[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

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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.