    [Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
    [December 6, 1995]
    [Pages 1853-1855]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the House of Representatives Returning Without Approval
    Budget Reconciliation Legislation
    December 6, 1995

    To the House of Representatives:
        I am returning herewith without my approval H.R. 2491, the budget
    reconciliation bill adopted by the Republican majority, which seeks to
    make extreme cuts and other unacceptable changes in Medicare and
    Medicaid, and to raise taxes on millions of working Americans.
        As I have repeatedly stressed, I want to find common ground with the
    Congress on a balanced budget plan that will best serve the American
    people. But, I have profound differences with the extreme approach that
    the Republican majority has adopted. It would hurt average Americans and
    help special interests.
        My balanced budget plan reflects the values that Americans share--
    work and family, opportunity and responsibility. It would protect
    Medicare and retain Medicaid's guarantee of coverage; invest in
    education and training and other priorities; protect public health and
    the environment; and provide for a targeted tax cut to help middle-
    income Americans raise their children, save for the future, and pay for
    postsecondary education. To reach balance, my plan would eliminate
    wasteful spending, streamline programs, and end unneeded subsidies; take
    the first, serious steps toward health care reform; and reform welfare
    to reward work.
        By contrast, H.R. 2491 would cut deeply into Medicare, Medicaid,
    student loans, and nutrition programs; hurt the environment; raise taxes
    on millions of working men and women and their families by slashing the
    Earned Income Tax Credit (EITC); and provide a huge tax cut whose
    benefits would flow disproportionately to those who are already the most
    well-off.
        Moreover, this bill creates new fiscal pressures. Revenue losses
    from the tax cuts grow rapidly after 2002, with costs exploding for
    provisions that primarily benefit upper-income taxpayers. Taken
    together, the revenue losses for the 3 years after 2002 for the
    individual retirement account (IRA), capital gains, and estate tax
    provisions exceed the losses for the preceding 6 years.
        Title VIII would cut Medicare by $270 billion over 7 years--by far
    the largest cut in Medicare's 30-year history. While we need to slow

    [[Page 1854]]

    the rate of growth in Medicare spending, I believe Medicare must keep
    pace with anticipated increases in the costs of medical services and the
    growing number of elderly Americans. This bill would fall woefully short
    and would hurt beneficiaries, over half of whom are women. In addition,
    the bill introduces untested, and highly questionable, Medicare
    ``choices'' that could increase risks and costs for the most vulnerable
    beneficiaries.
        Title VII would cut Federal Medicaid payments to States by $163
    billion over 7 years and convert the program into a block grant,
    eliminating guaranteed coverage to millions of Americans and putting
    States at risk during economic downturns. States would face untenable
    choices: cutting benefits, dropping coverage for millions of
    beneficiaries, or reducing provider payments to a level that would
    undermine quality service to children, people with disabilities, the
    elderly, pregnant women, and others who depend on Medicaid. I am also
    concerned that the bill has inadequate quality and income protections
    for nursing home residents, the developmentally disabled, and their
    families, and that it would eliminate a program that guarantees
    immunizations to many children.
        Title IV would virtually eliminate the Direct Student Loan Program,
    reversing its significant progress and ending the participation of over
    1,300 schools and hundreds of thousands of students. These actions would
    hurt middle- and low-income families, make student loan programs less
    efficient, perpetuate unnecessary red tape, and deny students and
    schools the free-market choice of guaranteed or direct loans.
        Title V would open the Arctic National Wildlife Refuge (ANWR) to oil
    and gas drilling, threatening a unique, pristine ecosystem, in hopes of
    generating $1.3 billion in Federal revenues--a revenue estimate based on
    wishful thinking and outdated analysis. I want to protect this
    biologically rich wilderness permanently. I am also concerned that the
    Congress has chosen to use the reconciliation bill as a catch-all for
    various objectionable natural resource and environmental policies. One
    would retain the notorious patenting provision whereby the government
    transfers billions of dollars of publicly owned minerals at little or no
    charge to private interests; another would transfer Federal land for a
    low-level radioactive waste site in California without public
    safeguards.
        While making such devastating cuts in Medicare, Medicaid, and other
    vital programs, this bill would provide huge tax cuts for those who are
    already the most well-off. Over 47 percent of the tax benefits would go
    to families with incomes over $100,000--the top 12 percent. The bill
    would provide unwarranted benefits to corporations and new tax breaks
    for special interests. At the same time, it would raise taxes, on
    average, for the poorest one-fifth of all families.
        The bill would make capital gains cuts retroactive to January 1,
    1995, providing a windfall of $13 billion in about the first 9 months of
    1995 alone to taxpayers who already have sold their assets. While my
    Administration supports limited reform of the alternative minimum tax
    (AMT), this bill's cuts in the corporate AMT would not adequately ensure
    that profitable corporations pay at least some Federal tax. The bill
    also would encourage businesses to avoid taxes by stockpiling foreign
    earnings in tax havens. And the bill does not include my proposal to
    close a loophole that allows wealthy Americans to avoid taxes on the
    gains they accrue by giving up their U.S. citizenship. Instead, it
    substitutes a provision that would prove ineffective.
        While cutting taxes for the well-off, this bill would cut the EITC
    for almost 13 million working families. It would repeal part of the
    scheduled 1996 increase for taxpayers with two or more children, and end
    the credit for workers who do not live with qualifying children. Even
    after accounting for other tax cuts in this bill, about eight million
    families would face a net tax increase.
        The bill would threaten the retirement benefits of workers and
    increase the exposure of the Pension Benefit Guaranty Corporation by
    making it easy for companies to withdraw tax-favored pension assets for
    nonpension purposes. It also would raise Federal employee retirement
    contributions, unduly burdening Federal workers. Moreover, the bill
    would eliminate the low-income housing tax credit and the community
    development corporation tax credit, which address critical housing needs
    and help rebuild communities. Finally, the bill would repeal the tax
    credit that encourages economic activity in Puerto Rico. We must not
    ignore the real needs of our citizens in Puerto Rico, and any
    legislation must contain effective mechanisms to promote job creation in
    the islands.

    [[Page 1855]]

        Title XII includes many welfare provisions. I strongly support real
    welfare reform that strengthens families and encourages work and
    responsibility. But the provisions in this bill, when added to the EITC
    cuts, would cut low-income programs too deeply. For welfare reform to
    succeed, savings should result from moving people from welfare to work,
    not from cutting people off and shifting costs to the States. The cost
    of excessive program cuts in human terms--to working families, single
    mothers with small children, abused and neglected children, low-income
    legal immigrants, and disabled children--would be grave. In addition,
    this bill threatens the national nutritional safety net by making
    unwarranted changes in child nutrition programs and the national food
    stamp program.
        The agriculture provisions would eliminate the safety net that farm
    programs provide for U.S. agriculture. Title I would provide windfall
    payments to producers when prices are high, but not protect family farm
    income when prices are low. In addition, it would slash spending for
    agricultural export assistance and reduce the environmental benefits of
    the Conservation Reserve Program.
        For all of these reasons, and for others detailed in the attachment,
    this bill is unacceptable.
        Nevertheless, while I have major differences with the Congress, I
    want to work with Members to find a common path to balance the budget in
    a way that will honor our commitment to senior citizens, help working
    families, provide a better life for our children, and improve the
    standard of living of all Americans.

                                                          William J. Clinton

    The White House,

    December 6, 1995.