    [Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (1999, Book II)]
    [September 23, 1999]
    [Pages 1577-1578]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1577]]

    Message to the House of Representatives Returning Without Approval
    Legislation on Taxpayer Relief
    September 23, 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 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 elimination
    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

    [[Page 1578]]

    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 low-
    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; on 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.