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FOIA Number: 2012-0741-F
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This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
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Public Liaison
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Alexis Herman
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2648
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Economic Component Strategy [binder]
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1
ECONOMIC COMPONENT STRATEGY
ECONOMIC COMPONENT STRATEGY
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
2/14/93 UPDATE
SINCE THE EARLIER DRAFT MATERIALS, YOU WILL NOTE CHANGES IN THE FOLLOWING ITEMS:
Item 1
Item 2
DETERMINED TO BE AN ADMINISTRATIVE
Item 3
Item 4
MARKING INITIALS: MI DATE: 7/17/17
Item 5
2012-074FF
Item 6
Item 7
Item 9
Item 10
Item 12
Item 13 Omitted
Item 17 Omitted
Item 18 Omitted
Item 21 Omitted
Item 25 Omitted
Item 26 Omitted
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#B):
Uranium Enrichment Initiative
SUMMARY:
SAVINGS: $1.275 BILLION (FY 1994-1997)
The 1992 Energy Policy Act requires DOE's uranium enrichment program to
become a government corporation and to operate as would a private, for-profit
enterprise. This proposal calls for (1) closing one of the two operating plants
(the most likely option is the plant in Paducah, KY), (2) renegotiate the
contracts at the plant to allow "wheeling", (3) reduce the clean-up liabilities of
the corporation, (4) speed up the purchase of Russian highly enriched uranium
(HEU), (5) transfer ownership of excess U.S. HEU to the corporation, and (6)
obtain foreign funding to cost share advanced technology activities
BC RECORD:
"Stop spending 60% of the Department of Energy's budget on nuclear weapons,
with nuclear power and fossil fuels receiving most of the rest." [Putting People
First p.98]
IMPACT:
Likely closure of the Paducah plant could cost hundreds of jobs in Kentucky.
CONGRESS:
Ford
INTERGOV:
POL./LIAISON:
Industry and consumer groups will oppose.
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#H):
Assess Examination Fees for State-Chartered, FDIC-Insured Banks
SUMMARY:
SAVINGS: $1.386 BILLION (FY 1994-1997)
This option would assess against state-chartered FDIC-insured banks the full
cost of examining them. The FDIC monitors participating banks to ensure that
they adhere to regulatory standards and safe operating procedures. The
premiums it charges do not fully cover the costs of this monitoring, even
though it is authorized to collect full examination expenses. Thrifts, credit
unions, and nationally-chartered banks currently pay full examination expenses.
BC RECORD:
IMPACT:
The FDIC has the administrative mechanism in place to collect these fees and
the savings would be substantial. However, the additional fees might push
marginal banks into insolvency.
CONGRESS:
Could be problem with Alabama, North Carolina, or Ohio delegations.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#D):
Index Nuclear Waste Fee
SUMMARY:
SAVINGS: $105 MILLION (FY 1994-1997) (n.b. CBO estimates the savings
at $280 million)
Electric utilities pay a fee for each kilowatt hour of nuclear generated electricity
they sell. The resulting Nuclear Waste Fund develops storage and permanent
disposal facilities for high-level radioactive waste (the first is scheduled to go
on line in 2010). The fee has remained constant since it was enacted in 1983.
Indexing for inflation would ensure that the Fund has sufficient resources to
develop the necessary facilities and that those resources are supplied by
producers rather than through public funds.
BC RECORD:
IMPACT:
Currently, the Fund is in balance -- perhaps even in surplus. However, GAO
estimates a present-value shortfall of $2.4 billion due to future inflation if
indexing is not adopted.
CONGRESS:
Need to talk with Johnston. Combined with energy tax and other energy items,
could be significant.
INTERGOV:
POL./LIAISON:
Utilities and others affected might be irritated for being asked to pay more
while the fund is balanced and federal government is having trouble locating a
site for the facility (Yucca Mountain siting controversy).
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#J):
Direct Student Loans
SUMMARY:
SAVINGS: $2.211 BILLION (FY 1994-1997)
Under this option, the Education Department would provide student loans
directly. At present, the ED pays private lenders a "special allowance" equal to
a rate of return 3.25% above 91-day Treasury Bills and guarantees repayment
of the loans. Under this proposal, students would apply through their school
and the ED would provide the loans directly.
BC RECORD:
"Scrap the existing student loan program and establish a National Service Trust
Fund to guarantee every American who wants a college education the means to
obtain one." [Putting People First p.87]
IMPACT:
This option has the potential for substantial savings. However, it would require
putting a large new bureaucracy in place, under the direction of the ED, and it
is unlikely that this can be accomplished by FY 1994. Also, small schools will
need extra assistance to meet their administrative burden and schools with
records of abuse would need to be monitored closely. This could negatively
affect many of the Historically Black Colleges and Universities, which tend to
be smaller in size and not to have administrative apparatus in place. Some
education groups oppose.
CONGRESS:
Pell might oppose.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#1):
Consolidate Overseas Broadcasting
SUMMARY:
SAVINGS: $930 MILLION (FY 1994-1997)
Overseas broadcasting includes Radio Free Europe (Eastern Europe), Radio
Liberty (former Soviet Union), and Voice of America (worldwide radio/tv).
This option would close RFE and RL, provide VOA with additional funds for
broadcasting in Eastern Europe and the Soviet Union, end construction of the
radio transmitting facility in Israel, and end U.S. overseas television
broadcasting.
BC RECORD:
"We should build on the successes of Radio Free Europe and Radio Liberty and
expand our successful surrogate broadcasting by bringing news and information
to the despotisms that remain in Asia, in China, in Vietnam, Laos, North Korea,
and Burma."
"The President's opposition to Asian Democracy Radio is further evidence that
he still thinks it's more important to talk to dictators than to their oppressed
subjects." ["American Foreign Policy and the Democratic Ideal," Milwaukee,
WI, 10/1/92]
"I would encourage both the Agency for International Development and the
U.S. Information Agency to channel more of their resources to promoting
democracy. And just as Radio Free Europe and Voice of America helped bring
the truth to the people of those societies, we should create a Radio Free Asia to
carry news and hope to China and elsewhere." [Speech, A New Covenant for
American Security, Georgetown University, 12/12/91; and in Clinton Position
Paper "Promoting Democracy Around the World"]
Consolidate Overseas Broadcasting System, line-item savings of $79 million
(FY 1993-96). [Putting People First, P. 30]
IMPACT:
The consolidation of overseas broadcasting could cost as much as $105 million
in the first year. The move could be viewed by some as a weakening of U.S.
interests in former communist states. Some proponents believe consolidation
savings should be used to expand services to Asian and African nations with
government-controlled radio stations. Unclear whether cuts will affect Radio
and TV Marti, which are supported by South Florida and the Cuban-American
community.
CONGRESS:
INTERGOV:
POL.\LIAISON:
Alert Lane Kirkland, AFL-CIO, plus key ethnic constituencies.
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#2):
Reduce Export-Import Bank Credits
SUMMARY:
SAVINGS: $173 MILLION (FY 1994-1997)
The Export-Import Bank (Eximbank) promotes U.S. exports by providing
financing to foreign buyers of U.S. goods. The bank provides direct, below-
market interest rate loans and guarantees private lending without receiving full
compensation for the contingent liability of future losses. This option would
freeze funding for the program in FY 1994-95 and begin cutting the program in
FY 1996. Eximbank has lost $7 billion on its operations, practically all in the
last 15 years. Supporters argue that Eximbank increases exports and creates
jobs. Detractors say little evidence exists to support that proposition. Some
successful OECD negotiations have reduced other nations' export credit
subsidies, thereby reducing the need for matching Eximbank credit subsidies.
Efforts to eliminate Eximbank in early 1980's failed due to opposition from
exporters and Congress.
BC RECORD:
"Expand funding for the Export-Import Bank to help small businesses develop
export markets." [Bill Clinton on Small Business Position Paper]
"Increase funding for the Export-Import Bank, targeted to assist small
businesses in developing export markets." [Putting People First, p.79 and "Bill
Clinton on Defense Conversion" position paper]
IMPACT:
Private credit for certain export sectors (aircraft) or markets (Eastern Europe
and former Soviet Union) is tight; cuts in Eximbank could reduce U.S. exports
in these areas. Also, Eximbank cuts could reduce U.S. leverage in further
reductions of OECD nations' export credit subsidies.
CONGRESS:
Foley (Boeing), Gejdenson (GE), Dodd (GE), Neal, Frank (jurisdiction)
INTERGOV:
POL./LIAISON:
Morrison-Knudsen, Caterpillar, GE, Boeing, and other large export interests
would be affected.
MESSAGE:
"Restructuring Eximbank"
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#3):
Stretchout Superconducting Super Collider
SUMMARY:
ADDITIONAL COST: $172 MILLION (FY 1994-1997)
*NOTE: Earlier draft listed savings of $172 million. New draft lists as
additional costs. Typo?
Either as a cut or increase, this amount represents a small portion of the $8.2
billion total project cost. The Department Of Energy is building the SSC to
investigate the origin of mass and test current theories about the unity of
electromagnetism and radioactive decay. According to CBO, the funds devoted
to this project are out of proportion to the likelihood of the SSC's producing
usable science or technology. DOE has been largely unsuccessful in attracting
commitments for substantial amounts of foreign funds as it promised. GAO
may be issuing a report within a month claiming that SSC costs are out of
control. According to the official DOE projection, the SSC will consume 6
percent of all federal basic research spending over the next five years.
BC RECORD:
"I support the use of federal funds to complete the superconducting
supercollider. By investing in the superconducting supercollider, we are
investing in research and development that will create new, critical technologies
with important commercial spin-offs and improve the competitiveness of our
industry." [AP, 10/30/92]
But, "his staff doesn't know what funding level he would support for the
project." [Star Tribune, 9/20/92]
IMPACT:
Reduction of funding for the SSC may add to the perception of U.S.
unreliability in international cooperative projects. It will also affect various
contractors and universities.
CONGRESS:
Political supporters of the project include the Texas, Illinois, and Louisiana
delegations, and contractors around the country. Senator Johnston chairs both
the authorizing and appropriations subcommittee with jurisdiction over the SSC.
INTERGOV:
POL./LIAISON:
TX has a special Senate election in May.
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#4):
Replace Space Station With Technology Investment
SUMMARY:
ADDITIONAL COST: $1.249 BILLION (FY 1994-1997)
This option would reduce spending on the the space station and redirect the
funding into a broad range of technology investments.
BC RECORD:
Clinton's campaign position paper said he "Support[s] completion of the Space
Station Freedom, while basing its development on the twin principles of greater
cooperation and burden sharing with our allies." [Bill Clinton on America's
Space Program]
"I think we should pursue it [a manned space station], yes. At what level of
funding, I don't want to make any specific commitments on that "[NBC Today
show, New York City, 6/30/92]
IMPACT:
The proposal would restore about 12,000 of the 15,000 jobs affected if the
Space Station were to be cancelled; the new jobs, though, would not necessarily
be in the same companies and states as the Space Station jobs. Cutting the
Space Station might break commitments to international partners and limit the
ability to do long-duration life sciences research needed for a manned Mars
mission. Advocates of canceling the space station point out that many of the
traditional objectives of U.S. space policy (e.g. national security) will not be
furthered by the current program.
CONGRESS:
California, Alabama, Florida, Texas delegations, and Senator Mikulski.
INTERGOV:
POL./LIAISON:
McDonnell-Douglas and Labor. What programs (e.g., NASP) positively
affecting these constituencies might be considered as part of the technology
investment package?
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAF
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#5):
Reduce Rural Electrification Administration 5-percent loan subsidies
SUMMARY:
SAVINGS: $380 MILLION (FY 1994-1997)
The REA, an agency within the Department of Agriculture, provides financial
assistance to electric and telephone utilities that serve rural areas. To qualify
initially for an REA loan, a borrower's service area could not contain more than
1,500 inhabitants. Although many communities originally targeted by the REA
have grown substantially, any utility that met the original requirements still
qualifies for REA assistance. The agency's borrowers serve about 10% of the
nation's electricity consumers and about 4% of its telephone customers.
BC RECORD:
"We need to invest in infrastructure, education, and health care. These
investments, like rural electrification, will allow the rural economy to create
good jobs
The REA is an important example of the role the government
can play in fostering rural development. We need to see that we build on it in
our comprehensive plan to rebuild rural America." [Clinton statement to the
Rural Electric Cooperative Association, 9/18/92]
"Allow rural electric cooperatives to prepay Federal Finance Bank debt, at a
savings of $200 million over four years that can be passed on to rural rate
payers and reinvested in their communities." [Clinton/Gore on Rebuilding
Rural America position paper]
IMPACT:
Would raise the utility rates charged by REA borrowers, especially for the rural
regions most affected.
CONGRESS:
Byrd, Sasser, Cochran, and Southeastern States. Spratt, English, de la Garza,
TN, MS, and AL.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#6):
Phaseout Below Cost Timber Sales
SUMMARY:
SAVINGS: $274 MILLION (FY 1994-1997)
In seven of the nine National Forest System regions, timber-harvest costs have
consistently exceeded timber revenues. Below-cost timber sales increase the
federal deficit, destroy forests, and inject the government into private timber
markets. Environmentalists would support eliminating below cost timber sales
as a means of reducing logging. This proposal would eliminate all timber sales
in the Rocky Mountains Forest Regions One, Two, and Four -- timber costs
consistently exceed revenues in these regions.
BC RECORD:
the reason I thought we ought to have a summit after the election and come
up here and get all the parties to sit down is that I think right now we've got
the worst of all worlds. You've got all the timber sales that have been tied up
in court for thirty-three months. That is the worst of all worlds. You can't get
any worse than that. No matter what your perspective is that's wrong. That's
not good for the environment. And its terrible for the economy. And it's not
right." [Conversation with Timber Family Workers in Portland, OR, 9/14/92]
"For example, we know that unrestricted exports of raw logs has hurt our
environment and economy. Depriving domestic mills of needed timber has
driven many mills out of business and caused thousands of high-wage mill jobs
to be lost. At the same time, raw log exports have threatened important
wildlife habitat and weakened the waterbeds that protect us from flooding.
"The long term solution is to improve the competitiveness of our timber
manufacturing industry. This will require greater investment, improved
education, and technological advances in this industry." [BC response to The
Oregon Newspapers]
IMPACT:
Loss of timber activity may increase unemployment in many timber-dependent
communities, especially in the Northwest.
CONGRESS:
Northwestern members
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#7):
Phaseout Wastewater Treatment Grants (except NAFTA)
SUMMARY:
SAVINGS: $4.104 BILLION (FY 1994-1997)
Construction grants for wastewater treatment were first authorized in 1972 by
the Clean Water Act. Under these grants, the federal government paid 55% of
project costs, with localities not obligated to repay the money. In 1987, the
Clean Water Act was amended to initiate another program of grants to
capitalize state revolving funds that make low interest loans to local public
agencies to construct municipal wastewater treatment facilities. For each
dollar of federal funds the state receives under the Act, the state contributes 20
cents to its revolving fund. Opponents of the grants argue that eliminating
funding will have little effect on water pollution because the grants have done
little to stimulate spending on wastewater treatment, and that federal grants
replace rather than supplement state and local spending.
BC RECORD:
"Reduce solid and toxic waste, and air and water pollution to ensure we leave
our nation cleaner and healthier." [Bill Clinton on Protecting our
Environment]
"Pass a new Clean Water Act with standards for "non-point source" pollution
and incentives for our firms, farmers, and families to develop ways to reduce
and prevent polluted run-off at its source; launch a national education
campaign to encourage all citizens to drastically reduce their contributions to
non-point-source" pollution made by household chemicals, lawn products, and
pesticides." [Ibid]
"Enact a stronger Clean Water Act to limit pollution before it happens." [Ibid]
IMPACT:
These funds will be replaced in a revolving loan fund for wastewater
treatment.
CONGRESS:
INTERGOV:
State and local governments are the primary recipients of these grants. With
the enactment of the Clean Water Act and State SRF programs, local reaction
will be negative. We should include the associations to communicate with
them (NLC,NACO,US Conference of Mayors,NGA,DGA) on what we are
doing so as not to appear completely contradictory.
POL./LIAISON:
Building trades need to be inoculated -- depends on how attractive stimulus
package is.
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8a):
Agriculture (Discretionary): Eliminate Cooperative State Research Service
(CSRS) - Earmarked Grants
SUMMARY:
SAVINGS: $97 MILLION (FY 1994-1997)
The CSRS is one of three agencies through which USDA conducts and supports
agricultural research and education. Specifically, CSRS supports research
conducted at land-grant universities and state institutions. This proposal would
eliminate congressionally earmarked CSRS grants -- a practice that has
increased significantly in recent years. 126 grant, totaling over $150 million,
were included in the FY 1993 appropriations bill. These grants were not peer-
reviewed, competitively awarded, nor specifically authorized.
BC RECORD:
"Look at the things we could do with farm products: biodegradable plastics,
soybean-based inks, industrial oils, lubricants, bio-fuels. We can drive up
incomes and profits for decades to come in states like yours and mine and
create businesses that will stay in smaller communities if we had a little vision
and we have the kind of research and development policy and technology
spreading we need." [emphasis added, Speech, Iowa, 9/12/92]
IMPACT:
Impacts smaller universities that are not competitive in other grant programs.
Also, affects agribusiness -- i.e., floral, timber, and seafood industries -- that
benefit from this research.
CONGRESS:
Whitten, Ag Appropriations Committee.
INTERGOV:
POL./LIAISON:
State Universities.
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8b):
Agriculture (Discretionary): Eliminate CSRS Earmarked Facilities Construction
SUMMARY:
SAVINGS: $87 MILLION (FY 1994-1997)
This proposal would eliminate congressional earmarking of CSRS facilities
construction. This account is often used to fund projects that are not directly
related to agricultural research, such as the $3.7 million earmarked for the New
York Botanical Garden in FY 1993.
BC RECORD:
"Improve farmers' incomes by properly managing current programs." [Clinton-
Gore on Rural Development]
IMPACT:
Alternative funding sources are available to current recipients of this assistance.
CONGRESS:
A competitive grants program for facility construction was proposed in FY
1993 budget, but rejected by Congress. Whitten, Ag Appropriations.
INTERGOV:
POL./LIAISON:
State Universities.
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8):
Agriculture (Discretionary): Expand Agriculture User Fees
SUMMARY:
SAVINGS: $59 MILLION (FY 1994-1997)
This recommendation would change the funding source for services that
currently paid for with appropriated funds to be fee-supported [including the
Federal Grain Inspection Service (FGIS), the Agricultural Marketing Service
(AMS), and the Agricultural Cooperative Service (ACS)] For example: this
option would include the costs of standardization and research related to grain
inspection in the FGIS's fee computation.
BC RECORD:
IMPACT:
Would transfer funding responsibility from federal taxpayers to agriculture-
related business.
CONGRESS:
A similar FY 1993 Budget proposal was rejected by Congress.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8d):
Agriculture (Discretionary): Eliminate Agriculture Research Service (ARS)
Facilities Construction
SUMMARY:
SAVINGS: $24 MILLION (FY 1994-1997)
ARS, USDA's internal research arm, operates at locations throughout the
country. Its research focuses on maintaining and increasing the productivity of
the nation's land and water resources, improving the quality of agricultural
products and finding new uses for them, and improving human health and
nutrition. This option would reduce spending on ARS facilities construction by
eliminating low-priority projects required by congressional earmarks.
Construction project funding would still be provided for ARS facility
improvements necessary for health and safety reasons, and ARS facility
modernization for state-of-the-art research in areas such as biotechnology.
BC RECORD:
Secretary Espy's "stimulus" options included a $36 million increase in this
program.
"Improve farmers' incomes by properly managing current programs." [Clinton-
Gore on Rural Development]
"Look at the things we could do with farm products: biodegradable plastics,
soybean-based inks, industrial oils, lubricants, bio-fuels. We can drive up
incomes and profits for decades to come in states like yours and mine and
create businesses that will stay in smaller communities if we had a little vision
and we have the kind of research and development policy and technology
spreading we need." [Speech, Iowa, 9/12/92]
IMPACT:
Fewer resources would be spent on construction. This is consistent with a
recent USDA re-organization review, which concluded that USDA should not
build additional facilities until ARS structure and locations were determined.
CONGRESS:
Whitten, Ag Appropriation.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8e):
Agriculture (Discretionary): Reduce Agricultural Research/Extension 10%
SUMMARY:
SAVINGS: $577 MILLION (FY 1994-1997)
This proposal would cut budget authority by 10% for all research/extension
activities -- including the Agricultural Research Service (ARS), the
Cooperative State Research Service (CSRS), and the Extension Service (ES). To
offset the impact of this proposal, cuts could be targeted to low-priority
programs in each agency.
BC RECORD:
"Look at the things we could do with farm products: biodegradable plastics,
soybean-based inks, industrial oils, lubricants, bio-fuels. We can drive up
incomes and profits for decades to come in states like yours and mine and
create businesses that will stay in smaller communities if we had a little vision
and we have the kind of research and development policy and technology
spreading we need." [Speech, Iowa, 9/12/92]
"Fund research and development projects to encourage processing of agriculture
products in rural areas and develop alternative non-food agriculture industries."
[Clinton-Gore on Rural Development]
"Create a small business technical extension service through the SBA, based on
the successful Agriculture Extension..." [emphasis added, Putting People First,
p. 79]
IMPACT:
Federal investment in agricultural research and extension activities has been
credited with U.S. farmers' large production capacity and the resulting low price
of food. Reducing this investment could hurt the competitiveness of the U.S.
agricultural sector in world markets.
CONGRESS:
All agricultural state members.
INTERGOV:
POL./LIAISON:
In a recent report, the Board on Agriculture of the National Research Council
proposed an increase in funding for agricultural research.
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8f):
Agriculture (Discretionary): Eliminate Special Extension Grants
SUMMARY:
SAVINGS: $54 MILLION (FY 1994-1997)
The Extension Service (ES) introduces farmers to new technology and educates
low-income families in good nutrition; the ES also provides some services to
urban residents. Each of the ES earmarked grants that would be eliminated
could be funded through the USDA formula funds each state receives to support
ES.
BC RECORD:
"Create a small business technical extension service through the SBA, based on
the successful Agriculture Extension. [emphasis added, Putting People First,
p. 79]
"Improve farmers' incomes by properly managing current programs." [Clinton-
Gore on Rural Development]
IMPACT:
Not likely to impact the ES's central mission.
CONGRESS:
Ag appropriations.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8g):
Agriculture (Discretionary): Reduce Foreign Agricultural Service programs
SUMMARY:
SAVINGS: $ 35 MILLION (FY 1994-1997)
USDA runs programs to promote exports and international activities through the
Foreign Agricultural Service (FAS) and the Organization for International
Cooperation and Development (OICD). FAS develops foreign markets by
jointly funding -- with U.S. trade show and commodity organizations called
"cooperators" -- overseas advertising campaigns, trade show exhibits, and
promotional materials. FAS also provides commodity analysis and information
on access to foreign markets to U.S. producers and traders. OICD collaborates
on a variety of ventures, one of which provides training to foreign national with
the objective of improving commercial relationships that will benefit U.S.
agriculture.
While these programs are popular among its recipients, some have questioned
its value to taxpayers (In promoting commodities, FAS sponsors private, brand-
name advertising). This proposal recommends reducing these expenditures by
cutting market promotion activities; limiting the cooperator program, or merging
the International Cooperation and Development Office with FAS.
BC RECORD:
"[George Bush] didn't understand how we need to sell pork to Russia I came
here to tell you that in my administration farm families will be able to make a
profit again selling pork and beef and corn and soybeans here and around the
world. [Speech, Iowa, 9/27/92]
"You just look. Mr. Bush drones on and on about how he's an outward-
looking president and he believe in free markets, he believes in exports. But
look at his record on agricultural issues. He promised to expand farm exports,
but when opportunities come, he just sort of hem and haws about them and our
farmers got the shaft. [Ibid]
IMPACT:
If the Market Promotion Program (MPP) was reduced as well (as proposed in
the entitlement options), these cuts could impact on U.S. efforts to expand into
foreign markets. Some commodity groups may no longer maintain offices
overseas if they must pay for it themselves.
CONGRESS:
Agricultural state members.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8h):
Agriculture (Discretionary): Reduce direct Agricultural Credit Insurance Fund
(ACIF) Loans 25%, replace with guarantees
SUMMARY:
SAVINGS: $39 MILLION (FY 1994-1997)
This option would freeze the FmHA farm program loan levels for FmHA direct
loans, non-subsidized guaranteed loans, and subsidized guaranteed loans for
farm ownership to the levels authorized in the 1990 Budget Accord. And like
OBRA 1990, this proposal would shift lending authority from direct loans to
subsidized guarantee authority.
BC RECORD:
"My own state, like yours, was nearly devastated during the Reagan-Bush years
of trickle-down. It started on the farms and it spread So I went to work to
change our farm foreclosure laws in the '80s, to increase farm loans, to start a
new program for first-time farmers because the average farmer is nearly 60
years old today. [Speech, Iowa, 9/27/92]
IMPACT:
Cuts in direct loans are generally thought to disadvantage low-income
borrowers. However, the impact would be lessened by actual trends in FmHA
lending authority, which are a function of current low market interest rates (The
interest rate charge on subsidized guarantees can be reduced to the direct
limited resource loan rate of 5.0%.
CONGRESS:
The FY 1992 Ag Appropriations superseded OBRA and restored FmHA lending
authority to its pre-OBRA distribution.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8i):
Agriculture (Discretionary): Implement One New Farm Service Organization
SUMMARY:
SAVINGS: $730 MILLION (FY 1994-1997)
USDA currently maintains separate field offices for each of its county-based
agencies. Each of the more than 12,000 offices nationwide maintain separate
support staff and computer systems, even though there are up to five USDA
offices serving a single county or region. Savings would be realized through
staffing cuts (through attrition) and other inefficiencies.
BC RECORD:
"Streamline USDA field offices, $281 million (FY 1994-1997)." [Putting
People First]
IMPACT:
The number of USDA offices would decline by approximately 65%.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAM
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#8j):
Agriculture (Discretionary): Reduce Economic Research Service (ERS) Funding
SUMMARY:
SAVINGS: $60 MILLION (FY 1994-1997)
ERS provides economic and other social science information and analysis to the
USDA Secretary, USDA bureaus, the Administration, and the general public to
evaluate USDA programs and program administration. ERS monitors and
forecasts U.S. and world-wide production and demand, measures the costs and
returns of U.S. production, and estimates the impact of government programs on
the economy and the public.
BC RECORD:
IMPACT:
ERS states that it is currently unable to perform all the research projects that
are being requested by the Department.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#9):
Reduce 7(a) Business Loan Subsidies
SUMMARY:
SAVINGS: $523 MILLION (FY 1994-1997)
The Small Business Administration provides both direct loans and loan
guarantees to qualified small businesses. Under the loan guarantee program,
the federal government guarantees 90% of the principal for business loans up
to $155,000 and 70-85% of larger ones. Under the direct loan program, the
SBA provides loans of up to $150,000 to businesses located in high-
unemployment and low-income areas and to businesses owned by minorities,
handicapped individuals and Vietnam or disabled veterans. Homeowners
recovering from natural disasters are also eligible for loans.
BC RECORD:
"I know that small businesses need more credit, not less." [Small Business
Release, 9/30/92]
"Despite a severe credit crunch, George Bush did not seek significant increases
in Small Business Administration programs until six months before the
election." [Bush/Quayles's Neglect of America's Small Businesses and
Entrepreneurs, 9/30/92]
Clinton criticized Bush for proposing to "halv[e] SBA small business loan
subsidies..." [Small business Release, 9/23/92; and Bush/Quayles's Neglect of
America's Small businesses and Entrepreneurs, 9/30/92]
"The Reagan/Bush Administration proposed the elimination of the Small
Business Administration first in 1985 and then again in 1986."
[Bush/Quayles's Neglect of America's Small Businesses and Entrepreneurs,
9/30/92]
IMPACT:
In 1991, the SBA guaranteed 23,2000 loans and disbursed 29,300 direct loans.
Reducing loans and loan guarantees would reduce long-term credit availability
to these small firms at a time when the "credit crunch" for business is an
important policy concern. Are there any programs that would positively affect
the SBA and small businesses in the stimulus package?
CONGRESS:
Bumpers (needs call from Bentsen on capital gains, SSC and spacestation),
LaFalce, Skelton.
INTERGOV:
Should not affect states or locals in any major way. Most of the 7A programs
are already so cumbersome that the program is rarely used in large volume.
POL./LIAISON:
MESSAGE:
ACTION:
02/09/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#10):
Highway Demonstrations (appropriated)
SUMMARY:
SAVINGS: $1.391 BILLION (FY 1994-1997)
This proposal would eliminate funding for the 72 highway demonstration
projects included in the 1993 Transportation Appropriations. Although many of
the projects are low priorities for state DOTs, any could receive funding
through the regular federal aid highway formula if the states concluded they are
of sufficiently high-priority to warrant funding.
BC RECORD:
"...[Highway demonstration projects] shouldn't all be funded if you're going to
increase highway funding to the states anyway. Let them make their own
decisions about what should be done." [ABC's Good Morning America
Interview, 10/30/92]
"In the first week, I would issue an executive order to double the rate of
highway funding in the first year to create 200,00 jobs..." [New Hampshire
Democratic Party Debate, 1/19/92]
IMPACT:
This takes earmarking power away from members of Congress and forces
projects to compete for funds by normal formula funding processes based on a
project's worthiness. This cuts only the 72 projects added in the FY 93
appropriations bill. The 539 demonstration projects authorized by Intermodal
Surface Transportation and Efficiency Act are not cut. Again, if the states were
to determine that the projects were worthy, they could receive funding through
the formula system. However, Govs and State DOTs will not necessarily
support using their funds for these projects. But where is the list of these
projects?
CONGRESS:
Expect opposition from Appropriations Committee members who sponsor the
projects.
INTERGOV:
Based on the summary, we need to make sure Gov.'s understand this because it
does not appear that we are taking away funds, just redirecting funds.
POL./LIAISON:
Building Trades, AGC and ABC need to be inoculated depends on how
much money going to infrastructure in stimulus package.
MESSAGE:
ACTION:
Ask NGA and AASHTO (which represent state DOTs) to support trading
demos for greater formula funds (over which they exercise greater control).
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#11):
Eliminate Interstate Commerce Commission (ICC)
SUMMARY:
SAVINGS: $92 MILLION (FY 1994-1997)
Allows the ICC to complete trucking deregulation, and then eliminates the ICC,
with DOT, DOJ and FTC taking over remaining functions. Legislation could
also address the negotiated rates problem between shippers and carriers, which
will be one of the Teamsters' principal concerns.
BC RECORD:
N/A
IMPACT:
Labor (Teamsters), some parts of the trucking industry and some shippers will
oppose in favor of a piecemeal approach to regulatory reform that keeps the
ICC.
CONGRESS:
INTERGOV:
POL./LIAISON:
Teamsters
MESSAGE:
ACTION:
Cutter contact Mineta.
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#12):
Stop Growth of 1993 Pell Grant Shortfall
SUMMARY:
SAVINGS: $522 MILLION (FY 1994-1997)
This option would repeal changes made in the 1992 Higher Education Act that
expanded eligibility/awards for middle and upper income students. Currently,
funding appropriation falls well below authorization, causing an unfunded
shortfall made up in later years.
BC RECORD:
"George Bush has proposed eliminating Pell grants for any family that earns
more than $10,000 a year. That isn't right. I have no plans to cut back o the
Pell Grant program." [US Students Association questionnaire].
"[George Bush has] proposed eliminating Pell grants for any family that earns
more than $100,000 a year. If your income's over $10,000 a year, you're too
rich to get any college aid...But, if you make $300,000 a year you're still poor
enough to need a capital gains tax cut. It isn't right. Those who do receive
Pell grants know that they are so small; they are worth about half as much as
they were a decade ago." [Speech, "They Are All Our Children," East Los
Angeles, 5/14/92]
IMPACT:
Directly repeals key components of the 1992 Higher Education Act. Would
cause confusion among schools and applicants. Cuts middle and upper income
families out of program -- 240,000 kids. This must be decided quickly, as
schools are supposed to be notified of '93-'94 award schedules on Feb. 1.
CONGRESS:
Pell, Metzenbaum, Kennedy, and Ford.
INTERGOV:
POL./LIAISON:
Middle class hit - even if it's only perception
MESSAGE:
Eventually replace with National Service Trust Fund.
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#14):
Meat/Poultry fees - 100% of Overtime
SUMMARY:
SAVINGS: $416 MILLION (FY 1994-1997)
Slaughterhouses/meat plants with regularly scheduled overtime shifts would
have to reimburse the federal government for the full cost of federal inspections
during the overtime period. Currently, user fees for overtime inspection are
required at plants without regular overtime shifts (usually smaller plants). Big
plants with regular overtime shifts currently don't pay a fee.
BC RECORD:
N/A
IMPACT:
This is not a proposal to lessen inspections, but to charge fees for all plants'
overtime inspections. In fact, Agriculture Secretary Espy announced that the
President had authorized him to hire an additional 160 meat and poultry
inspectors at a cost of $4 million annually.
CONGRESS:
Bumpers, Pryor, Daschle, and Sasser.
INTERGOV:
POL./LIAISON:
Industry and consumer groups will oppose. Get consumer groups, Ellen Haas,
labor (UFCW & AFGE) to say positive things.
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#15a):
Veteran Benefits and Services (Discretionary) - Cut VA Construction
SUMMARY:
SAVINGS: $282 MILLION (FY 1994-1997)
This proposal would freeze the VA construction budget (mainly for medical
facilities) at the FY 1993 enacted level and freeze funding for three grants to
states for VA construction.
BC RECORD:
"Ensure the VA receives the funding it needs to provide excellent, timely care
to veterans and oppose opening VA hospitals to non-veterans
Expand
veterans centers." [Bill Clinton on Issues of Concern to Veterans]
"As an American, I honor the service of every man and every woman who has
served our country in uniform. As President, I will honor your service and
sacrifice with deed, not words. You earned nothing less. I will honor it first
by giving veterans the kind of health care system your country owes you. I
will work to ensure the VA--the Veterans Administration--gets the funding it
needs to provide the excellent and timely care our veterans deserve -- all our
veterans. [American Legion Convention Speech, Chicago, 8/25/92, original
emphasis]
IMPACT:
Rural veterans could be adversely affected. In general, this option would shift
focus to improving existing facilities instead of building new ones.
CONGRESS:
Montgomery.
INTERGOV:
POL./LIAISON:
MESSAGE:
More efficient, creative use of existing funds.
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#15b):
Veteran Benefits and Services (Discretionary) - Improve Management of VA
Hospitals
SUMMARY:
SAVINGS: $1 BILLION (FY 1994-1997)
This recommendation proposes allocating medical resources to VA hospitals
through a prospective payment system (PPS) similar to the one used in
Medicare. VA had a similar system from 1986-1990 but limited its effect by
severely restricting the amount of funds that could be reallocated among
facilities. Under a PPS, each patient would be classified in a diagnosis-related
group (DRG), which would entitle the hospital to a fixed payment designed to
reflect the average cost of efficient care for such a patient. In turn, the VA
health care system would receive an overall level of operational funding related
to the sum of these amounts. For this system to work the VA would have to be
given greater control over its facilities.
BC RECORD:
"...we will simplify and reform, and strengthen the VA's efforts to deal with the
special problems veterans face -- like post-traumatic stress disorder,
complications from Agent Orange, drug and alcohol abuse. And we will honor
America's unbreakable moral obligation to care for our veterans who were
disabled in the service of our country." [American Legion Convention Speech,
Chicago, 8/25/92, original emphasis]
Would identify hospitals that could be examined for conversion or closure.
Rural VA hospitals would face the greatest financial pressure.
CONGRESS:
Congress would have less control over the VA health care system. Montgomery.
INTERGOV:
VA hospital directors would strongly oppose.
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#15c):
Veteran Benefits and Services (Discretionary) - Reduce VA Beneficiary Travel
SUMMARY:
SAVINGS: $289 MILLION (FY 1994-1997)
This option would limit the population eligible for beneficiary travel
reimbursement by providing payments only to veteran patients who: (1) live
more than 50 miles from the facility and (2) are treated for a service-connected
disability, have at least a 50% service-related disability, or have a low income
($15,238).
BC RECORD:
"Bush FY 1993 budget would cut mandatory veterans programs by $3.5 billion
over five years. This would strongly affect VA medical care -- eliminating
travel benefits for veterans living within 50 miles of a VA medical facility
(mostly rural veterans).. [Release, Fact Sheet on Bush and Veterans' Issues]
"...we will simplify and reform, and strengthen the VA's efforts to deal with the
special problems veterans face -- like post-traumatic stress disorder,
complications from Agent Orange, drug and alcohol abuse. And we will honor
America's unbreakable moral obligation to care for our veterans who were
disabled in the service of our country." [American Legion Convention Speech,
Chicago, 8/25/92, original emphasis]"
IMPACT:
Doubles current income threshold ($7,619) for defining low income veterans.
Eliminates travel reimbursement for high-income, service connected veterans
rated 30% and 40%. Also, eliminates reimbursement for non-service-
connected treatments, compensation exams, emergency care, and special
transportation modes.
CONGRESS:
Requires legislation rejected by Congress in FY 90,92, and 93. Montgomery,
Evans
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#15d):
Veteran Benefits and Services (Discretionary) - Reallocate Nurse Staff
SUMMARY:
SAVINGS: $161 MILLION (FY 1994-1997)
BC RECORD:
"...we will simplify and reform, and strengthen the VA's efforts to deal with the
special problems veterans face -- like post-traumatic stress disorder,
complications from Agent Orange, drug and alcohol abuse. And we will honor
America's unbreakable moral obligation to care for our veterans who were
disabled in the service of our country." [American Legion Convention Speech,
Chicago, 8/25/92, original emphasis]
IMPACT:
CONGRESS:
Montgomery, Evans
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#15e):
Veteran Benefits and Services (Discretionary) - Adhere to Outpatient Eligibility
SUMMARY:
SAVINGS: $199 MILLION (FY 1994-1997)
BC RECORD:
"Ensure the VA receives the funding it needs to provide excellent, timely care
to veterans and oppose opening VA hospitals to non-veterans
Expand
veterans centers." [Bill Clinton on Issues of Concern to Veterans]
"...we will simplify and reform, and strengthen the VA's efforts to deal with the
special problems veterans face -- like post-traumatic stress disorder,
complications from Agent Orange, drug and alcohol abuse. And we will honor
America's unbreakable moral obligation to care for our veterans who were
disabled in the service of our country." [American Legion Convention Speech,
Chicago, 8/25/92, original emphasis]
IMPACT:
CONGRESS:
Montgomery, Evans
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#16):
Reduce Prison Construction
SUMMARY:
SAVINGS: $331 MILLION (FY 1994-1997)
Since 1981, prison capacity has more than doubled. This option would reduce
construction of new facilities by more than 50 percent. A significant amount of
new prison space is already under construction or is "in the pipeline".
BC RECORD:
"I think the answer to the overcrowding in our prison system is obviously to
build more prisons, or reduce the population going in
My Budget
includes some seed money to help cities and states establish these boot camps
There is also the possibility of more federal prison-building
[WSB
Town Hall Meeting 6/21/92]
"Give young offenders a second opportunity to become decent citizens by the
supporting the creation of "boot camps" for non-violent first-time offenders.
These shock incarceration programs require rigorous exercise and arduous work
to instill discipline, boost self-esteem, and teach decency and respect for the
law." [Bill Clinton on Crime and Drugs]
Clinton also supported the '92 crime bill conference report, which included
more federal funds for prison construction.
IMPACT:
If current incarceration trends continue, prison overcrowding will remain a
problem for many years. This proposal would still permit the construction of
one large prison complex per year.
CONGRESS:
Biden, Schumer, Hughes, Brooks.
INTERGOV:
Govs need to be offered something by way of the boot camp program or excess
base facilities for prison related activities, because this affects more than just
crime imagery for all of them, it also affects jobs related to construction etc..
Check in with key governors we need on our side.
POL./LIAISON:
MESSAGE:
Progress has been made in reducing overcrowding; there is significant prison
construction already in the "pipeline."
ACTION:
02/10/93
CONFIDENTIAL
DRAF
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19a):
Natural Resources and Environment (Entitlements): Conservation Reserve
Program (CRP) - No New Acres
SUMMARY:
SAVINGS: $331 MILLION (FY 1994-1997)
Under the CRP, acres of land are competitively bid into the 10-year program
during which time the land is taken out of production, and the producer is
compensated with rental payments. Since FY 1985, 36.5 million acres of
marginal farmland have been added to the CRP. This option would implement
a "no new acres" policy for the CRP and represents an alternative to the
proposal to remove all acreage from the CRP in FY 1994.
BC RECORD:
"We haven't seen good management of agricultural programs for twelve years
because the people because the people running these programs didn't believe in
them and would rather bring about their end by misusing them." [Questionnaire
to the National Cattlemen's Association]
"I'll rededicate the agencies that manage our national parks and wilderness lands
to a true conservation ethic. And I'll expand our efforts to acquire new
parklands and recreational sites with the funds already available under the
federal Land and Water Conservation Fund. Every year, millions of American
families vacation in national parks, from Yosemite to Yellowstone." [Drexel
Speech 4/22/92]
IMPACT:
Uncertain, but OMB alleges that U.S. soil productivity has improved, and that
the worst acres (from a conservation standpoint) have already been enrolled in
the program.
CONGRESS:
The program is highly popular in the Midwest and Western states.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19b):
Natural Resources and Environment (Entitlements): Inland Waterway User Fee
Phase-In.
SUMMARY:
SAVINGS: $685 MILLION (FY 1994-1997).
This is essentially a gas tax hike. The proposal would increase the Federal
inland waterway fuel tax from 19 cents to $1.19 per gallon (six times higher),
to cover the Corps of Engineers operation and maintenance costs on parts of the
nation's inland water system. The tax would be phased in gradually in a series
of increasing steps -- $.10/gal the first year, $.25/gal the second, etc.
Currently, the inland navigation system is the most heavily subsidized form of
commercial freight transportation and is the last remaining Corps of Engineers
program that is not shared by private entities.
BC RECORD:
IMPACT:
Would adversely affect shippers, barge operators and grain producers. Could
cause certain waterway users to switch to cheaper means of transportation.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAIT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19c):
Natural Resources and Environment (Entitlement): Increase Grazing Fees
SUMMARY:
SAVINGS: $76 MILLION (FY 1994-1997)
This proposal would raise the fee that ranchers pay for access to federal grazing
lands. The current fee ($1.97/animal unit month (AUM)) does not cover the
government's management costs ($3.86/AUM) or the fair market value of the
grazing rights ($5.41 - $9.88/AUM). This proposal would bring the fee in line
with the government's costs and the fair market value of the land. Legislation
increasing the fee to fair market value over four years passed the House in 1991
but did not clear the Senate.
BC RECORD:
"I support land use which helps our economy thrive and which also protects our
environment. I have not taken a position on grazing fees and welcome your
thoughts." [National Cattlemen's Questionnaire] (emphasis added)
IMPACT:
CBO estimates that increasing the fee to fair market value over four years
would save $120 million.
CONGRESS:
Western state delegations will strongly oppose this legislation.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19d):
Natural Resources and Environment (entitlements): Federal Irrigation Water.
SUMMARY:
SAVINGS: $45 MILLION (FY 1994-1997).
The Bureau of Reclamation provides water from federal projects under contract
to non-federal entities for irrigation in the 17 western states. Water charges for
irrigation are typically well below market-value. Policies allowing up to 50
years for repayment of the federal capital investment, charging zero interest on
costs assigned to irrigation, and other similar policies result in substantial
federal subsidies that encourage excessive use of water. This option proposes a
per acre surcharge on water sales to those Reclamation projects throughout the
West that are still repaying the federal government or are receiving
appropriations for operation and maintenance of water projects.
BC RECORD:
IMPACT:
would discourage use of federal irrigation water
CONGRESS:
Miller and Western states.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19e):
Natural Resources and Environment (Entitlements): Recreation Fees
SUMMARY:
SAVINGS: $253 MILLION (FY 1994-1997)
This proposal would increase fees on users of federal recreational areas and
facilities. All major land-holding federal agencies allow recreational access to
their lands. Although some charge visitor fees, these cover only a small portion
of the actual cost of providing recreational access. This proposal require users
to cover a greater portion of the cost of providing recreational facilities and
services.
BC RECORD:
"I'll expand our efforts to acquire new parklands and recreational sites with the
funds already available under the federal Land and Water Conservation Fund.
Every year, millions of American families vacation in national parks, from
Yosemite to Yellowstone. They deserve an administration that cares about
America's parks as much as they do." [Drexel Speech, 4/22/92]
"Preserve places of natural beauty and ecological importance--such as our
national parks, wilderness areas, old growth forests, and wetlands--so that we
can pass on America's natural splendor to our children." [Putting People First.
p. 94]
IMPACT:
Increasing recreation fees would decrease the public's access to the nation's
natural resources, particularly for the poor and elderly. Since this proposal only
seeks to reclaim one-third of this amount, the effect of decreased access would
be muted.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19f):
Natural Resources and Environment (Entitlements): Increase Hardrock Mining
Claims.
SUMMARY:
SAVINGS: $240 MILLION (FY 1994-1997).
Private access to public domain land for hardrock mining (gold, silver, copper)
is controlled by the Bureau of Land Management (BLM). Under the 1872, the
discovery of a "valuable mineral deposit" and the staking of a mining claim
gives a prospector the right to mine and sell public domain mineral without
paying fees or royalties to the federal government. The only condition is that
the claimant perform $100 of work on the land. In the FY 1993 Interior
Appropriations, the $100 work requirement was replaced with a $100 fee. This
proposal would make this provision in current law permanent after its expiration
date of 1994.
BC RECORD:
N/A
IMPACT:
Minimal. Would reduce soil disturbance at claim sites done solely to satisfy the
current requirement. Could disproportionately affect small operators with
several claims.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
02/10/93
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#19g):
Natural Resources and Environment (Entitlements): 50% net receipt sharing
(minerals).
SUMMARY:
SAVINGS: $170 MILLION (FY 1994-1997)
States would have to bear 50% of the Federal administrative costs incurred in
generating the receipts prior to distribution to States and the Federal Treasury.
Includes programs for oil, gas, and other minerals.
BC RECORD:
IMPACT:
CONGRESS:
Western members have strongly opposed this measure, but it has been enacted
by Congress in the last three Interior Appropriations bill.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20a):
Agriculture (Entitlement): Eliminate Cooperative State Research Service
(CSRS) Morrill-Nelson Program
SUMMARY:
SAVINGS: $12 MILLION (FY 1994-1997)
The CSRS, one of three agencies through which USDA conducts and supports
agricultural research and education, has a permanent appropriation (since 1890)
to support higher education in the food and agricultural sciences at land-grant
institutions. The Morrill-Nelson program provides each state and territory with
a $50,000 appropriation (since 1912), which -- unlike other higher education
assistance -- does not require any matching funds.
BC RECORD:
"Fund research and development projects to encourage processing of agriculture
products in rural areas and develop alternative non-food agriculture industries."
[Clinton-Gore on Rural Development]
IMPACT:
This proposal will have minimal impact. CSRS has other (and competitive)
programs that support higher education at land-grant colleges. Moreover, the
funding involved in the Morrill-Nelson appropriation is so small that it should
not affect the quality of the higher education system.
CONGRESS:
INTERGOV:
POL./LIAISON:
Land-grant colleges will oppose the measure.
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20b):
Agriculture (Entitlement): Eliminate the Honey Program
SUMMARY:
SAVINGS: $43 MILLION (FY 1994-1997)
The federal government subsidizes the price of honey. Producers pledge their
honey as collateral for a federal loan. The loan can be repaid and the collateral
redeemed at either the market price or the loan rate ($.538/lb.) whichever is
lower. Participants are eligible for "loan deficiency payments" whereby the
producer receives the difference between the loan rate and the market price.
The market price averages $.45/lb. for a subsidy of $.088/lb.
BC RECORD:
"End taxpayer subsidies for honey producers." [Putting People First p.30]
IMPACT:
Roughly 350 individuals get over 50% of the payments and less than 1% of all
US honey producers participate in the program. Program supporters claim that
it is vital to the survival of beekeepers on whom many fruit, nut, and vegetable
growers depend for pollination. The GAO holds that the program is no longer
necessary to assure crop pollination.
CONGRESS:
Pryor
INTERGOV:
POL./LIAISON:
MESSAGE:
PLAN:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20c):
Agriculture (Entitlement): Total income over $100,000 (Means-Test Farm
Subsidies)
SUMMARY:
SAVINGS: $1.05 BILLION (FY 1994-1997)
Producers of wheat, corn and other feed grains, rice, and cotton who participate
in federal commodity programs receive a deficiency payment, the primary form
of direct payment to farmers. This payment is calculated in part by the
difference between the market price of a crop and a "target price".
This proposals calls for means-testing of federal farm payments, making
producers with an adjusted gross income of $100,000 or more ineligible to
receive crop subsidies.
BC RECORD:
"A Clinton-Gore Administration will support an agriculture policy that both
recognizes the small-family producers who have done so much to make
America great and treats consumers and taxpayers fairly." [Putting People First
p. 33]
"The Bush-Quayle read my lips recession has caused, in May 1992, 55% of
farm households to experience losses from their farming operations has caused,
since 1980, a 65% decrease in real expenditures in rural development
programs has caused during the 1980's farm and ranch families to decrease by
12% and the number of Americans living on farms and ranches to decline by
nearly 25%. [Statement, "Bush\Quayle Pander then Slander America's Farmers,"
9/26/92]
IMPACT:
The option directs aid at supporting farmers' incomes rather than controlling
production. It would eliminate 5%-10% of program participants and target
funds to small and family farmers. But farmers are likely to be uneasy with the
implication that farm price supports are "welfare payments". Larger producers
will complain that a cut in subsidies will make them less productive vis-a-vis
heavily-subsidized foreign producers.
CONGRESS:
All Ag State Members. Check floor votes.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20d):
Agriculture (Entitlement): Limit Commodity Credit Corporation (CCC) Income-
Support Payments to Individual Farmers to a Maximum $50,000 Per Year
SUMMARY:
SAVINGS: $810 MILLION (FY 1994-1997)
While CCC deficiency payments are now limited to $50,000 annually by law,
the current definition of "person" is broadly-defined and includes payment
entities such as a corporation or limited partnership. Thus, individuals are
eligible to receive multiple payments. This option would preclude multiple
payments by attributing them to a specific individual rather than to payment
entities. Additionally, the complexity of the existing payment system makes it
the most time consuming procedure that USDA county offices handle.
Simplifying the limitation would also help curb fraud and waste.
BC RECORD:
"Consolidate forms and processes to cut down on wasted time and delays." [Bill
Clinton on Agriculture position paper]
"Improve farmers' incomes by properly managing current programs"
[Clinton/Gore on Rural Development position paper]
IMPACT:
This option will streamline procedures thereby saving administrative costs as
well as costs attributable to fraud and abuse. But exposing producers to market
forces -- while foreign producers continue to receive substantial subsidies --
could negatively impact the agricultural sector.
CONGRESS:
Opposition can be expected from all agricultural states. May prematurely
aggravate the farm debate before the 1995 farm bill comes due.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20e):
Agriculture (Entitlement): Reduce Market Promotion Program (MPP) to FY
1993 level
SUMMARY:
SAVINGS: $208 MILLION (FY 1994-1997)
MPP provides subsidies to commodity associations, cooperatives, and private
enterprises to promote the export of US farm products. The 1990 farm bill
authorized MPP at $200 million per year but only $148 million was
appropriated for FY 1993. This option would make this cut mandatory and
extend it through FY 1997.
BC RECORD:
"Work hard to enter new markets for American Agricultural products,
particularly in Eastern Europe and the Commonwealth of Independent States."
[Bill Clinton on Agriculture position paper]
"Support full use of federal export tools like the Export Enhancement Program
to expand trade and enter new markets." [Ibid]
IMPACT:
Impact could be muted because -- rather than eliminating the program, as
some have proposed -- this option merely freezes funding. Still, depending on
what is done with other similar programs, domestic producers will claim that
they will be negatively impacted because foreign agricultural producers are
heavily subsidized.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20f):
Agriculture (Entitlement): Increase Non-Eligible Payment Acres starting in FY
1996.
SUMMARY:
SAVINGS: $1.03 BILLION (FY 1994-1997)
This proposal would raise the percentage of "triple base" acres from 15% to
25% in FY96. The 1990 Budget Accord instituted "triple base" to reduce CCC
outlays and free producers from farming for such outlays. Under triple base,
15% of a farm's crop acreage base is ineligible for CCC deficiency payments
(wheat, feedgrains, cotton and rice), but most crops could still be raised on
those acres and sold at market price, without jeopardizing the farm's acreage
base for payments in future years. Triple base allows the farmer to respond
more directly to the markets, and to rotate crops in an environmentally sound
fashion.
BC RECORD:
IMPACT:
Increases farmers' flexibility. Might lower the incomes of farmers who grow
crops that are not federally supported.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
Toward more competitive, less subsidized industry.
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20g):
Agriculture (entitlement): Eliminate the 0/92 and 50/92 (PAY/92) Programs
starting in FY 1996.
SUMMARY:
SAVINGS: $937 MILLION (FY 1994-1997)
In the 1985 farm bill, at a time of large crop surpluses, the USDA started
paying farmers not to produce on a voluntary basis. Producers can set aside a
certain portion of their crop payment acreage and still receive 92 % of their
CCC deficiency payments on these acres. The effects of the PAY 92 program
is demonstrated by the rice program. Whereas 174,000 acres were under the
program in 1986, this figure is expected to increase 236% by 1998. This
option would eliminate PAY 92 starting in FY 1996.
BC RECORD:
IMPACT:
Could increase exports. While U.S. planted acreage fell by 10% since the
introduction of PAY 92, planted acreage in other countries virtually replaced
America's idled acres.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20h):
Agriculture (Entitlement): Increase Assessments on "Non-Program" Federally-
Subsidized Crops Starting in FY 1996.
SUMMARY:
SAVINGS: $900 MILLION (FY 1994-1997)
"Non-program" crops (sugar, dairy, tobacco, honey, peanuts, soybeans, wool
and mohair) currently receive USDA price-support loans and benefits from
USDA-imposed restrictions on production and imports. The '90 farm bill
reduced subsidies on program crops and levied fees on non-program crops.
This option would balance the proposed increase in non-eligible (triple base)
acres (see increase in non-eligible crops proposal). Would become effective in
'96, when '90 Farm Bill provisions run out.
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DEAR
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20i):
Agriculture (Entitlement): Limit payments on wool and mohair to $50,000 per
person.
SUMMARY:
SAVINGS: $212 MILLION (FY 1994-1997)
Price support payments on wool and mohair would be limited to $50,000 per
producer, consistent with the proposed payment limitation on other CCC
programs. Currently, the wool and mohair program works exclusively as
income support with producers receiving a sum based on the difference between
a legislatively determined support price and the market price (which is almost
210 percent lower). Current payments are highly concentrated to large, wealthy
sheep/goat owners.
BC RECORD:
IMPACT:
Align wool/mohair payment limits with that of other CCC programs.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20j):
Agriculture (Entitlement): Reform Disaster Payments
SUMMARY:
SAVINGS: $*
Currently, a farmer must suffer a 35% loss (40% if they don't have insurance)
to be eligible for disaster payments (farmers do not receive payments on the
first 35% of crop loss). This proposal would increase the loss threshold to
40% (50% without insurance) and give the Agriculture Secretary authority to
pro-rate all eligible disaster claims. The loss threshold increase alone could
reduce annual disaster payments by 32 percent.
*
NOTE ON BUDGET SCORING: Disaster payments are not funded through
an appropriations bill at the beginning of a fiscal year. Thus, there are no
disaster payments included in the baseline, and so no savings can be claimed.
However, disaster payments have averaged $895 millon per year since '87.
BC RECORD:
IMPACT:
The loss threshold increase will cost some farmers disaster payments. The pro-
rating proposal means that farmers may not receive full payment at a future
date.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#20k):
Agriculture (Entitlement) Reform the Crop Insurance Program Through Area-
Yield. (Does not apply to savings from disaster payments)
SUMMARY:
SAVINGS: $739 MILLION (FY 1994-1997)
This option would reform the FCIC crop insurance program to eliminate the
need for free disaster payments. Insurance companies are "reinsured" by the
FCIC to share profits and losses. Currently, the FCIC spends roughly $2.56 for
every dollar in premiums paid by farmers (administrative expenses, insurance
reimbursements, etc.) Area-yield would save money as reinsured companies
don't have to be reimbursed for loss adjustment activities, reducing the annual
FCIC loss ratio from 1.4 to roughly 1.1. Currently, this option is being tried on
a pilot basis.
BC RECORD:
IMPACT:
Will cause confusion over proper premium rates. Payments could be paid to
individual farmers within a disaster area who have not experienced a significant
loss.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 9, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#22):
Federal Employee Health Benefits: Medicare Rates Over-65
SUMMARY:
SAVINGS: $210 BILLION (FY 1994-1997)
This proposal would extend Medicare Part-B billing and payment limits (which
cover physician and non-hospital services) to those Federal annuitants age 65
and older who do not have Medicare coverage. Medicare Part-A billing and
payment limits (covering in-patient services) already apply to this small group
of people.
BC RECORD:
IMPACT:
This proposal would reduce the income of physicians whose fees exceed the
limits allowed by Medicare. These physicians could conceivably refuse to serve
such retirees if brought under Medicare limits.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#22):
Federal Employees Health Benefits: Phase-In Retiree Copayments
SUMMARY:
$415 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#22):
Medicaid: Survey and Certification User Fees
SUMMARY:
$413 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#22):
Third Party Liability: Enhanced Collections (Includes Medicare, Medicaid,
Veterans Affairs, Indian Health Service, Defense Department)
SUMMARY:
$800 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Set Intraocular Lens Reimbursement at Competitive Rates ($100) -
Administration
SUMMARY:
SAVINGS: $255 BILLION (FY 1994-1997)
This proposal would reduce Medicare's payment for implantation of intraocular
lens (IOL) to $100 from the $200 Medicare currently pays at ambulatory
surgical centers and the $215 paid by Medicare at hospital outpatient
departments. The rate would be indexed by the CPI thereafter. In Canada, IOL
prices average $110.
BC RECORD:
During the campaign, Clinton repeatedly attacked Bush for cuts in Medicare.
One release claimed that, under Bush's plan, care would be denied to elderly
Americans because of proposed reductions in hospital and physician payments.
Another campaign document warned of reductions in the Medicare
reimbursement rate down to less than two thirds of cost under Bush. Clinton
did express concern, however, that the U.S. health care system pays for services
which are sometimes unnecessary or overpriced.
IMPACT:
If providers were unable to negotiate favorable IOL prices and find it less
profitable to implant IOLs, beneficiaries access to this procedure might be
reduced. The reduced prices could heavily impact the IOL industry; if IOL
manufacturers go out of business, beneficiaries would lose access to IOLs.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Eliminate Skilled Nursing Facility Return on Equity Payments
SUMMARY:
SAVINGS: $480 MILLION (FY 1994-1997)
Medicare pays for care in Skilled Nursing Facilities (SNFs) -- nursing homes -
- for eligible people who need skilled nursing services following discharge
from the hospital. Medicare makes return on equity (ROE) payments based on
the average interest rate paid on securities issued by the Hospital Interest Trust
Fund (HITF). This proposal would eliminate the requirement that Medicare
make the ROE payment to the SNFs. The FY 92 President's Budget also
proposed this option.
BC RECORD:
During the campaign, Clinton repeatedly attacked Bush for cutting Medicare
and forcing higher payments for the elderly. Clinton spoke of people "who are
forced to spend themselves into poverty and put themselves into institutions
instead of being able to stay at home with nursing care..."
IMPACT:
Proprietary SNFs are the only class of Medicare provider that received return
on equity payments. This proposal would discourage private investment in
SNFs at a time when demand for SNFs is strong and growing. Some SNF debt
financing costs are eligible for reimbursement under Medicare rules; the
proposal would encourage debt-financing over equity financing, which could
offset some Medicare savings.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Set Laboratory Rates at Market Levels
SUMMARY:
Savings: $3.01 BILLION (FY 1994-1997)
The proposal initially would lower the Medicare Part B laboratory fee schedules
to 76% of the median of all fees, down from the current maximum level of
88%. Later, based on market surveys, the Secretary of HHS would adjust
Medicare payment rates to laboratories based on technological changes and
other market factors.
BC RECORD:
During the campaign, Clinton repeatedly attacked Bush for proposed cuts in
Medicare and for shifting the costs of health care to the private sector. One
release claimed that, under Bush's plan, care would be denied to elderly
Americans because of proposed reductions in hospital and physician payments.
Another campaign document warned of reductions in the Medicare
reimbursement rate down to less than two thirds of cost under Bush.
IMPACT:
Laboratories argue that lower Medicare rates will harm their industry and
reduce Medicare beneficiaries' access to services.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Maintain Supplementary Medical Insurance (SMI) Premium at 25% of Costs
SUMMARY:
Savings: $2.055 BILLION (FY 1994-1997)
This proposal would raise the coinsurance rate on all services provided by the
Supplementary Medical Insurance (SMI) program to 25%. Currently, the
coinsurance rate on most services is 20%, except for clinical laboratory services
and home health care, which have no coinsurance requirements.
BC RECORD:
During the campaign, Clinton repeatedly attacked Bush for proposed cuts in
Medicare and for the devastating affect of increasing out-of-pocket health care
costs over the last 12 years. One release stated that "the Bush plan would
increase private sector health costs," increasing insurance premiums. The
Clinton campaign also warned of reductions in the Medicare reimbursement rate
down to less than two thirds of cost under Bush. Finally, Clinton complained
of increasing health care costs to the states, "state governments are not like the
federal government. We don't get to print money and we have to balance our
books."
IMPACT:
This proposal would not increase the coinsurance payments for about 80% of
Medicare beneficiaries who are covered by Medigap, Medicaid or other third
party insurance. However, this would increase the risk of very large out-of-
pocket costs for the 20% of enrollees who have no supplementary coverage as
well as increasing medigap premiums for the 30% of enrollees who purchase
that kind of supplementary insurance. Moreover, it would increase states'
Medicaid costs for the nearly 20 percent of enrollees who are eligible for full or
qualified Medicaid benefits.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Set Durable Medical Equipment Rates at Market Levels
SUMMARY:
$600 MILLION (FY 1994-1997)
The proposal would change the payment method for certain Durable Medical
Equipment (DME) -- including ostomy and tracheostomy supplies, urological
supplies, surgical dressings, splints and casts -- which are currently paid for
based upon "reasonable costs."
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
10% Capital Reduction, Prospective Payment System neutral
SUMMARY:
BC RECORD:
1.95 BILLION (FY 1994-1997)
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Internal Revenue Service/Social Security Administration/Health Care Financing
Administration data match
SUMMARY:
$953 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Medicare Secondary Payer (MSP) for the disabled
SUMMARY:
$1.38 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
MSP for End Stage Renal Disease After 18 Months
SUMMARY:
$96 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Payments for Hospital Outpatient Services
SUMMARY:
$1.76 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Pay Hospitals for Inpatient Services by Hospital-based Physicians
SUMMARY:
$2.015 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DEAD
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Outpatient Payment Reform (Part B) Hospitals
SUMMARY:
$2.65 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Put Hospitals on Current Year Update
SUMMARY:
$4.475 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DEAD
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Phase in Lower IME to 3.2% - Hospitals
SUMMARY:
BC RECORD:
9.211b (94-97)
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Set Erythropoietin (EPO) at non-U.S. Market Rates ($10 per 1,000 units) -
Administration
SUMMARY:
BC RECORD:
100m (94-97)
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
CLAB
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Three-Month Part B Freeze (CBO)
SUMMARY:
$3.4 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
30% Coinsurance When Medigap Pays Some Beneficiaries
SUMMARY:
$9.35 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
/
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#23):
Discount for Interactions
SUMMARY:
$6.806 BILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#24):
End Lump-Sum Benefit
SUMMARY:
SAVINGS: $5.132 BILLION (FY 1994-1997)
This recommendation would permanently extend the elimination of the lump-
sum annuity option for federal employees retiring after 10/1/95. The Omnibus
Budget Reconciliation Act of 1990 eliminated the lump-sum option for most
federal employees except for the critically ill, involuntarily separated and Gulf
War vets. Employees retiring after October 1. 1995, will again be eligible for
such lump-sum payments if no action is taken.
BC RECORD:
"I support a stable and secure retirement system for public employees and
would support federal legislation to protect retirement income, achieve
portability of pension rights and benefits, and require federal reporting,
disclosure, and fiduciary standards for public employee pension plans."
[Governor Clinton's Written Responses to the FOP Questionnaire September 10,
1992 p.10]
IMPACT:
This option generates significant near-term savings, but no long-term savings
as full benefits will eventually have to be paid out.
CONGRESS:
Hoyer, Moran
INTERGOV:
POL./LIAISON:
Would be opposed by federal employee unions. Check in with AFGE on
inoculation.
MESSAGE:
This would be an extension of current policy.
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#27):
Retain Social Security threshold and tax 85% of benefits
SUMMARY:
SAVINGS: $21.4 BILLION (FY 1994-1997)
Currently, 50% of Social Security (and RRB Tier I) benefits beyond a
threshold of $25,000 for individuals and $32,000 for couples are subject to
income tax. Retaining the current threshold and increasing the percentage of
benefits taxed as income to 85% would move Social Security toward the
taxation policy for pension benefits.
BC RECORD:
"So my view is the middle class -- they've been suffering, Jim. Now, should
people pay more for Medicare if they can? Yes. Should they pay more for
social security if they get more out of it than they've paid in and they're upper
income people? Yes. (emphasis added)" [Third Presidential Debate, East
Lansing, Michigan, 10/19/92]
"Preserve and protect the Social Security system. Bill Clinton believes Social
Security is a commitment that must be kept--a covenant between generations
that must be honored for today's beneficiaries and for the working people who
are paying into the system." [Bill Clinton on Issues of Concern to Older
Americans position paper]
Currently, 80% of Social Security recipients are not taxed. For those upper-
income recipients who are taxed, a greater portion of their benefits will be
subject to taxation, and some additional beneficiaries will then be subject to
taxation.
CONGRESS:
Florida, Pennsylvania delegations.
INTERGOV:
POL./LIAISON:
AARP and other seniors' groups. Get Nat'l Council of Sr. Citizens & others to
speak out in favor if we don't touch COLAs.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28):
Veterans Benefits and Services (Mandatory): Housing and Loan Fees
SUMMARY:
SAVINGS: $574 MILLION (FY 1994-1997)
Currently, veterans pay a maximum fee of 1.25% of the mortgage on a no-
downpayment loan; the fee decreases as the downpayment increases. This
proposal would raise the maximum fee to 2% of the mortgage cost (but not for
interest rate reduction financing loans).
BC RECORD:
"Bush proposed cutting $660 million for FY 1993, and a total of $1.2 billion
over 5 years, by requiring veterans who are second and subsequent users of the
loan guarantee benefit to pay a 2.5% fee and a 10% downpayment." [Fact
Sheet on Bush and Veterans' Issues, 9/1/92]
IMPACT:
Might discourage participation among low-income veterans.
CONGRESS:
Similar fee proposal was rejected in the last session of Congress. Sonny
Montgomery.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28b):
Veterans Benefits and Services (Mandatory): Pensions-Medicaid Nursing
Homes
SUMMARY:
SAVINGS: $* (FY 1994-1997)
This proposal would make permanent the provision in the 1990 Budget Accord
that sets a $90 monthly limit on pension benefits paid to any veteran, without a
spouse or child, that receive Medicaid coverage in a Medicaid-approved
nursing home. In addition, the proposal includes Congress' extension last year
of the $90 Pension-Medicaid limit to include surviving spouses without
children.
NB: *Because the $90 Pension-Medicaid limit does not expire until 1997, no
savings would be realized until FY 1998 ($300 million for both options).
BC RECORD:
IMPACT:
Previously, VA pensions in excess of $60 were applied to the cost of a veteran's
Medicaid nursing home care. Thus, states would experience an increase in their
Medicaid costs.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28c):
Veterans Benefits and Services (Mandatory): Pension Through Internal Revenue
Service
SUMMARY:
SAVINGS: $* MILLION (FY 1994-1997)
This proposal would make permanent the provision in the 1990 Budget Accord
that grants the IRS access to tax data to verify income reported by VA pension
recipients. (the VA's pension program is means tested.)
NB *Because this authority does not expire until 1997, no savings would be
realized until FY 1998 ($155 million).
BC RECORD:
IMPACT:
VA pension recipients may be less likely to file a tax form or report all income
if they know that the IRS will be used to verify their eligibility.
CONGRESS:
Montgomery.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28d):
Veterans Benefits and Services (Mandatory): Readjustment Benefits
SUMMARY:
SAVINGS: $436 MILLION (FY 1994-1997)
OPTION #1: To account for Congress' increasing the monthly G.I. Bill benefits
without increasing servicemembers' contribution to the program, this proposal
would increase the contribution of prospective servicemembers.
OPTION #2: Currently, all veterans with a service-connected disability rated
greater than 10% are entitled to Vocational Rehabilitation services. This option
would eliminate these benefits for veterans with a service-connected disability
rating of 20% who do not have a "serious employment handicap".
BC RECORD:
"The Bush Administration has consistently opposed increased education
assistance benefits under the Montgomery G.I. Bill since the program's
enactment in 1984. Benefits have risen less than inflation -- from about $300
monthly to $350 monthly." [Fact Sheet on Bush and Veterans' Issues, 9/1/92]
"In the FY 1993 budget proposal, Bush proposes cutting as many as 5,000
veteran from the vocational rehabilitation program by 1997. '[Fact Sheet on
Bush and Veterans' Issues, 9/1/92]
IMPACT:
1 - New recruits would pay more, in absolute terms, than their predecessors.
2 - Would prevent some combat-disabled veterans from obtaining vocational
rehabilitation services.
CONGRESS:
Both proposals have been rejected by Congress in FY92 and FY93 Budgets.
The Senate, however, did support/consider eliminating veterans with a 20%
service-connected disability during the 1990 budget negotiations.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28e):
Veterans Benefits and Services (Mandatory): Medical Care Costs Recovery
SUMMARY:
SAVINGS: $1.170 BILLION (FY 1994-1997)
This proposal would make permanent the VA's authority to collect the cost of
medical care provided by private health insurers to veterans with service-
connected disabilities -- but for treatment of non-service-connected
conditions. This authority expires in July, 1994, and would cover non-service-
connected insurers as well.
BC RECORD:
IMPACT:
CONGRESS:
Congress has twice supported this option and used it to pay for expanded VA
entitlement benefits or to fund increases in the veterans Medical Care program.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28f):
Veterans Benefits and Services (Mandatory): Prescription Charge/Co-payment
SUMMARY:
SAVINGS: $* MILLION (FY 1994-1997)
This proposal would make permanent the VA's authority to collect from most
veterans a $2 co-payment for each 30-day supply of outpatient prescription
drugs that is not related to treatment of a service-connected disability.
NB: *Because this authority does not expire until 1997, no savings would be
realized until FY 1998 ($42 million, or more if the payment was indexed).
BC RECORD:
"[George Bush] also seeks to impose co-payments by service-disabled veterans
with disabilities rated below 50%. This would affect 50,000 in-patient
admissions and 275,000 outpatients visits, costing veterans $35 million in FY
1993 and $140 million over five years. "[Fact Sheet on Bush and Veterans'
Issues, 9/1/92]
IMPACT:
CONGRESS:
Congress has authorized the $2 co-payment three times.
INTERGOV:
POL./LIAISON:
Veterans Service Organizations have opposed service-connected veterans
paying for any prescription drugs -- even for non-service-connected
conditions.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DEART
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28g):
Veterans Benefits and Services (Mandatory): VA Housing Down Payment
SUMMARY:
SAVINGS: $68 MILLION (FY 1994-1997)
This proposal would require a 2.5% fee and a 10% downpayment for multiple-
use of the loan guaranty benefit. Currently, multiple-users are charged the
same fee as first-time users and are not required to make a downpayment.
(Active-duty military would be exempt.)
BC RECORD:
"Bush proposed cutting $660 million for FY 93, and a total of $1.2 billion over
five years, by requiring veterans who are second and subsequent users of the
loan guarantee benefit to pay a 2.5% fee and a 10% downpayment. "[Fact Sheet
on Bush and Veterans' Issues, 9/1/92]
IMPACT:
Could deter some veterans from using the program.
CONGRESS:
This proposal was rejected by Congress in the FY92 and FY93 Budgets.
Montgomery.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28h):
Veterans Benefits and Services (Mandatory): Resale Loan Losses
SUMMARY:
SAVINGS: $80 MILLION (FY 1994-1997)
This proposal would make permanent the inclusion of expected losses on the
resale of a foreclosed property in the VA formula used to determine whether or
not it should: (1) acquire and resell a foreclosed property; or (2) pay the
guarantee to the lender.
BC RECORD:
IMPACT:
CONGRESS:
Congress first enacted this provision in the FY 1993 appropriations for loans
closed before 10/1/93. Montgomery.
INTERGOV:
POL./LIAISON:
The Mortgage Bankers have claimed that they would leave the program if they
end up with more foreclosed properties.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#28i):
Veterans Benefits and Services (Mandatory): Insurance Administration from
Reserve
SUMMARY:
SAVINGS: $113 MILLION (FY 1994-1997)
BC RECORD:
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
TONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#29):
Auction Federal Communications Commission spectrum
SUMMARY:
SAVINGS: $4.072 BILLION (FY 1994-1997)
The FCC currently awards licenses to use the radio spectrum through
comparative hearings and lotteries. Both of these methods are economically
inefficient. There are substantial delays putting the licenses into use, and
winners of the FCC lotteries often turnaround and sell/auction their licenses for
millions of dollars. Moreover, such auctions have generated substantial
revenues for the sale of licenses for offshore drilling, grazing on federal land,
and harvesting timber from National Forests.
BC RECORD:
IMPACT:
Implementing this recommendation would require the support of the FCC and
the Department of Commerce. Uncertain savings. CBO might have more
information.
CONGRESS:
Dingell, Inouye, Markey
INTERGOV:
POL./LIAISON:
Broadcasters, others?
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
D.AL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#30):
Restrict Business Deduction for Business Meals and Entertainment (to 50%)
SUMMARY:
SAVINGS: $11.9 BILLION (FY 1994-1997)
The tax code does not allow deductions for personal living costs, but it allows
full deductions for ordinary and necessary business expenses. Expenses for
meals, entertainment, and travel are deductible only if they are clearly related to
business and are not deemed "lavish and extravagant". Congress reduced this
deduction to 80% from 100% of the expenses that meet these conditions out of
concern that some taxpayers were deducting personal living expenses as
business expenses.
BC RECORD:
IMPACT:
Separating the component of expenses that represent ordinary and necessary
business expenses from the part that represents personal business consumption
is inevitably arbitrary. This change would negatively affect the entertainment
and restaurant industries.
CONGRESS:
Rostenkowski
INTERGOV:
POL./LIAISON:
Restaurant and entertainment industries would vehemently oppose such a
change. See if we can get unions on our side because of other positive things
we're doing.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#31):
Increase Alternative Minimum Tax to 28%
SUMMARY:
SAVINGS: $8.8 BILLION (FY 1994-1997)
The AMT limits the use of tax preferences by taxpayers to reduce their tax
liability. Increasing the AMT would raise revenues from those taxpayers that
use tax preferences most. This proposal would raise the AMT for individuals
from 24 to 28 percent of alternative taxable income in excess of the exemption
amount of $40,000 for joint filers, $30,000 for singles; the exemption amount is
phased out for upper income taxpayers. The AMT was raised from 21 to 24
percent in the '90 Budget agreement.
BC RECORD:
"Increase rates on top 2%, raise Alternative Minimum Tax, surtax on
millionaires: $81.9 billion (FY 1993-1997)." [Putting People First, p. 31]
"Increase the Alternative Minimum Tax on personal income from 21 to 26-27
percent." ["Bush Tries to Salvage Economic Train Wreck by Lying about
Clinton Plan," press release, 9/26/92]
IMPACT:
Would substantially increase the number of AMT filers, as taxpayers must pay
the larger of either the AMT or the regular tax. NOTE: the Joint Tax
Committee estimates $27 billion in additional revenues (FY93-97). Some
argue, however, that revenues may be uncertain because taxpayers can avoid the
AMT through careful planning.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
Toward a more progressive tax code.
ACTION:
February 5, 1993
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#32):
Repeal health insurance (Medicare) taxable wage maximum
SUMMARY:
SAVINGS: $20.7 BILLION (FY 1994-1997)
Under current law, wages above the taxable maximum ($130,000 in 1992) are
exempt from all payroll taxes, including the Medicare Insurance Tax. This
option would repeal the taxable maximum for Medicare. Opponents argue that
higher wage earners are already subsidizing Medicare treatments of other
workers. If not used entirely for deficit reduction, this option could help
replenish the Medicare Trust Fund, which will be exhausted by 2005.
BC RECORD:
IMPACT:
Would affect only 2 percent of workers.
CONGRESS:
Rostenkowski
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
Bentsen, Marina Weiss
February 5, 1993
CORFIDENTIAL
DR/18
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#33):
Increase top corporation income tax rate to 36%
SUMMARY:
SAVINGS: $20.4 BILLION (FY 1994-1997)
Current top corporate rate is 34 percent, with lower marginal rates applying to
the first $75,000 of taxable income. Corporations with taxable income between
$100,000 and $335,000 pay an additional 5 percent surtax in order to phase out
the benefits of the lower marginal rates.
BC RECORD:
Never mentioned raising corporate rates during campaign.
IMPACT:
Would affect only 10 percent of corporate taxpayers (currently paying the top
rate), but these firms generate 90 percent of all corporate taxable income.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#34):
Broad based energy tax (5 percent of value). Also see gas tax
SUMMARY:
SAVINGS: $59.5 BILLION (FY 1994-1997)
Probably would take the form of a 5% tax on the value of energy consumption,
including coal, natural gas, oil, hydroelectricity and nuclear power. Could be
levied as a fraction of the value of fuel, on the heat contnent of the fuel or
could be based on units (of oil, coal, etc) produced.
BC RECORD:
Denied GOP accusations of a gas/carbon tax proposal during the campaign, but
Bensten has proposed it informally since inauguration.
!!!!also see drexel speech and check w/sylvia on refinement!!
IMPACT:
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
Raise big revenues while promoting energy conservation.
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#35):
Extend 2.5 cent per gallon gas tax
SUMMARY:
SAVINGS: $5 BILLION (FY 1994-1997)
Federal taxes are currently 14.1 cents per gallon for gas and 20.1 cents per
gallon of diesel fuel, of which 2.5 cents per gallon goes into the general fund
until October 1, 1995, when rates are scheduled to drop by 2.5 cents per gallon.
Would have to be specifically earmarked for deficit reduction, and not for use
to finance the Highway Trust Fund. Even with the increase, U.S. gas tax rates
would be among the lowest in the world, and about the same as they were in
1981.
BC RECORD:
"Clinton again criticized Tsongas' plan to raise the gas tax five cents a year for
10 years, saying it would hurt the middle class. In the shadow of Disney
World, he talked about people who had driven to the entertainment center from
around the country because they could not afford airline tickets, and how much
those people would be hurt by a gas price increase." [Boston Globe, 3/10/92]
"If you think poor and middle class families can afford to pay hundreds of
dollars more in gas taxes in return for an energy policy that relies more on
nuclear power, vote for Paul Tsongas." [Prepared Remarks, 3/4/92]
"The only people you ask to sacrifice are the same people who sacrificed during
the 1980s. Sen. Tsongas wants to continue to pound low- and middle-income
people into the dirt." [From Chicago debate, Boston Globe, 3/14/92]
"In his 1990 Budget Agreement, Bush passed $25 billion in increased gas taxes,
$8.8 billion in alcohol tax increases, and an increase of $5.9 billion in tobacco
taxes as well as higher airline ticket taxes and telephone excise taxes."
[Excerpted from "Bush: A Tax and Spend President"]
IMPACT:
Reduce consumption, but hurts trucking industry and some regions, particularly
in the West, where people often have to drive long distances.
CONGRESS:
INTERGOV:
POL./LIAISON:
Overall on energy tax - is there some kind of rebate or tax credit for rural
communities, etc.. who don't have more money to spend on rapid transit
options.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#36):
Increase "sin" taxes on alcohol and tobacco.
SUMMARY:
SAVINGS: $18 BILLION (FY 1994-1997)
Options include: increase the cigarette tax to 48 cents per pack (double current
tax); increase alcohol tax to $16 per proof gallon, and index these taxes for
inflation. Current beer/wine taxes are much lower than those on distilled
spirits. The '90 Budget agreement last raised excise taxes on alcohol and
cigarettes.
BC RECORD:
"In his 1990 Budget Agreement, Bush passed $25 billion in increased gas taxes,
$8.8 billion in alcohol tax increases, and an increase of $5.9 billion in tobacco
taxes as well as higher airline ticket taxes and telephone excise taxes."
[Excerpted from "Bush: A Tax and Spend President"]
"In Arkansas we have raised the tax on tobacco products on more than one
occasion, but an increase on alcohol and tobacco related products is not
included in my national economic strategy... I want a more progressive tax code
that will ask the top two percent of income earners to pay their fare (sic) share
and give low and middle income families a tax break." [Governor Clinton's
Responses to The Center on Addiction and Substance at Columbia University]
IMPACT:
Perceived as regressive and unfair to moderate consumers by some groups. Cut
down on "external costs" (mostly associated with health) of alcohol and tobacco
consumption.
CONGRESS:
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAN
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#37):
Phase-out possessions tax credit (sec. 936) over 5 years
SUMMARY:
SAVINGS: $5.8 BILLION (FY 1994-1997)
Income earned by U.S. corporations operating in Puerto Rico or any U.S.
possession is generally treated as foreign-source income, and the U.S. federal
tax on such income is offset by the foreign tax credit (FTC) for any tax paid to
the possession. But a U.S. corporation that receives at least 80% of its gross
income for the last three years from Puerto Rico or another U.S. possession,
and that derived at least 75% of its income from the active conduct of a trade
or business, may elect to be a possessions corporation. With such status --
because the possessions tax credit is equal to the U.S. tax on qualified income -
- the section 936 tax credit effective exempts such income from federal tax.
BC RECORD:
IMPACT:
Section 936 was first adopted to promote employment in U.S. possessions. And
in 1987, 82% of manufacturing jobs in Puerto Rico were in possessions
corporations. Critics, however, have argued that section 936 is too lucrative
and cite the example of pharmaceutical manufacturers who, in 1987, received
54% of the tax benefits but accounted for only 18% of the employment in
possessions corporations.
CONGRESS:
New Jersey and New York delegations, particularly Rangel, but Moynihan,
Lautenberg, Bradley, and others as well.
INTERGOV:
Cuomo and Florio (NY & NJ) might be combative.
POL./LIAISON:
Pharmaceutical industry will oppose.
MESSAGE:
ACTION:
February 5, 1993
CONFIDENTIAL
DRAFT
ECONOMIC PACKAGE COMPONENT STRATEGY
ITEM (#38):
Modify Limits on Pension Contributions
SUMMARY:
SAVINGS: $4.5 BILLION (FY 1994-1997)
Current law limits the contributions that an employer can make to an employees
defined contribution or defined benefit plan. Payments made to defined
contribution plans are limited to 25% of compensation or $30,000 per employee
(whichever is less), and payments made to defined benefit plans are limited so
that annual pension benefits that begin at age 65 are no more than 100% of
preretirement wages or $112,221. For employees that are eligible for payments
from both types of plans, a combined limit of 140% of wages or $140,276
applies.
These funding limits remain far higher than the preretirement earnings of most
workers. In fact, fewer than 1% of employees earned more than $140,276 in
1991. Decreasing limits on the employers contributions -- to a level that is
more in line with what most employees earn -- could raise an additional $6
billion.
BC RECORD:
"I do not foresee the need to reduce the maximum annual benefit for defined
benefit plans, and I especially do not see the need to reduce the maximum
annual contribution for defined contribution plans." [Questionnaire Response to
The Pension Form Magazine]
IMPACT:
Reducing employer contribution limits may ultimately reduce total savings.
Moreover, it would make participation to high-income business owners and
managers less attractive, and thus might discourage them from sponsoring these
plans for both themselves and their employees.
CONGRESS:
Rostenkowski, Moynihan.
INTERGOV:
POL./LIAISON:
MESSAGE:
ACTION:
February 5, 1993