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American Families in a Framework of Fiscal Discipline

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The Briefing Room



June 26, 2000



Today President Clinton will make a constructive offer to the Congress to lock in our fiscal discipline and debt reduction and address priorities for American families. The President's offer builds on bipartisan consensus on three issues: we should lock in Social Security and Medicare surpluses for debt reduction, American families should have marriage penalty tax relief, and Seniors need an affordable prescription drug benefit. The President will offer that if the Congressional leadership agrees to an overall framework of fiscal discipline that takes Medicare off-budget, the President would be willing to sign broader marriage penalty relief legislation if the Congress will pass his prescription drug plan.

The precondition: lock in added debt reduction by taking Medicare off-budget. The Vice President has proposed taking Medicare off-budget to ensure that its surpluses are used to reduce the debt. Last week, the House virtually unanimously endorsed this principal. The President will ask the Congressional leadership to agree to take Medicare Part A -- which covers hospital insurance -- truly off-budget. This would protect the $403 billion Medicare surplus for debt reduction. If this legislation was combined with a commitment to lock away Social Security surpluses for debt reduction, as proposed by the President, then the total debt reduction would be $2.7 trillion over ten years.


Accept the President's proposal for a Medicare prescription drug benefit. The President has proposed a new, meaningful voluntary Medicare prescription drug benefit. This long-overdue benefit would provide coverage for 50 percent of prescription drug costs up to $5,000 when fully phased in. It would provide protections against catastrophic drug expenses by limiting out-of-pocket spending to $4,000. Beneficiaries would pay a premium of $25 per month in the first year for this coverage which would assure access to discounts, needed drugs, and local pharmacies. This Medicare drug benefit is part of the Administration's Medicare reform plan that improves provider payments by $40 billion, makes the program more competitive and efficient, and extends the life of Medicare's trust fund.


Broader marriage penalty relief legislation. The President is committed to marriage penalty relief. His February budget included a $43 billion proposal to provide targeted marriage penalty relief. The President believes that the Republican marriage penalty proposals, standing alone, are too large, too untargeted to people who specifically face marriage penalties, and outside of the context of fiscal discipline. However, if a broader marriage penalty bill, along the lines reported out by the Senate Finance Committee or passed by the House of Representatives, is passed as part of a framework that locks in additional debt reduction by taking Medicare off-budget and provides the President's proposal for a Medicare prescription drug benefit, then the President would be willing to sign it.

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Budget Framework - Table of Contents

Clinton-Gore Administration - Appendix A1

Clinton-Gore Administration - Appendix A2

Clinton-Gore Administration's Budget Framework

American Families in a Framework of Fiscal Discipline

Taking Medicare Off-Budget and Dedicating the Resulting Interest Savings

Improving the President's Medicare Prescription Drug