[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

[[Page 2028]]

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.