November 14, 2001
Administration opposes passage of H.R. 3090 as reported by the Senate
Finance Committee. The Administration believes that it is crucial
for Congress to quickly pass a stimulus bill that will help get the
economy going again following the terrorist attacks of September 11th.
This bill in its present form will not accomplish this goal.
Instead of providing broad-based tax relief to restore economic growth, this bill is an assembly of provisions that do not provide immediate economic stimulus and are not appropriate to this bill. For instance, $5 billion is set aside for agricultural programs, including payments for bison meat, and more than $4 billion is directed to tax credit bonds for Amtrak.
Furthermore, some of the proposals in H.R. 3090 as reported by the Senate Finance Committee would require at least six months to one year to take effect due to their unprecedented nature, the need for new Federal regulations, and the requirement for new health insurance authorizations from State legislatures. Proposals that effectively start next summer and purportedly end next winter will neither provide immediate assistance for displaced workers nor rapid stimulus for the economy. Indeed, economic growth could suffer substantially as a result of these provisions. In contrast to the President's proposal to give prompt aid to displaced workers and provide broad-based tax relief that will speed their reemployment, this bill's unprecedented expansion of unemployment insurance and the new health care entitlements would likely increase unemployment by hundreds of thousands of workers next year.
These provisions have one feature in common however: each is likely to permanently expand the size and scope of the Federal government and its control over programs, such as unemployment insurance, that have always been under State purview.
The Administration also notes that the proposed expansion of the work opportunity tax credit is duplicative since the Administration has decided it will direct $700 million in Community Development Block Grant (CDBG) funds to New York to aid businesses affected by the terrorist attacks. The Administration's decision was the result of consultations with both New York State and city officials.
The Administration is opposed to efforts to attach additional discretionary spending to the bill. The Administration and Congress agreed to limit discretionary spending to $686 billion and to provide $40 billion for the emergency response to the terrorist attacks. These funds are more than adequate to meet foreseeable needs. This agreement should be upheld.
The Administration urges the Senate to work together across party lines to pass a responsible economic stimulus package that will provide an immediate boost to the economy. The President believes that the best way to retain and create jobs is through tax relief that improves incentives to work and invest while restoring consumer and business confidence. The President has set out the following four principles for achieving these goals:
The President has also called for swift action to help dislocated workers, through extensions of unemployment benefits and health care assistance programs that can be implemented without delay.
Unlike the version of H.R. 3090 reported by the Senate Finance Committee, the President's framework would boost the economy, help displaced workers get back to work quickly, and create several hundred thousand more jobs. Accordingly, the Administration urges the Senate to reject the Finance Committee approach and instead to work in a bipartisan manner to craft an economic stimulus package that reflects the President's principles and encompasses provisions that will provide an immediate and effective stimulus to the Nation's economy.
Any law that would reduce receipts or increase direct spending is subject to the pay-as-you-go requirements of the Balanced Budget and Emergency Deficit Control Act. Accordingly, H.R. 3090, or any substitute amendment in lieu thereof that would reduce revenues or increase direct spending, will be subject to the pay-as-you-go requirement. OMB's scoring estimates are under development. The Administration will work with Congress to ensure that any unintended sequester of spending does not occur under current law or the enactment of any other proposals that meet the President's objectives.