetary impact would grow even 
more severe, reaching about $2.7 trillion between 2010 and 
2019, just at the time when the baby boomers begin to retire, 
Medicare becomes insolvent, and Social Security comes under 
strain. If the bill were to become law, it would leave America 
permanently in debt. The bill as a whole would 
disproportionately benefit the wealthiest Americans by, for 
example, lowering capital gains rates, repealing the estate and 
gift tax, increasing maximum IRA and retirement plan 
contribution limits, and weakening pension anti-discrimination 
protections for moderate- and lower-income workers.
    The bill would not meet the Budget Act's existing pay-as-
you-go requirements, which have helped provide the discipline 
necessary to bring us from an era of large and growing budget 
deficits to the potential for substantial surpluses. It would 
also automatically trigger across-the-board cuts (or 
sequesters) in a number of Federal programs. These cuts would 
result in a reduction of more than $40 billion in the Medicare 
program over the next 5 years. Starting in 2002, they would 
also lead to the elimination of numerous programs with broad 
support, including: crop insurance, without which most farmers 
and ranchers could not secure the financing from banks needed 
to operate their farms and ranches; veterans readjustment 
benefits, denying education and training to more than 450,000 
veterans, reservists, and dependents; Federal support for 
programs such as child care for low-income families and Meals 
on Wheels for senior citizens; and many others.
    As I have repeatedly stressed, I want to find common ground 
with the Congress on a fiscal plan that will best serve the 
American people. I have profound differences, however, with the 
extreme approach that the Republican majority has adopted. It 
would provide a tax cut for the wealthiest Americans and would 
hurt average Americans by denying them the benefits of debt 
reduction and depriving them of the certainty that my proposals 
for Medicare and Social Security solvency would provide as they 
plan for their retirement.
    I hope to work with Members of Congress to find a common 
path to honor our commitment to senior citizens, help working 
families with targeted tax relief for moderate- and lower-
income workers, provide a better life for our children, and 
improve the standard of living of all Americans.

                                                William J. Clinton.
    The White House, September 23, 1999.
      
    
    
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