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Budget Summit [1990] [6]
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Budget Summit [1990] [6]
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Records of the White House Office of the Chief of Staff to the President (George H. W. Bush Administration)
John Sununu Issues Files
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Originally Processed With FOIA(s):
FOIA Number:
1998-0004-F[1]; 1998-0251-F
1998-0004-F[1]; 1998-0251-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin: Chief of Staff, White House Office of
Series:
Sununu, John, Files
Subseries:
Issues Files
OA/ID Number:
29138
Folder ID Number:
29138-008
Folder Title:
Budget Summit [1990] [6]
Stack:
Row:
Section:
Shelf:
Position:
G
10
18
3
2
LOSERS
Losen (agreed)
$ 18
EITC
9
$27
RAISERS
agreed
$ 75.5
Energy Pease (4%)
40.3
24.0
HI (to $69,000)
10.0
FUTA
5.2
Interest on SLL Tax Deficiences
2.0
$ 157.0
Net Deficit Reduction
$ 130.0
&
Revenue Effects of $0.01 Per Gallon Tax
On Refined Petroleum Products
Fiscal Years:
1991
1992
1993
1994
1995
1991-1995
($ billions)
Gasoline
$0.5
$0.7
$0.7
$0.7
$0.7
$3.3
Other Motor Fuel
0.2
0.3
0.3
0.3
0.3
1.5
Subtotal
$0.7
$1.0
$1.0
$1.0
$1.0
$4.8
Distillate Used for
0.1
0.1
0.1
0.1
0.4
other
0.3
0.4
0.4
0.4
0.5
1.9
TOTAL
$1.0
$1.5
$1.5
$1.5
$1.6
$7.1
22.Sep.90
Department of the Treasury
05:03 PM
Office of Tax Analysis
Note: Sales to manufacturers are exempt from tax.
less than $50 million
Regressivity Offset Proposal in Democratic Offer (9/17)
The proposal is poorly targeted. Despite its cost ($28
billion over the budget period), many poor families will
not benefit from the increase in the earned income tax credit
(EITC) and the standard deduction.
Although the working poor with children will benefit from a
doubling of the earned income tax credit, other poor families
will not receive any additional assistance. Only eight
percent of families with family economic income below $10,000
receive the EITC. Poor families who are not eligible for the
EITC and who would not benefit from the proposal include:
-- The working poor with no children.
-- The elderly whose main source of income is social
security or supplemental security income (SSI).
-- Families who receive welfare income and have no other
sources of income.
Because the EITC does not adjust for family size, the proposal
will provide disproportionate benefits to certain recipients.
The single mother of one child who works full-time at a
minimum wage job will receive the same amount ($1992) as the
mother of three who works beside her.
The proposed changes in the EITC will raise the marginal tax
rates for families in the phase-out range of the credit.
Families with AGI in the phase-out range could face marginal
tax rates of 50 percent (reflecting the combined effect of
both individual income and payroll tax rates).
Changes in the standard deduction will not benefit those who
currently do not incur any individual income tax liability.
Nearly 45 percent of the reduction in tax liabilities
resulting from the change in the standard deduction will go to
families with income in excess of $50,000.
ENTITLEMENT OPTIONS
($ billions)
DEMOCRATIC
REPUBLICAN
REPUBLICAN
OFFER 9/17
OFFER 9/17
VS. DEMO OFFER
1991
1991-95
1991
1991-95
1991
1991-95
Agriculture/price supports
-1.3
-11.8
-1.1
-13.3
0.2
-1.5
Crop insurance
---
---
---
-0.5
----
-0.5
Medicare:
Providers
-3.1
-30.0
-3.4
-33.0
-0.3
-3.0
Deductible/premium/
co-insurance
-1.5
-22.0
-2.5
-31.5
-1.0
-9.5
Subtotal Medicare
-4.6
-52.0
-5.9
-64.5
-1.3
-12.5
Civil Service:
Lump sum
-1.3
-8.5
-1.3
-8.5
---
----
Postal Service reforms
---
-0.7
-4.4
-0.7
-4.4.
FEHB
---
---
-0.3
-0.9
-0.3
-0.9
COLAs
-0.5
-2.5
---
0.5
2.5
Other
-0.9
-6.8
---
-1.5
0.9
5.3
Subtotal civil service
-2.7
-17.8
-2.3
-15.3
0.4
2.5
Medicaid:
Employee payor
---
---
-0.1
-1.1
-0.1
-1.1
Pharmaceutical purchasing
---
---
-0.1
-1.5
-0.1
-1.5
First dollar coverage
---
---
----
-5.7
---
-5.7
Unspecified
-0.2
-2.6
---
---
0.2
2.6
Subtotal medicaid
-0.2
-2.6
-0.2
-8.3
---
-5.7
Military retirement
-0.4
-8.2
---
---
0.4
8.2
Stafford loans (GSLs)
----
-0.7
-0.1
-3.1
-0.1
-2.4
Child nutrition
---
---
-0.2
-1.3
-0.2
-1.3
Unemployment insurance
---
---
---
-4.6
---
-4.6
Rail pension fund liability
-0.1
-0.4
-0.1
-0.4
---
---
Foster care admin
---
---
-0.2
-2.9
-0.2
-2.9
CSE admin
---
----
-0.4
-2.1
-0.4
-2.1
Social security overpmts
0.0
-0.2
0.0
-0.2
---
----
FHA assignment waiver
-0.2
-1.0
-0.2
-1.0
---
---
Other FHA reforms 1/
-0.5
-1.3
-0.4
-3.4
0.1
-2.1
Tongass
0.0
-0.2
0.0
-0.2
---
Veterans
-0.4
-2.2
-0.4
-2.2
---
---
Subtotal entitlements
-10.4
-98.4
-11.5
-123.3
-1.1
-24.9
NOTE: CBO estimates
11:17 AM
1/ FHA reforms in the Possible Offer assume Senate-passed S.566.
Details may not add to totals due to rounding. All estimates assume cash-based accounting,
adjustments may be required if credit reform proposals are adopted.
DEMOCRATIC OFFER also included fees of $2.5 billion in 1991 and $22.4 billion over 1991-95
in the entitlement category in their 9/17 offer.
Prepared by SBC Minority Staff, 18-Sep-90.
Other Beneficiary Options
FY91
FY92
FY93
FY94
FY95
FY91-95
A. Provider reforms at (3.5/35); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 30% premium.
Providers
CBO/Staff
OMB
3,500
5,250
6,710
8,577
10,963
35,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 30%
CBO/Staff
OMB
1,082
2,332
3,665
5,175
6,797
19,051
Subtotal, Beneficiary
CBO/Staff
OMB
2,493
4,710
6,308
8,092
9,993
31,596
Total Medicare
(3.5/35)
CBO/Staff
OMB
5,993
9,960
13,018
16,669
20,956
66,596
B. Provider reforms at (3.5/35); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 29% premium.
Providers
CBO/Staff
OMB
3,500
5,250
6,710
8,577
10,963
35,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 29%
CBO/Staff
OMB
852
1,844
3,110
4,546
6,091
16,443
Subtotal, Beneficiary
CBO/Staff
OMB
2,263
4,222
5,753
7,463
9,287
28,988
Total Medicare
(3.5/35)
CBO/Staff
OMB
5,763
9,472
12,463
16,040
20,250
63,988
Page 1
C. Provider reforms at (3.3/33); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 30% premium.
Providers
CBO/Staff
OMB
3,300
4,950
6,327
8,087
10,336
33,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 30%
CBO/Staff
OMB
1,094
2,368
3,710
5,232
6,870
19,274
Subtotal, Beneficiary
CBO/Staff
OMB
2,505
4,746
6,353
8,149
10,066
31,819
Total Medicare
(3.3/33)
CBO/Staff
OMB
5,805
9,696
12,680
16,236
20,402
64,819
D. Provider reforms at (3.3/33); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 29% premium.
Providers
CBO/Staff
OMB
3,300
4,950
6,327
8,087
10,336
33,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 29%
CBO/Staff
OMB
864
1,878
3,153
4,602
6,162
16,659
Subtotal, Beneficiary
CBO/Staff
OMB
2,275
4,256
5,796
7,519
9,358
29,204
Total Medicare
(3.3/33)
CBO/Staff
OMB
5,575
9,206
12,123
15,606
19,694
62,204
Page 2
FY91
FY92
FY93
FY94
FY95
FY91-95
E. Provider reforms at (3.1/30); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 30% premium.
Providers
CBO/Staff
OMB
3,100
4,650
5,823
7,293
9,134
30,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 30%
CBO/Staff
OMB
1,106
2,403
3,769
5,325
7,011
19,614
Subtotal, Beneficiary
CBO/Staff
2,517
4,781
6,412
8,242
10,207
32,159
OMB
Total Medicare
(3.1/30)
CBO/Staff
OMB
5,617
9,431
12,235
15,535
19,341
62,159
F. Provider reforms at (3.1/30); $150 Part B deductible, Indexed to CPI,
20% copayment for clinical labs; 29% premium.
Providers
CBO/Staff
OMB
3,100
4,650
5,823
7,293
9,134
30,000
Beneficiary
Set Part B deductible at $150, index to CPI
CBO/Staff
OMB
911
1658
1,823
1,987
2,146
8,525
20% Coinsurance on Clinical Labs
CBO/Staff
OMB
500
720
820
930
1,050
4,020
Move Part B premium to 29%
CBO/Staff
OMB
876
1,913
3,210
4,691
6,299
16,989
Subtotal. Beneficiary
CBO/Staff
OMB
2,287
4,291
5,853
7,608
9,495
29,534
Total Medicare
(3.1/30)
CBO/Staff
OMB
5,387
8,941
11,676
14,901
18,629
59,534
Page 3
cy Monthly Premiums: Part B
35/35
91 92 93 94 95
29%Blica
34.29 36.15 41.32 45.93 50.84
30%201%
35.47 37-40 42.74 47.51 52.59
3.3/33
91 92 93 94 95
29%
34.35 36.24 41.43 46.07 51.01
30%
35.53 37.49 42.86 47.66 52.77
3.1/30
91
92
93
94
95
29% 34.41 36.33 41.57 46.29 51.35
30% 35.59 37.58 43.01 47.89 53.12
E491 Amount does not reflect
amants/balances. OMB estimates
actuarial advistments for cartigency
these to be about -$1.50/month for
cyal only. outyears very close to actuans.
Medicare SMI Premium
1990
1991
1992
1993
1994
1995
25% Premium-No Outlay Savings
$28.60
$31.40
$34.00
$38.90
$43.50
$48.40
30% Premium
$28.60
$33.00
$37.30
$42.70
$47.50
$52.70
50% Premium
$28.60
$55.00
$62.17
$71.17
$79.17
$87.83
75% Premium
$28.60
$78.50
$85.00
$97.25
$108.75
$121.00
current law: 15BP and if Fund decline
+ 7.5 increase may./yr. and
absolute cay 32.5 BP.
\
Conzales removes
21-Sep-90
SUMMARY TABLE
7.5 constraint am
Funn decline construit
ALTERNATIVES TO MIDSESSION OUTLAYS ESTIMATE
FDIC BANK INSURANCE FUND
001
'90 = BP
($ in Millions)
*7.5 out comment
19.5 now = trach for '91
FY90
FY91
FY92
FY93
FY94
FY95
Total FY91-95
- OMB MIDSESSION OUTLAYS 11
(15 BP in 91-95)
3,904
945
(252)
(1,261)
(2,446)
(3,521)
(6,535)
- See other TabA for 19.5 thin '95
- @ rec. 23 and 1.5 (last below)
- NET CHANGES TO OMB MIDSESSION OUTLAYS:
RIEGLE ALTERNATIVE 12
(27 BP Premium, CBO Pricing)
(800)
(2,200)
(2,700)
(3,100)
(3,200)
(12,000)
- OMB PRICING, 27 BP, ZERO GROWTH 13
(80 Bank Failures)
0
(1,073)
(3,224)
(1,842)
(2,050)
(2,215)
(10,404)
- OMB PRICING, 27 BP, 1.5 % DECLINE \4
(80 Bank Failures)
0
(1,002)
(3,012)
(1,493)
(1,541)
(1,527)
(8,575)
- OMB PRICING, 23 BP, ZERO GROWTH 15
827
856
5620
(50 Bank Failures)
0
(1,073)
(2,139)
(725)
(2,927)
(988)
(7,852)-
- OMB PRICING, 23 BP, 1.5 % DECLINE 16
393
269
4048
12:19
(50 Bank Failures)
0
(1,002)
(1,958)
(426)
(2,493)
(401)
(6.280)
MEMO: OTHER ADJUSTMENTS TO OMB BASELINE
CBO Failure Rate, 15 BP 17
605
2,898
2,443
(303)
(245)
120
4,913
09/21/90
OMB Revised CBO Rate 18
605
7,972
8,012
6,774
4,973
1,138
28,869
Notes:
-
CBO
cm
11 15 BP Premium Assessment '90-'95, Midsession Deposit Growth GNP Assumptions.
12 27 BP Premium Assessment '91-'95, CBO (4.5 annual) Deposit Growth, No Bank Failures due to premium increase.
(additionality
$2 B
fulure:
13 27 BP Premium Assessment, Deposit Growth= nominal GNP at 0 short-term real growth, 80 Bank Failures ('93-'95).
14 27 BP Premium Assessment, Deposit Growth = real GNP growth less 150 BP each year, 80 Bank Failures ('93-'95).
15 23 BP Premium Assessment, Deposit Growth = nominal GNP at 0 short-term real growth, 50 Bank Failures ('93-'95).
16 23 BP Premium Assessment, Deposit Growth . real GNP growth less 150 BP each year, 50 Bank Failures ('93-'95).
17 CBO Bank Failure Assumptions (9/90) based on recent ('87-'90) failure rates and capitalization level rates.
18 CBO Failure Assumptions plus 1 Money Center Bank Failure ($8B in Disbursements), S4B "put option excercised, 20 % increase in other failures.
TAX PACKAGE
AGREED. 45.4
IRS.
9.4
RETIREE HEALTH 1.3.
STATE E LOCAL. HI 5.2.
ALCOHOL
j
12.2
BUSINESS Coop.
2.0
75.5
75.5.
25.5
63.-
—
15.
*
S.S
10,-
153.5
PEASE 50k/2'/2
15.-
25.
SUB 100.5.
153.
ENERGY 48.
148.5.
X 3.3
75.
REV. LOSERS.
ENERGY.
3,5.
78 E./BEASE/OTHER
L.I.HOUSE/ AE
2.0
SMALL Bus.
8.0.
INDEX.
4.5.
18.0
23.
25
5.2-
7.3
1,11
30
5.8
8.1
(,1.1
35
6,4
30 1.2
25 =
5.8x 7.3
11
5.2
REVENUE ESTIMATES.
9/29
10 PM
8 ESTIMATES
7 REQUESTED
1 DEM
- 7.3 @ a 25%
30% = 9B
11
MINIMUM BASIS /D GENED BASIS
REV LOSS OF - .7 5 yrs.
Job.generators
2
R/D 30% SMALL CoS, -04 for 1 year
3
I ND EXING (No TIME UMIT)
)
5 jr limit
Au STOCK.
COMMON E PREFERRED
An POST AGREEM / 2.3B. 5 yrs
4
NDEX SMAR -
common
400 5 yrs Acquisition TOST
5
CORP. BUBBLE
-.5 -
50,000 000
10k ok
A
EXPENSING.
of Assets
40-130K.
)
SMAKERSET
1.9.
2 gr.shnsat
7
EXPENSING 2 yro
scientific again
8
permanent
DOUBLE lok to 20k
- 3.1 B / 5yrs
FOR 50,000 ood of Oquity
10.0
Airport
11.8
Small bus
equity deduction
-8.0
LUST
0.6
Harbor Has bor
1.8
Indexing for
newly ifs wed
-0.2
small bus. stock
45.4
Expensing r
ADDITIONAL AGREED
- small a dive cap.
?
- scientific
?
IRS
9.4
/
Retiree Health
1.3
- 15.6 + ?
St. Loc. HI
5.2
)
Alcohol
12.2
Coughoses (bus.)
2.0
30.1
75.5
NET: 60-? SHORTN72+?
Additional incentives
Additional Raisers (?)
R+D for small bus 7 30% - 0.3
- Energy
40 + (?)
Indexing all new stock
- 0.5
State t Loal S 11.7
(incremental)
Phase-out/ lower rate A
?
HI cap Part3 9.5
small income corp.
@ 65K(+9)
Pease @ 2% 11.0
EITC / telephone (?)
72.2
ADJUSTMENTS TO ABOVE!
Losers
Raisers
Luxury ? ?
Energy
DAC -2
?
Data from the 1988 Statistics of Income
For Returns with Taxable Income
Number of Returns (millions)
First
Bubble
Second
Total
Taxable Income Class
15%
28%
33%
28%
Rate
Rate
Rate
Rate
1 to
10000
35.9
0.0
0.0
0.0
35.9
10000 to 20000
19.6
1.7
0.0
0.0
21.3
20000 to 30000
8.9
5.0
0.0
0.0
13.9
30000 to 50000
0.0
12.3
0.4
0.0
12.7
50000 to
75000
0.0
3.3
0.6
0.0
3.9
75000 to 100000
0.0
0.0
1.1
0.0
1.1
100000 to 200000
0.0
0.0
0.8
0.2
1.0
200000 and Above
0.0
0.0
0.0
0.5
0.5
TOTAL
64.4
22.2
2.9
0.7
90.3
Taxable Income Taxed At Various Regular Tax Marginal Rates ($billions)
First
Bubble
Second
Total
Taxable Income Class
15%
28%
33%
28%
Rate
Rate
Rate
Rate
1 to
10000
152
0
0
0
152
10000 to
20000
310
2
0
0
312
20000 to
30000
312
30
0
0
342
30000 to
50000
348
132
1
0
482
50000 to
75000
111
115
7
0
233
75000 to 100000
30
43
19
0
92
100000 to 200000
28
40
62
5
136
200000 and Above
15
22
57
229
322
TOTAL
1306
383
147
234
2070
1988 is the latest avaiable data. Current revenue estimates are extrapolated from
this information.
Demos need recession
for success, Eagleton says
The Associated Press
we'll go down
KANSAS CITY - The Democrat-
the tube in
ic Party will not return as a viable
force in Missouri or the nation until
style."
the economy goes into recession,
The three-
former U.S. Sen. Tom Eagleton
term senator
says.
who retired in
"I don't think it is dead," Eagle-
1986 said un-
ton said Sunday of the party. "I
employment
think it is in a deep sleep. to be
could induce &
reinvigorated by' a recession."
recession,
The Missouri Democrat also pre-
Eagleton
which would
dicted that New York Gov. Mario
brighten
Cuomo would be the 1992 Democrat-
chances for the
ic presidential nominee.
Democratic Party. He called it "a
"I think he'll probably be a loser."
Eagleton told a forum at the All
rather morbid way to base a politi-
Souls Unitarian Church. "But at
least if we have to go down the tube,
cal policy."
5-15-90
Looks like the Demoo
want
PEASE 6% 211 1.8%TAX RATE
Reduce Phase-out Rate from 5% to 3%
--
The proposal would reduce the phase-out rate of personal
exemptions and the 15% rate from 5% to 3%.
--
In other words, the proposal would flatten and lengthen the
bubble. The bubble rate would fall from 33% to 31%, but the
amount of taxable income taxed at the bubble rate would
increase by two-thirds.
-- The maximum capital gains rate is assumed to be 28%.
-- The effective date of the proposal would be 1/1/91.
Fiscal years ($billions)
1991
1992
1993
1994
1995
1991-95
OTA
-1.1
-1.8
-2.0
-2.2
-2.4
-9.5
JCT
[unknown]
In 1991, the phase-out range end points are:
Current law
3% phase-out
Single, 1 exemption
114,200
157,500
Joint, 3 exemptions
206,490
289,417
Head of household, 2 exemptions
165,280
228,567
Revenue Neutral Third Individual Tax Rate
---
The proposal would eliminate the "bubble" and would create a
third rate so that the proposal would be revenue neutral.
--
The OTA revenue neutral third rate is 30.5%. The JCT revenue
neutral rate is probably slightly higher (based on comparison
of OTA and JCT revenue estimates of 15-28-31 structure).
--
The proposal assumes that the maximum capital gains rate is
28%.
--
The effective date of the proposal would be 1/1/91.
Fiscal years ($ billions)
1991
1992
1993
1994
1995
1991-95
15-28-30.5
OTA
.3
.7
.4
.3
.2
1.9
JCT
[unknown]
15-28-31
OTA
1.4
2.6
2.5
2.5
2.5
11.5
JCT
.5
1.2
1.4
1.7
2.0
6.8
Proposal
Repeal the phase-out (bubble) and add a 3rd explicit rate of
33% (with a 28% maximum rate on capital gains) with starting points
of $120,000 (single), $160,000 (head of household), and $200,000
(joint) and an end point of approximately $900,000. After
$900,000, the rate would revert to 28%. This proposal is revenue
neutral.
A $1 million ending point picks up approximately $.5 billion
in the first calendar year, and no ending point raises
approximately $2.5 billion in the first calendar year.
31/30
(1) Repeal bubble phase outs and impose an explicit 3rd rate of
31% at levels the bubble currently begins.
(2) Provide a 30% exclusion for individual assets (other than
collectibles) (1 year holding period, full recapture and AMT).
Based on Table 90-3 113 (15 Sept. 90) , the JCT should score this
option as raising money in the first year and losing approximately
$1 to 2 billion over the period.
JCT distribution as with all capital gains proposals will show much
larger losses. However a distribution of change in taxes paid by
income classes should show an increase in taxes paid by the highest
income class.
OTA Preliminary
Revenue Effect of Percentage Point Increases in AMT Rate
Assuming a 31% Top Rate and a 45% Capital Gains Exclusion
Fiscal Years ($Billions)
1991
1992
1993
1994
1995
1991-95
New
Increase
Rate
1
22%
0.1
0.7
0.9
1.1
1.2
4.0
2
23%
0.3
1.4
1.9
2.3
2.7
8.6
3
24%
0.4
2.2
2.9
3.6
4.3
13.5
4
25%
0.5
2.9
4.2
5.4
6.4
19.3
JCT has consistently estimated the AMT lower than OTA
15-28 Individual Rate Structure
--
The proposal would eliminate the phase-outs of personal
exemptions and the 15% rate.
--
In other words, the proposal would eliminate the "bubble" and
simply have two rates, 15% and 28%.
--
The effective date of the proposal would be 1/1/91.
Fiscal years ($ billions)
1991
1992
1993
1994
1995
1991-95
OTA
-4.9
-8.6
-9.6
-10.4
-11.1
-44.6
JCT
-4.8
-9.1
-10.2
-11.3
-12.7
-48.1
LOW INCOME ENERGY TAX REBATE
Annual Change in Tax Liability
1
Change in Liability ($ billions)
0.5
0
(0.5)
1
(1)
below 0
0-10
10-20
20-30
30-50
50-75
75-100
100-200
over 200
Income Class (FEI, $ thousands)
9/22
Indeving -4.5 but time linited (e.g. 5yrs.)
2% Pease
Energ 7
OPTION 4 (Woinderly) (wo
Enterprise Zones
-1
Energy Production Incentives
- 3.5 - 5
R+D * (LIH
- 2.9
Small. Beesiness Venture Incentive :
bigger
- 10.79
with mini intering
THANK
new
equita
~18
- Go from 25.63030
ADD
deduction for to dends paid individuals
(deduct 1/4
5B/yr. = 25B)5yw.
straight minium basis : 50% of sales price 3 yrs. = 4.5.5B
[could be sales price %-ape)
expensing for tangible investment Cold ITC basis)
- more from 10000 to 100000 (?)
over an amt. of
-2-
3
- 2-yr. window
- applies to 50M on less
- plus expensing add of 50K for scientific equip
0.2
change schedule of fax rate
at low corp. income end
*
R+D
credit
as
30% for under 50m equity firms
[Rollover for rental property sain up to 100k]
Dollover for SOK 7 assets : 1-time; 3-year til expiration
(defer gain; carry forward basis)
9
NYT indexing for new invested 75 in som
fax capital faming at death add to option
Offects:
NY Times: all stocks, prospective [might limit 7
Every
sweeteress adegate)
LOW INCOME ENERGY TAX REBATE
The proposal includes an energy tax designed to reduce America's
dependence on foreign oil, encourage energy conservation, and reduce
automobile emissions and other sources of air pollution. The energy
tax applies at a low rate to all conventional sources of energy so
that the tax achieves its important goals in the economically most
efficient and fairest manner possible. To insure that the tax does
not impose a disproportionate burden on low income households, a low
income energy tax rebate would be provided.
Description of Rebate
All households with annual money incomes of less than $10,000 would
be eligible for an energy tax rebate of $48 each year. To receive
the rebate, a household would certify to its electric utility
company that it had income in the preceding year of less than
$10,000. The rebate would then be provided directly to the
household by the electric utility as a $4 per month offset to the
household's electricity bill.
Low income households whose electricity is provided as part of their
rent would certify to their landlords that their income in the
preceding year was less than $10,000. Each landlord would then make
a combined certification for all of their low income renters to
the electric utility. The landlord would pass the rebate from the
utility through to each low income renter as a $4 per month
reduction in the household's rent.
Electric utilities would receive a credit against their energy tax
liabilities for all low income energy tax rebates they paid, either
directly to low income families or to landlords of low income
households.
To insure that the rebate went only to truly low income households,
it would not be allowed to full time students or to dependents of
another taxpayer.
Targeted Relief
The proposed rebate would target relief to low income households
much better than would an increase in the standard deduction. Many
of the lowest income households have income too low to benefit from
an increase in the standard deduction. Those who received the
maximum benefit from an increase in the standard deduction would
receive as little as $15, less than a third of the proposed low
income energy tax rebate. The rebate is also better targeted to the
lowest income class than is an increase in the earned income tax
credit.
The attached chart shows the distribution by family economic income
class of the low income energy tax rebate. Because "family " economic
income" is a broader concept of income than "money income, the
income concept would be used to determine eligibility for the
rebate, the chart shows that some households with more than $10,000
of family economic income would receive the rebate.
Attachment
OFFERS BY ADMINISTRATION TO I's @ 3:45PM SUNDAY
MODIFY OUR CAP GAINS OFFER-
ADDRESS DIS SAMS FACTION WITH S/L INC TAX
As GENL MATTER WITH PROVISIONS THAT APPLY ONLY TO RICH
I.e = 740 K TAXPAYERS
BY DESIGN FULLY OFFSET CAPITAL GAINS LOSS
1) FOR An I $wok AGI, ADD BACK TO TAX I A % OF SCITED
A DEDUCTIONS-
5%70% ?
(1a)
THRESHOLD TO TAX INCOME TO GET FULL OFFSOT
2) N.Y. STATE
$ $36.B 36 B.
3). S/C. MODIFIED TO GET MORE OUT OF FEWER/RICITION.
AGI
4) SLIDE THE BOBBLE aptions- -
OVERPAY FROM THESE TAXPAYBRS
7147170
5:22 p.m.
LOSERS
Blue = Card
Enterprise Zones
-1.0
Their res purse
9/29/63 p.m.
Energy Incentives
-4.0 -
1-yr. extend: R+D/LIH
- 2.9
Tob-creating incentives:
(≤ 50 as equity caps)
- small business ded. 30%
-8.0 -
- experising (gent)
- -2.0
(science)
-0.2
- corp. rates 15%
-0.5
- small &us iness stoch indeady
(new equity purchase)
-0.2
accept the
- smaller co. RX s r 30%
-0.3
extra 1.3 BIll
-
Brady teemed basis
- -0.4
(tot. 10.9+1.3)
- all new individ. stoch indexing
- -0.6
EITC (ex child care)
- -5.0
[NOTE: child care + teleghoutar
included separately and subject
I
to subsequent anthosiatiion 5.71)
- 25.1
REVENUE RAISERS
?
Gasoline 50-50'y' 5,10,10,10,10
+ 45
[9570mmy/
How this WHOM.
Petrolem 24/gator
13.4
11.5
Pease @ 3%
@106/100/100
18
HI to 69 K
It
13
87.4
Luxury
2.
Tohacco
5.9
Ozone
0.5
+ 159.4
Salvage/lois ded.
1.1
- 25.1
Corp/St/Local interested.
3.2
foreign complience
0.2
NET 134.3
DAC
9.0
*
Airport
11.8
+ 253,9
LUST
0.6
25.
Has her Maint.
1.8
IRS Compliance
9.4
128.8
Retire Health
1.3
*
Alcohol
10.0
Loopholes (bus.)
2.0
58.8
Social Security State Hocal
+11.7
QMB
Ret. Test
-27)
-
Z
-
7.7
State Hocal HI
5.2
ANTI JOB GROWTH
$21.8
8%
ANTI EXPANSION
MITHELL RECESSION
PRESSING FOR RATE CHANGE
RERUSE To DELIVER ON ENTITLEMENTS.
LARGE ENERGY TAX - -
ALL EXCISE TAXES
LIMITATIONS OF DEDUCTIONS -
DOCUMENT PROM COMMITTEE
NOPOSIBILITY TO THAT -
$1200. NET.
OBJECTIVE TO REACH
$ 90 B.= <
$ 30B —
$
6B
CAP
GAINS WITH ACT. OFFSET
lose.
TEMP. DEF. REDUCTION SURCHARGE
Surcharge-
'TIL BUDGET IS BACANCED
$
5.4 B.
$160B. - $ 180
$
$
185
190 - 210B REV. PACKAGE
if
$38B
$ 210 B.
AGREED M $ 120B NET.
200. B M-
70B.
$
120B NET.
480 B
$ 138 vs$128 = ACCEPTED -
$70B
$58B Not cuts -
$
130B
1.5 PET
$
.15 ELEC.
1.5% NAT.
31.5.
I
15/28/31 + 18%
-5.5
+ EXEMPTIONS LOST (TAXP $ SPOUSE) 200, 000
SHOW 1 28 31 FOR 100,000 or 2020,000 +
SHOW CAP GAINS SAVINGS RJX 100K
work
GET NOT + IN
"RICA"
1991
1991-95
I.
Revenue Raisers
A. Extenders
1. Leaking underground storage
tank (LUST) trust fund
0.1
0.6
2. Telephone
1.5
12.9
B. New Revenues
1. IRS Reforms (3)
0.3
4.3
2. Airport/Airway increase
1.3
11.8
3. State and local HI- modified
.8
6.0
4. State and local SS
1.6
11.7
5. Shippers increase
0.3
1.7
6. Salvage value/insurance- modified
0.3
0.9
7. Pension/retiree health
0.6
2.0
8. DAC - Insurance reform- modified
2.0
10.0
9. Alcohol- modified
2.2
14.5
10. Luxury excise taxes
1.1
9.0
11. Ozone depleting
chemical excise tax
0.1
0.5
12. Indexing of excise taxes
(other than alcohol, tobacco,
and ad valorem)
0.5
8.6
13. Petroleum fuels tax
0.8
7.0
14. Deny deduction of interest
on corporate income tax
underpayments
4.8
4.5
II. Revenue Losers
A. Extenders
1. Health insurance
for self employed
-0.3
-1.8
2. R&E allocation rules
-0.4
-3.6
3. R&E credit
-0.5
-5.5
III. Initiatives for Growth, Low
Income and Upper Income Offset
A. Low Income
1. Enterprise Zones
-0.1
-2.0
B. Savings/Investment/Growth
1. Capital gains (45% exclusion,
individuals only - with AMT
and recapture)
3.7
-21.5
2. Family Savings Account (FSA)
-0.2
-5.0
3. Energy security
(President's Budget)
-0.3
-2.6
C. Upper Income Offset
Limit State and local
income tax deduction
2.4
32.6
IV. User Fees (5 year)
6.0
33.4
28.6
130.2
Major Outstanding Issues
Issue
Size
Composition
Energy
Democratic
49.1
To be determined. The $49.1
billion estimate is based on a
Joint Tax estimate of what a 10
cent gasoline tax would raise
over 5 years.
Republican
7.0
Petroleum fuels tax. This is *
broader than a simple gas tax. *
State and Local HI
Democratic
4.0
Phase-in to achieve.
X
Republican
6.0
Modified to be phased in per a
discussion in the budget summit.
(raised $6.0 billion rather than
$8.4)
State and Local SS
Democratic
Revenues intended to be
dedicated to liberalizing the
Social Security Retirement test
as part of child care.
Republican
11.7
Indexing of Excise Taxes
Democratic
Not in plan
Republican
8.6
Indexing of excise taxes other
than alcohol, tobacco and ad
valorem.
Telephone Excise Tax
Democratic
Intended for pay-as-you-go for
child care.
Republican
12.9
Initiatives
Democratic
None
Republican
-2.0
Enterprise Zones
-5.0
Family Savings Account
-2.6
Energy Security
TOTAL
-9.6
User Fees
Democratic
14.2
(From Tentatively agreed list)
Republican
30.6
*
Alcohol Taxes
Democratic
13.6
Modified Option A with beer at
$21.98 per barrel (40 cents).
DSP increased by $1.50. Wine
at $1.93 per gallon (40 cents) .
Fortified wine at 50 cents per
bottle.
Republican
14.5
Not yet specified.
Capital Gains
Democratic
Not in plan.
Republican
-21.5
45% capital gains exclusion.
Full recapture. AMT.
Bubble/Surtax
Democratic
app. 44.0 .
Piercing the bubble or a 20%
surtax on individuals making
more than $200,000.
Republican
Not in plan.
HI Wage Increase
Democratic
app. 40-53
Not in final offer.
Republican
Not in plan.
09/14/90 12:23
1
002
September 14, 1990
11:30 a.m.
BROAD-BASED PER-UNIT ENERGY TAX WITH
MANUFACTURING EXEMPTION
Structure of the Tax. The tax would be imposed at a 1 cent
per gallon rate on refined petroleum products.* (This roughly
approximates 1 percent of national average retail price.)
Electricity, natural gas (including propane) and coal would be
taxed on a per-unit basis with rates that approximate 1 percent
of national average retail prices.
Products not used as fuel, such as asphalt, lubricants, waxes
and feedstocks, would not be taxed. Sales of fuels for the
generation of electricity would be exempt, since electricity
would be taxed separately.
Point of Collection. In general, taxes would be paid by
refiners of refined petroleum products, utilities generating
electricity, local natural gas distribution companies, industrial
users of coal, and importers.
Imports and Exports. Imported fuels and electricity are
taxed, and exported fuels and electricity are exempt from tax.
Manufacturers' Exemption. Fuels and electricity sold for use
in manufacturing (including agriculture) would be exempt from
tax. Manufacturing would be defined to include all steps in the
processing, conversion, or fabrication of raw, unfinished, or
semifinished materials into a packaged and finished article of
tangible personal property. The exemption would not apply to
such things as transportation (including transportation in
connection with manufacturing or agriculture), construction,
retail trade, wholesale trade, or financial or other services.
Effective Date. The tax would go into effect on January 1,
1991.
*Taxed refined petroleum products would include gasoline, diesel
fuel, aviation gasoline and jet fuel, kerosene and residual fuel
oil.
09/14/90 12:23
003
9/14/90 Fri 11:42:40
RATES AND REVENUE ESTIMATES
Revenue Estimates
($ billions)
1991
1992
1993
1994
1995
1991-1995
I. Refined Petroleum Products
Rate: 1c/gallon
Gasoline
.5
.7
.7
.7
.7
3.3
Heating Oil
*
*
*
*
*
0.2
Other Petroleum Products
.5
.7
.7
.7
.7
3.2
Total Petroleum Products
1.0
1.4
1.4
1.4
1.5
6.7
II.
Electricity
Rate: $1.00/1000 kwh
(1 mill/kwh)
1.0
1.4
1.4
1.5
1.5
6.7
III. Natural Gas
Rate: 6.3é/mcf = %
.2
.3
.3
.3
.3
1.6
1
IV. Coal
Rate: 47.6é/ton- = I %
*
*
*
*
#
*
V. Other
*
*
*
*
*
#
GASOLINE
VI. Total Broad-Based Per-Unit Energy Tax
2.2
3.1
3.2
3.2
3.3
15.0
3.3.
,
S=1
18.3)
s/.
20:
6
6.7
16%
66.4
3.2,
*Less than $50 million.
&
09/14/90 12:24
004
9/14/90 Fri 11:21:50
TOTAL BROAD-BASED PER-UNIT ENERGY TAX REVENUE ALTERNATIVES
Revenue Estimates
($ billions)
1991
1992
1993
1994
1995
1991-1995
1d/gal on petroleum products
and equivalents
2.2
3.1
3.2
3.2
3.3
15.0
2d/gal on petroleum products
and equivalents
4.3
6.3
6.4
6.5
6.6
30.1
3d/gal on petroleum products
and equivalents
6.5
9.4
9.6
9.7
9.9
45.1
4d/gal on petroleum products
and equivalents
8.6
12.5
12.8
13.0
13.2
60.1
Preliminary Revenue Estimates
Individual Income Tax Options 1/
(FY, $ Billions)
1991
1992
1993
1994
1995 1991-95
---
...
A. 15,28,31% Rates, Cep=28% AGI
0.9
1.7
1.6
1.5
1.4
6.9
B. 15,28,32% Rates, Cap=28% AGI
2.5
4.7
4.8
4.9
5.0
22.0
C. 15,28,31% Rates, Cap=28% Taxable Income
-1.8
-2.8
-3.2
-3.6
-3.9
-15.3
D. 15,28,32% Rates, Cap=28% Taxable Income
-1.2
-1.9
-2.2
-2.4
-2.7
-10.4
E. 15,28,31% Rates, Cep=28% Taxable Income +
Exemptions
-1.2
-1.8
-2.0
-2.2
-2.4
-9.6
F. 15,28,32% Rates, Cap=26% Taxable Income +
Exemptions
-0.6
-0.6
-0.7
-0.8
-1.0
-3.7
G. 15,28,28% Rates
-4.9
-8.6
-9.6
-10.4
-11.1
-44.6
1/Estimates RESURE a 20% capital gains cap. Companion capital gains proposals will change the
revenue effect.
Distribution By FEI, Change in 1991 Liability
($ Billions)
FEI Class
Option
A
B
C
D
E
F
0 and below
*
*
*
*
*
*
0-10,000
*
*
*
*
*
*
10,000-20,000
*
*
.
*
*
*
20,000-30,000
*
*
*
*
*
*
30,000-50,000
*
*
.*
*
*
*
50,000-75,000
-*
*
-*
*
.
+
75,000-100,000
-0.1
*
-0.1
-*
-0.1
-*
100,000-200,000
-0.6
-0.1
-0.6
-0.1
-0.6
-0.1
> 200,000
2.4
4.6
-2.0
-1.6
-1.0
-0.5
Total
1.8
4.5
-2.6
-1.7
-1.7
-0.5
1991
1991-95
I.
Revenue Raisers
A. Extenders
1. Leaking underground storage
tank (LUST) trust fund
0.1
0.6
2. Telephone
1.5
12.9
B. New Revenues
1.
IRS Reforms (3)
0.3
4.3
2.
Airport/Airway increase
1.3
11.8
3.
State and local HI- modified
0.8
6.0
4. State and local SS
1.6
11.7
5.
Shippers increase
0.3
1.7
6.
Salvage value/insurance- modified
0.3
0.9
7.
Pension/retiree health
0.6
2.0
8.
DAC - Insurance reform- modified
2.0
10.0
9. Alcohol- modified
2.2
14.5
10. Luxury excise taxes
1.1
9.0
11. Ozone depleting
chemical excise tax
0.1
0.5
12. Indexing of excise taxes
(other than alcohol, tobacco,
and ad valorem)
0.5
8.6
13. Petroleum fuels tax
0.8
7.0
14. Deny deduction of interest
on corporate income tax
underpayments
4.8
4.5
II. Initiatives for Growth, Low
Income and Upper Income Offset
A. Low Income
1. Enterprise Zones
-0.1
-2.0
B. Savings/Investment/Growth
1. Capital gains (45% exclusion,
individuals only - with AMT
and recapture)
3.7
-21.5
2. Family Savings Account (FSA)
-0.2
-5.0
3. Energy security
(President's Budget)
-0.3
-2.6
C. Upper Income Offset
Limit State and local
income tax deduction
2.4
32.6
III. User Fees (5 year)
5.6
30.6
29.2
138.1
Sep 17 90 2:56pm
ENFORCEMENT
1.
Social Security cash Off-GRH
-
Take Social Security cash balances out of Gramm-Rudman-Hollings in 1991.
-
Provide a firewall, including a point of order against legislation that would
violate the 75 year actuarial balance and a feeback mechanism, to protect
Social Security surpluses.
2.
GRH, Sequester, and Caps (see attachment)
3.
Pay-as-you-go (entitlements & revenues)
4.
Budget Act Points of Order
-
extend to out-years.
-
apply to budget resolutions and appropriation bills that do not meet
caps.
-
-
3/5ths point of order against legislation to modify sequester unless fully
offset
-
Extension of 302 point of order to outlays in the House and repeal of Fazio
rule (exception to 311 point of order in the House if a subcommittee meets
its allocation)
5.
Reconcilation
-
Mandate 5 year reconciliation
-
Strenthen Byrd rule in Senate
-
Extend Byrd rule to the House
6.
Credit Reform
-
implementation date FY 1992 (hold harmless for subsequent 3 years).
-
Provide enforcement of credit levels in the Senate.
7.
GSEs. Mandate studies and trigger a legislative response to assure financial
soundness of government sponsored enterprises (GSEs).
8.
RTC
-
Carry on-budget but exclude from GRH deficit calculations.
9.
Egyptian Debt Forgiveness. Hold Egyptian debt forgiveness harmless against
summit caps.
10.
Scorekeeping. Adopt current scorekeeping guidelines.
REPUBLICAN PROPOSAL FOR GRH EXTENSION AND ENFORCEMENT OF CAPS
General Description
O
The five year agreement would be enforced through budget resolutions, caps,
and sequester. Fixed GRH deficit targets would be extended until GRH deficit is
balanced.
O
GRH would be modified in several ways to reduce burden on appropriated
programs.
Caps
O
The agreement would establish five year caps on defense, international affairs,
and domestic discretionary spending.
O
60 vote points of order would apply to budget resolutions or appropriation bills
that exceeded these caps.
Current GRH Sequester
If fully implemented, the agreement would cancel the FY 1991 sequester order.
The agreement would retain fixed statutory deficit targets and the current
sequester process until the GRH deficit was balanced.
O
The 1991-95 GRH targets would be modified in the agreement to reflect new
economic and technical projections. In March 1991, GRH targets would be
revised to reflect new economic projections.
O
For FY 1993 and subsequent years, the portion of the sequester due solely to
economic factors would be limited to $30 to $40 billion.
New Sequesters
o
If the summit caps were violated, the President would use existing rescission
authority to propose discretionary spending reductions by summit category. If
Congress did not enact a rescission measure to bring discretionary spending
within the summit categories, a categorical sequester by summit category would
be implemented.
o
To restrain entitlement growth, a categorical lookback sequester for entitlements
would be added to GRH. After the close of a fiscal year, OMB would lookback
at the previous year and determine the amount of spending added due to policy
changes. A sequester on entitlements and mandatories would be added to the
regular sequester.
REPUBLICAN ENFORCEMENT OPTION
Summit Categories
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
Non-defense
Cap
Cap
Cap
Cap
Cap
Discretionary
Defense
Cap
Cap
Cap
Cap
Cap
International
Cap
Cap
Cap
Cap
Cap
Affairs
Rescission
Maintain current law on rescission authority. If caps are violated, President proposes rescission
within summit categories. If Congress does not adopt a rescission measure in compliance with
summit categories, sequester down to caps.
Entitlements &
Lookback
Lookback
Lookback
Lookback
Mandatories
sequester for 1991
sequester for 1992
sequester for 1993
sequester for 1994
policy overages
policy overages
policy overages
policy overages
Economics
Adjust
Limit sequester to
Limit sequester to
Limit sequester to
for
$30-$40 billion
$30-$40 billion
$30-$40 billion
economics
Revise economics 6 or 7 months after agreement and adjust GRH targets.
GRH targets
(illustrative)
167
141
104
70
27
0
Overall
Cancel
Sequester
if
Retain current sequester to meet fixed deficit targets with a $10 billion buffer.
Agreement
fully
implemented
1.)/AMT.
2)/ How DONE
44
4
#25B.
23
%02
& 210
+ 3B.
23
+
EXEMPTION
RATES + CAP.GAINS + 150k THT = + 2B.
x
will
Share of
Share of hurning
SENATOR WILLIAM V. ROTH, JR.
SEPTEMBER 26, 1990
OUTLINE
ITEM
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
1991-1995
REVENUE ITEMS
IRA (w/Rollover)
$1.50
$3.40
$3.30
$3.30
$3.30
$14.80
Extension of Current Law Tax Provisions
$1.85
$3.04
$2.97
$2.90
$2.81
$13.57
Retiree Health Benefits Rollover
$0.20
$0.40
$0.20
$0.00
$0.00
$0.80
SUBTOTAL OF INCREASES
$3.55
$6.84
$6.47
$6.20
$6.11
$29.17
SPENDING CUTS
Defense
$6.00
$17.00
$34.00
$50.00
$69.00
$176.00
Non-Defense Discretionary ($12B off final approp.)
$12.00
$13.00
$14.00
$15.00
$16.00
$70.00
Entitlement Changes
$6.30
$9.11
$10.54
$13.43
$16.89
$56.27
User Fees
$5.49
$1.45
$1.55
$1.36
$1.65
$11.50
Net Interest
$1.60
$5.60
$10.50
$16.00
$23.40
$57.10
SUBTOTAL OF CUTS
$31.39
$46.16
$70.59
$95.79
$126.94
$370.87
TOTAL
$34.94
$53.00
$77.06
$101.99
$133.05
$400.04
SENATOR WM. V. ROTH, JR. PLAN
SEPTEMBER 26, 1990
DETAIL OUTLINE
ITEM
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
1991-1995
REVENUE ITEMS
IRA (w/Rollover)
$1.50
$3.40
$3.30
$3.30
$3.30
$14.80
Extension of Expiring Provisions
a) Permanent Research & Development Credit
($0.50)
($0.90)
($1.10)
($1.30)
($1.60)
($5.40)
b) Educational Assistance Act
($0.23)
($0.33)
($0.35)
($0.36)
($0.37)
($1.63)
c) Health Insurance for Self-employed
($0.25)
($0.31)
($0.36)
($0.41)
($0.46)
($1.79)
d) Foreign Allocation of R & D
($0.50)
($0.71)
($0.77)
($0.84)
($0.90)
($3.72)
e) Mortgage Rev. Bonds & Credit Certificate
($0.01)
($0.05)
($0.14)
($0.24)
($0.33)
($0.77)
1) Airport & Airway Trust Fund Taxes
$0.88
$1.56
$1.67
$1.81
$1.99
$7.91
g) IRS User Fees
$0.06
$0.06
$0.06
$0.06
$0.06
$0.30
h) Admin. Expense Limits of Private Foundations
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
i) Tax on Deep Seabed Hard Minerals
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
j) Telephone Exclse Tax Extension
$1.50
$2.50
$2.70
$2.90
$3.10
$12.70
k) FUTA 0.2% Surtax Extension
$0.77
$1.09
$1.12
$1.15
$1.18
$5.31
I) Extension of Leaking Underground Storage Tax
$0.13
$0.13
$0.13
$0.13
$0.14
$0.66
Retiree Health Benefits
$0.20
$0.40
$0.20
$0.00
$0.00
$0.80
SUBTOTAL OF INCREASES
$3.55
$6.84
$6.47
$6.20
$6.11
$29.17
SPENDING CUTS
Defense
$6.00
$17.00
$34.00
$50.00
$69.00
$176.00
Non-Delense Discretionary ($12 B off final approp.)
$12.00
$13.00
$14.00
$15.00
$16.00
$70.00
Agriculture Subsidies
a) Reduce Price Supports
$1.50
$2.10
$2.40
$3.00
$3.50
$12.50
b) Reduce REA Loan Subsidles
$0.07
$0.19
$0.33
$0.43
$0.50
$1.52
Medicare
a) Secondary Payer Reform
$0.31
$1.27
$1.63
$1.98
$2.33
$7.52
b) Part B Premium Floor 25%
$0.00
$0.67
$1.75
$3.13
$4.81
$10.36
c) Rural Hospital Capital at 85%
$0.17
$0.21
$0.23
$0.25
$0.27
$1.13
d) Urban Hospital Capital at 75%
$1.36
$1.72
$1.88
$2.05
$2.22
$9.23
e) Overvalued Procedures
$0.11
$0.18
$0.21
$0.24
$0.26
$1.00
1) Durable Medical Equipment
$0.11
$0.20
$0.22
$0.25
$0.27
$1.05
Medicaid
a) Eliminate Federal Medicare Match
$0.61
$0.66
$0.71
$0.76
$0.81
$3.55
b) Pay Employee Premium if Cost Effective
$0.18
$0.22
$0.26
$0.31
$0.97
$1.94
General Government & Postal Service
a) Federal Retirement Lump Sum
$0.96
$0.72
($0.06)
($0.07)
($0.07)
$1.48
b) Federal Employee Health Program
$0.32
$0.37
$0.38
$0.50
$0.42
$1.99
c) Postal Service Indirect Subsidy
$0.60
$0.60
$0.60
$0.60
$0.60
$3.00
User Fees
a) Customs
$0.81
$0.82
$0.84
$0.86
$0.88
$4.21
b) Nuclear Regulatory Commission
$0.30
$0.32
$0.33
$0.34
$0.36
$1.65
c) Naval Petroleum Reserve
$1.00
($0.09)
($0.03)
($0.27)
($0.03)
$0.58
d) Food & Drug Administration
$0.16
$0.16
$0.16
$0.17
$0.17
$0.82
e) Strategic Petroleum Reserve
$3.00
$0.00
$0.00
$0.00
$0.00
$3.00
I) Additional User Fees
$0.22
$0.24
$0.25
$0.26
$0.27
$1.24
Net Interest
$1.60
$5.60
$10.50
$16.00
$23.40
$57.10
SUBTOTAL OF CUTS
$31.39
$46.16
$70.59
$95.79
$126.94
$370.87
TOTAL
$34.94
$53.00
$77.06
$101.99
$133.05
$400.04
(1) Estimates based on CBO, OMB and JCT figures
WILLIAM V. ROTH, JR.
COMMITTEES:
GOVERNMENTAL AFFAIRS
DELAWARE
FINANCE
104 HART SENATE OFFICE BUILDING
BANKING, HOUSING AND URBAN AFFAIRS
TELEPHONE: 202-224-2441
United States Senate
JOINT
ECONOMIC
COMMITTE
WASHINGTON, DC 20510
September 26, 1990
Dear Colleague:
As the October 1 Gramm-Rudman-Hollings sequester deadline is imminent, I
am writing to present to you an alternative to other plans currently under
discussion. This five year $400 billion package meets the need for real deficit
reduction while providing a better environment for continued economic growth.
This plan is designed to break the gridlock in the budget negotiations while
saving the American people from a tax increase at a time when the economy is
weakening. My plan would drop proposed increases in taxes, reduce the deficit by
$400 billion over five years, and would institute several policies to stimulate
economic growth, without the proposed cut in the capital gains tax rate. It is
straightforward and easy to understand.
Though the economy has performed well during this longest peacetime
expansion in our history, the pace of growth has slowed lately. Consequently, the
economy is especially vulnerable to the implications of a large tax increase. What
we need is a budget plan that would enhance economic growth, and generate the job
creation, expanded opportunity, and income gains that come with it. This is why I
have put together a complete budget package that provides spending restraint and
deficit reduction.
First, I abandon the budget negotiators' proposed tax increases. Warning
signs point to a recession and a tax increase would throw the nation into a recession
headfirst.
Second, I lay aside a proposed cut in the capital gains tax.
Third, I cut the federal deficit by $400 billion over five years, a significant cut,
but one which will not have damaging effects on an already weakened U.S.
economy. This deficit reduction includes : defense savings of $6 billion in the first
year and $176 billion over five years; entitlement savings of $6 billion in the first
year and $56 billion over five years; and non-defense discretionary savings of $12
billion in the first year and $70 billion over five years. In addition, my alternative
would raise $11.5 billion in new user fees and $29 billion in additional revenues,
primarily through a rollover provision in the expanded IRA.
Fourth, this alternative expands Individual Retirement Accounts to enhance
savings incentives as well as raise federal revenue. In addition, the R&D credit is
made permanent and education incentives are broadened to keep our industries
competitive and our employment base strong.
My plan is balanced and would benefit the economy, instead of undermining
it. Deficit reduction would be substantial while incentives would be provided for
savings and innovation, boosting economic growth. I urge you to consider this
alternative package.
Sincerely,
Rice
William Koth, Jr.
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