Today I am signing H.R. 5835, the "Omnibus Budget Reconciliation Act of 1990," the centerpiece of the largest deficit reduction package in history and an important measure for ensuring America's long-term economic growth. This Act is the result of long, hard work by the Administration and the Congress. No one got everything he or she wanted, but the end product is a compromise that merits enactment.
H.R. 5835, and the discretionary spending caps associated with it, will achieve nearly $500 billion -- almost half a trillion dollars -- in deficit reduction over the next 5 years. Over 70 percent of that deficit reduction derives from outlay reductions; less than 30 percent from revenue increases. In addition, the Act enacts significant budget process reforms to ensure that the agreement is fulfilled and that budgetary discipline is extended and strengthened.
Entitlement Reforms. The Act provides for the most comprehensive and substantial reform of mandatory "entitlement" programs ever -- about $100 billion in savings from restructuring and reforms in the following major programs:
Federal housing programs;
Student loan programs;
Federal employee benefits; and
Discretionary Program Caps. The Act establishes 5-year caps on overall discretionary spending that will result in savings of over $180 billion. To keep domestic and international spending from growing any faster than inflation, the Act creates new automatic "mini-sequesters." The Act also provides for an orderly defense reduction without threatening national security.
Energy Security. The Act provides incentives for energy conservation and for exploration and development of domestic energy resources.
Social Security. Social Security is fully protected and taken off-budget.
Enforcement and Process Reform. The Act contains the toughest enforcement system ever. The Gramm-Rudman-Hollings sequester process is extended and strengthened with caps, mini-sequesters, and a new "pay-as-you-go" system.
Credit Reform. The Act implements a new Federal accounting and budgeting system to expose and limit previously hidden (and rapidly growing) liabilities.
Tax Changes. The Act includes a tax rate cut from 33 percent to 31 percent for about 3.5 million middle and upper-middle income taxpayers and an overall decrease in taxes paid by those with incomes under $20,000. There are higher excise taxes on luxury items and limitations on itemized deductions and the personal exemption for higher income taxpayers. The total net tax changes comprise 28 percent of the deficit reduction package.
This Act creates the conditions that should allow future interest rates to be lower than they would be otherwise. Lower interest rates can benefit the entire economy. They can mean more housing starts; more Americans driving new cars; reductions in mortgage payments for homeowners; more long-term investment; greater productivity; and increased numbers of jobs.
In signing this landmark Act, I pledge the continuing best efforts of my Administration to maintain not only the letter, but the spirit of the new fiscal order for the Federal Government that is embodied in this agreement.
H.R. 5835 also contains Child care provisions, strongly supported by this Administration, that will enlarge the opportunities of parents to obtain the child care they desire, including care that is provided by sectarian institutions if the parents so choose. The largest portion of this new child care program will come from tax credits to people -- as requested by the Administration. In addition, a Child Care and Development Block Grant program includes provisions for the issuance of child care certificates or vouchers that would enable parents to exercise their own judgment as to what type of child care best suits the particular needs of their own child.
I note my understanding of these child care provisions and sign the bill based on that understanding, as follows:
First, I understand that the definition of child care certificates in section 658P(2) ensures that States may not restrict parental choice by limiting the range of providers from whom parents may seek child care, using certificates as payment, and that such certificates shall not be considered to be grants or contracts.
Second, section 658N(a)(1)(B) specifically permits sectarian organizations that are child care providers to require that all of their employees adhere to the religious tenets and teachings of the organization and comply with rules forbidding the use of drugs or alcohol. As I understand it, the term "sectarian organization" in this provision includes religious organizations generally.
Third, as used in sections 658N(a)(2)(B) and 658N(a)(3)(B), the term "organization" means not only the particular provider but also a broader association with which that provider may be identified.
Finally, all of the provisions of the Child Care and Development Block Grant program will be interpreted in light of the requirements of the establishment and free exercise clauses of the First Amendment.
I would also note certain constitutional difficulties in other titles of the Omnibus Budget Reconciliation Act. In particular, section 4117 of the Act requires the Secretary of Health and Human Services, in certain conditions, to treat the States of Nebraska and Oklahoma as single fee schedule areas for purposes of determining the adjusted historical payment basis and the fee schedule amount for physicians' services furnished on or after January 1, 1992. Such treatment is made to depend on the Secretary's receiving written expressions of support for treatment of the State as a single fee schedule area from each member of the congressional delegation from the State and from organizations representing urban and rural physicians in the State. This provision requires the Secretary to base a substantive decision on the allocation of Federal benefits on the statements of members of congressional delegations and other persons who are not appointed by the President. Therefore, it must be understood either (1) as an attempt to vest significant authority to execute Federal law in those persons, in which case it violates the Appointments Clause, Article II, section 2; see Buckley v. Valeo, 424 U.S. 1 (1975); or (2) as an attempt to confer lawmaking power on individual members of the Congress and others, in which case it violates Article I, section 7; see INS v. Chadha, 462 U.S. 919 (1983). Accordingly, this requirement is without legal force, and I am so instructing the Secretary of Health and Human Services. I am also instructing the Attorney General and the Secretary of Health and Human Services to prepare remedial legislation to amend this section for submission to the next session of the Congress, so that the Act can be brought into compliance with the Constitution's requirements.
Further, the Constitution empowers the President to "recommend to [Congress] such Measures as he shall judge necessary and expedient." U.S. Const. Art. II, Sec. 3. Several sections of the Act raise constitutional difficulties by appearing or purporting to impose requirements that the executive branch submit legislative proposals of a predetermined kind. The executive branch has consistently treated provisions of this type as advisory rather than as mandatory, and to avoid a constitutional question will so construe the provisions at issue here.
The White House,
November 5, 1990.