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The Administration strongly opposes S. 2346. If a tax bill of this
magnitude were presented to the President before a proper framework for
paying down debt, strengthening Social Security and Medicare, and funding
critical initiatives has been established, the President's senior advisors
would not recommend that he sign it.
Earlier this year, the President and the bipartisan Congressional
leadership expressed a common interest in continuing to pay down the debt,
strengthening Social Security and Medicare, providing tax relief to
middle-income families, and funding critical initiatives. Achieving these
objectives is central to the continued strength of the Nation's economy.
This month is the 109th month of the economic expansion -- the longest in
the Nation's history. The economy is strong because, over the past seven
years, the Administration and Congress have focused on reducing deficits,
paying down debt held by the public, bringing down interest rates,
investing in our people, and opening markets. These policies have reduced
the publicly-held debt by $1.7 trillion below the level forecast in 1993
and have contributed to greater productivity growth, low inflation, low
unemployment, and broad-based growth in real wages. We must stay the
course.
S. 2346, which would cost about $248 billion over ten years, appears to be
only one in a series of tax bills. Both the Senate and House have already
passed other costly tax cut legislation this year. Carving last year's
vetoed tax bill into a series of smaller ones does not mitigate the core
concerns that led to the President's veto last year. Just as important,
proceeding on one expensive part of a legislative agenda before the others
are even defined does not make sound fiscal policy. As the President's
budget makes clear, the Administration supports targeted marriage penalty
relief. The Administration believes, however, that marriage penalty relief
needs to be done in the right way, at the right time, and in the right
framework.
Pay-As-You-Go Scoring
S. 2346 would affect receipts; therefore, it is subject to the
pay-as-you-go requirements of the Omnibus Budget Reconciliation Act of
1990. The Administration has not yet completed its scoring of the bill,
but it is evident that the magnitude of the proposed tax cut ($4.1 billion
in FY 2001, according to the Joint Committee on Taxation) and the absence
of any offsets could cause a significant sequester of Federal resources.
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