Letter from the President to the Speaker of the House and the Senate Majority Leader: Tax Relief (10/26/00)
                              THE WHITE HOUSE

                       Office of the Press Secretary

For Immediate Release                            October 26, 2000


                                 October 26, 2000

Dear Mr. Speaker:   (Dear Mr. Leader:)

Thank you for your letter yesterday responding to my proposed consensus tax
package.  As I said yesterday, I believe we all have a responsibility to
make every possible effort to come together on a bipartisan agreement on
tax relief and Medicare/ Medicaid that will maintain fiscal discipline and
serve the interests of all the American people.  That is why I put forward
a good faith offer yesterday that sought to reflect our differing
priorities in a balanced manner.  I was disap-pointed, however, that,
without any consultation with me or Congressional Democrats, you chose to
put forward a partisan legislative package that ignores our key concerns on
school construction, health care, and pensions policy.   If this current
tax and Medicare/Medicaid package is presented to me, I will have no choice
but to veto it.

While we have already reached substantial agreement in important areas,
such as replacement of the Foreign Sales Corporations regime, your
legislation has substantial flaws in several key areas.

As I stated yesterday, I believe it is absolutely essential that we do as
much as possible to meet America?s need for safe and modern schools.  It is
estimated that there may be as much as a $125 billion dollar financing gap
in meeting the school construction and modernization needs of our children.
The bipartisan Rangel-Johnson proposal to finance $25 billion in bonds to
construct and modernize 6,000 schools is, quite frankly, the very least we
should do, given the magnitude of this problem and its importance to
America?s future.  Unfortunately, your proposal falls far short of the
mark.   We should not sacrifice thousands of modernized schools to pay for
inefficient tax incentives that help only a few.  For example, the
arbitrage provision encourages delay in urgently needed school construction
and would disproportionately help wealthy school districts.

On health care, my offer sought to lay a path to common ground by coupling
both of our priorities on health and long-term care.  Unfortunately, your
health care proposal completely ignores our proposal to cover millions of
uninsured, working Americans.  Instead you put forward a series of tax cuts
that, particularly when standing alone, would be inequitable, inefficient,
and even potentially counterproductive health care policy.  For example,
while our FamilyCare proposal would expand coverage to 4 million uninsured
parents at a cost of slightly over $3,000 per person, your proposal would
provide additional coverage to one-seventh the people at six times the cost
per person.  Moreover, your proposal would give the least assistance to
moderate-income families that need help the most, while even raising
concerns that those with employer-based coverage today could lose their

Similarly, on long-term care, I offered to embrace your proposed deduction
for long-term care insurance in exchange for inclusion of my proposal to
give families, who are burdened today by long-term care needs, a $3,000 tax
credit.  Unfortunately, your legislation ignores the bipartisan package I
suggested and instead would provide half the benefits of my proposal for
financially pressed families trying to provide long-term care for elderly
and sick family members.  Surely we can agree on this bipartisan compromise
that has already been endorsed by a broad array of members of Congress,
advocates for seniors and people with disabilities, and insurers.
Similarly, I am perplexed that we cannot agree to include the bipartisan
credit for vaccine research and purchases that is essential to save lives
and advance public health.

I also am disappointed that you have made virtually no attempt to address
the concerns my Administration has expressed to you about the pension
provisions of your bill.  By dropping the pro-gressive savings incentives
from the Senate Finance Committee bill, you have failed to address the lack
of pension coverage for over 70 million people.  Moreover, employers may
have new incentives to drop pension coverage for some of the low- and
moderate-income workers lucky enough to have pension plans today.

Finally, I remain deeply concerned that your Medicare and Medicaid
refinement proposal continues to fail to attach accountability provisions
to excessive payment increases to health maintenance organizations (HMOs)
while rejecting critical investments in beneficiaries and vulnerable health
care providers.  Specifically, you insist on an unjustifiable spending
increase for HMOs at the same time as you exclude bipartisan policies such
as health insurance options for
children with disabilities, legal immigrant pregnant women and children,
and enrolling uninsured children in schools, as well as needed payment
increases to hospitals, academic health centers, home health agencies, and
other vulnerable providers.  Congress should not go home without responding
to the urgent health needs of our seniors, people with disabilities, and
children and the health care providers who serve them.

A far better path than the current one is for Congressional Republicans,
Democrats, and my Administration to come together in a bipartisan process
to find common ground on both tax relief and Medicare/Medicaid refinements.


                              WILLIAM J. CLINTON

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