[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.