Letter to Congressional Leaders on Bipartisan Tax Cut Legislation

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 disappointed, 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 insurance.

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 progressive 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.

Sincerely,

WILLIAM J. CLINTON