Statement of Administration Policy: H.R. 5300 - Omnibus Budget Reconciliation Act

(House)
(Sponsor: William Gray (D), Pennsylvania)

The Administration supports passage by the House of an Omnibus Budget Reconciliation Act that is substantially the same as the Domenici-Dole-Chiles Amendment as introduced in the Senate. It is imperative that the savings approved by the Senate be adopted by the House-Senate conference to help avoid a Gramm-Rudman-Hollings sequester.

With respect to the bill now before the House (H.R. 5300), unless the provisions discussed below, to which the Administration objects most strongly, are not resolved satisfactorily, the President's senior advisors would recommend veto:

• The inclusion of the bill H.R. 1, the Housing Act of 1985.
• Language requiring an across-the-board reduction in discretionary appropriations in order to achieve a $1 billion reduction in outlays.
• Excessive Customs Service user fees on cargo imports, which exceed actual costs would violate our international obligations under the GATT and create a new revolving trust fund for Customs Service operations.
• The labor protection provisions that would encumber the sale of Conrail.
• Extension of the temporary Federal Unemployment Tax Act 0.2 percent tax.
• Removal of Executive Branch discretion regarding the PPS update in the Medicare program.
• Preventing the Administration from achieving much needed Medicare reforms, particularly in the areas of hospital capital payments, physician charges, and the ESRD program.
• A blanket prohibition of Administration regulations necessary to prudent management of the Medicare program prior to September 15, 1987.
• Placing the Hospital Insurance trust func off budget, in violation of the 1982 bipartisan agreement on Social Security.
• Payment for Medicare claims beginning in FY 1988 within 22 days, rather than the current 30 days, increasing Medicare costs by $1.2 billion each year.
• An ill-advised and counterproductive Buy-America requirement (stricken from last year's reconciliation bill) that, by requiring any vessel or structure used for the exploration of oil and gas on the O.C.S. to be built in the U.S., would threaten our export-dependent farmers and industries with retaliation from our trading partners.
• The requirement increasing the mandatory minimum daily fill rate for the Strategic Petroleum Reserve (SPR) from 35,000 barrels per day under current law to 100,000 barrels per day, thus adding approximately $1.5 billion over the next three years to our deficit.
• Language that would have the effect of increasing the amount of R.E.A. guaranteed Federal Financing Bank loans that can be prepaid without penalty, in contravention of existing contracts signed by these cooperatives, and at a cost to the Treasury of several hundred million dollars in prepayment penalties.
• The requirement that sale of loan assets with recourse be treated as offsetting collections that reduce the deficit.
• The establishment of a new government-sponsored enterprise (COSBI) to finance small business investment companies (SBICs) that would require the sale of the $1 billion SBIC portfolio (currently held by the FFB) at par on a full resource basis.
• Language that allows Civil Service Retirement System-covered employees to contribute to the new thrift plan on January 1, 1987, but doesn't permit them to switch to the new retirement system until July 1, 1987.
• Excessive sales of Export-Import Bank loans — at a level that would cause enormous future losses to the government and raise major problems in the financial management of the Bank.