    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [November 19, 1993]
    [Pages 2026-2028]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to the Speaker of the House of Representatives on the Penny-
    Kasich Deficit Reduction Proposal
    November 19, 1993

    Dear Mr. Speaker:
        I write to express my strong opposition to the Penny-Kasich
    amendment to H.R. 3400.
        Over the past year, we have taken bold and serious steps to bring
    down the federal budget deficit and regain control of our economic
    destiny. We can be proud of the $500 billion in deficit reduction--
    including $255 billion in spending cuts--that we accomplished for fiscal
    years 1994 through 1998. The hard freeze on discretionary budget
    authority and outlays is the most significant step that has ever been
    taken to control discretionary spending. Likewise, my executive order
    establishing targets for mandatory spending (along with the specific
    mandatory savings contained in the reconciliation bill) is the first
    real step that has been taken to control unforeseen increases in
    entitlement programs. Furthermore, we have introduced the most detailed
    plan ever to provide universal health coverage and control the rise in
    health care spending--which is the main culprit in driving up the budget
    deficit.
        With specific regard to fiscal year 1994, we have already achieved,
    in the budget and appropriations process, savings of some $12 billion
    from the 1994 cap on budget authority. That is a major accomplishment. I
    have also sent to the Congress a 6-year $9 billion package of additional
    spending reductions and a $2 billion fiscal year 1994 rescission bill. I
    am also supporting efforts to increase these savings as contained in
    H.R. 3400. The primary changes will be: (1) increasing the rescission
    proposal to $2.6 billion in fiscal year 1994; and (2) a specific
    requirement to implement the National Performance Review (NPR) proposal
    to eliminate 252,000 positions from the federal work force. These and
    other actions will bring the total savings in the package to $25-$30
    billion, as likely to be scored by the Congressional Budget Office.
        In addition to these spending cuts, my Administration is working
    with the Congress on major reforms in the procurement process to be
    based on the principles established in the Vice President's NPR. If the
    legislation follows those principles, we anticipate that the procurement
    measure will save another $22 billion over 6 years on top of the $25
    billion--$30 billion in spending cuts described above.
        The Penny-Kasich amendment to this savings package includes many
    meritorious spending cuts. Indeed, many of them have been proposed by my
    Administration to finance health care re-

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    form and meet the unprecedented spending caps in the recently passed
    economic plan. As they have included several of our cuts in their
    package, we will include several of these cuts in either our package or
    our FY 1995 budget proposal. Yet, despite these areas of common ground,
    I strongly believe that the amendment should not be passed for the
    reasons set forth below:
        Health Care Reform. In the aftermath of the $500 billion deficit
    reduction plan, the largest trouble spot in the federal budget is the
    spiraling cost of health care. The best single hope for reducing the
    long-term structural deficit is passage of fundamental health care
    reform to bring these costs under control. Yet, Penny-Kasich claims over
    $40 billion of the potential Medicare savings needed for any serious
    health care plan. Therefore, it hurts, not helps, our effort to bring
    the federal deficit down. Denying these savings to health care reform
    would reduce the flexibility needed for any plan, and fracture the
    growing consensus for universal coverage and cost containment. The fact
    that the authors have chosen to modify their proposal by increasing the
    magnitude of the health care cuts is particularly disturbing.
        A Substantial Budget Gap Will Be Created: Our economic plan already
    requires an unprecedented 5-year ``hard'' freeze on discretionary
    spending that will require serious cuts in nearly every part of the
    budget. This strict spending constraint already puts severe limits on
    spending, and will require serious cuts in nearly every part of the
    budget. Indeed, we already need to find over $50 billion in additional
    discretionary savings to meet our deficit reduction targets and protect
    needed investments in fighting crime, defense conversion,
    infrastructure, training and education and other investments that most
    Americans believe are essential to economic growth. The original Penny-
    Kasich proposal would mandate an additional $53 billion reduction of the
    discretionary spending caps. Because at least $20 billion of its
    specific spending cuts are already included in my plan, Penny-Kasich
    leaves a $70 billion gap between the deficit reduction mandate and the
    savings that are specified. Efforts to close this gap could harm
    important national priorities.
        Defense. We are already undertaking a measured reduction in defense
    spending, carefully designed to protect our security needs. As defense
    makes up roughly half of total discretionary spending, the need to close
    a $70 billion discretionary spending gap would create pressure for
    arbitrary defense cuts in force structure, force modernization, training
    and readiness, base cleanup, and defense conversion that could threaten
    our national security. Secretary of Defense Aspin and General John
    Shalikashvilli, the Chairman of the Joint Chiefs of Staff, believe that
    the amendment ``duplicates DoD reductions already taken to the current
    budget levels . . . [and] would require cuts to personnel strength that
    would seriously degrade the support necessary to maintain readiness.''
    In their letter to Congress, the Secretary and General went on to state,
    that the amendment and that while ``[w]e appreciate the enormous
    pressures that deficit reduction goals have placed on federal spending,
    . . . we do not believe this Congress is willing to allow our military
    forces to become the hollow shells that existed in the late 1970s.''
        Bipartisan Commission on Entitlement Reform. As you know, I have
    issued an executive order establishing a bipartisan commission to
    consider further entitlement reform. I believe that such detailed and
    deliberate consideration is the better way to address the difficult
    issues in our complex entitlement programs.
        Economic Growth and the Timing of Deficit Reduction. We have already
    enacted the largest deficit reduction package in our nation's history.
    While our economy still has a long way to go, the benefits of all of our
    actions are beginning to show. In the first 9 months of our
    Administration, the economy has created 200,000 more private sector jobs
    than were created over the last 4 years. The economic plan has led to
    historic lows in interest rates and mortgage rates, which are fueling an
    investment-led recovery while allowing millions of American families to
    refinance their homes or find better opportunities to buy their first
    home. Over 90 percent of small businesses are already eligible for new
    or additional tax cuts due to our economic plan. And starting January 1,
    1994, over 15 million American households with full-time workers will
    receive new or additional tax cuts so that those who work full-time will
    not have to live in poverty.
        While we still must do more to get our economy working for all
    Americans, recent economic indicators suggest--and my Secretary of the
    Treasury and Chair of the Council of Economic Advisers agree--that our
    plan provided the right dose of deficit reduction. We should give that

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    plan time to work and not take risks with our now fledgling recovery.
        Together, we have made major strides in bringing down the deficit
    while still taking the steps we need to ensure national security and
    economic growth. Many of the ideas contained in the Penny-Kasich
    legislation can help move us in that direction, but for the reasons
    listed above, the amendment as a whole is flawed and must be rejected.
        Sincerely,

                                                                Bill Clinton

    Note: This letter was made available by the Office of the Press
    Secretary but was not issued as a White House press release.