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In the last session of Congress, the Administration supported
passage of H.R. 622 as an important pro-family and pro-adoption
tax relief initiative and was pleased that virtually all of
the provisions of this bill were included in P.L. 107-16, the
Economic Growth and Tax Relief Reconciliation Act, which was
enacted into law last June. The Administration understands that
H.R. 622 is now being used as a vehicle for consideration of
economic security proposals on the Senate floor.
The Administration believes there is a need for quick action
on an economic security bill as an insurance policy against
an unwanted further slowdown as well as to provide needed
relief to dislocated workers. The bipartisan centrist bill
that passed the House last December (the Centrist Proposal)
would achieve such goals. The Administration strongly supports
the Centrist Proposal. In contrast, the Daschle-Baucus amendment
in the nature of a substitute will not provide true economic
security. In addition, the Administration is very concerned
that excessive spending will be added to this legislation
that will do more economic harm than good.
The Administration urges the Senate to work together across
party lines to pass a responsible economic security package
that will provide an immediate boost to the economy and assistance
to dislocated workers. The Centrist Proposal reflects the
view that the best way to retain and create jobs is through
tax relief that improves incentives to work and invest while
restoring consumer and business confidence. It does so by:
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Accelerating the planned reduction in the 27 percent tax
bracket to 25 percent, thus providing more money for consumers
to spend and for entrepreneurs and small businesses to retain
and create more jobs;
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Giving relief to low and moderate income workers to put
more money back in their pockets;
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Providing 30 percent immediate expensing for three years
to encourage businesses to invest and make new purchases;
and
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Undertaking necessary reforms to the corporate alternative
minimum tax, which, if unchecked, imposes job-killing higher
taxes during an economic downturn.
The Centrist Proposal also provides much-needed support to
unemployed and dislocated workers, through extensions of unemployment
benefits and additional immediate distributions of funds for
states to expand unemployment coverage temporarily in the
way best suited to the needs of their workers. In addition,
the Centrist Proposal includes an effective plan to enable
workers to keep health insurance when they lose their jobs,
through health credits that could be available immediately
to assist with the costs of their insurance. Finally, the
Centrist Proposal includes National Emergency Grants (NEGs)
to provide additional support that can be made available quickly
for health care, training, and other special needs.
Overall, the Administration believes that any economic security
bill should be limited to provisions that will stimulate the
economy or provide immediate assistance to dislocated workers
and thus urges that miscellaneous spending items not be added
to this bill. The Administration opposes measures that make
fundamental structural changes in the appropriate balance
between the Federal and State share of the Medicaid program.
If such measures were to become permanent, it would cost about
$100 billion over ten years. In addition, the Administration
would strongly oppose an amendment to delay the effective
date of the January 18th final rule on Medicaid upper payment
limits for non-State government-operated hospitals, if it
were offered for consideration. The Centrist Proposal includes
a more effective provision for immediate, emergency assistance
for State health care programs. Lastly, the Administration
does not support changes to the unemployment insurance program
that could lead to a permanently higher level of unemployment
and unemployment taxes and which could take 6 to 18 months
to implement.
The Administration urges the Senate to work to craft an economic
security package that reflects the Centrist Proposal and will
provide immediate and effective economic security for the
Nation.
Pay-As-You-Go
Scoring
Any law that would reduce receipts or increase direct spending
is subject to the pay-as-you-go requirements of the Balanced
Budget and Emergency Deficit Control Act. Accordingly, H.R.
622, or any substitute amendment in lieu thereof that would
reduce revenues or increase direct spending, will be subject
to the pay-as-you-go requirement. OMB's scoring estimates
are under development. The Administration will work with Congress
to ensure that any unintended sequester of spending does not
occur under current law or the enactment of any other proposals
that meet the President's objectives.
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