TAX CUTS: House Passes $792B Measure w/ Health Provisions

      Brushing aside a threatened veto from President Clinton and staving off defections by party moderates, House Republicans yesterday approved a sweeping measure that would cut taxes by $792 billion over 10 years and provide deductions for health insurance for the self-employed and long-term care insurance. The bill also expands Medical Savings Accounts and increases the exemption for family caregivers (Godfrey, Washington Times, 7/23). The 223-208 vote saw four Republicans break ranks, but six Democrats joined the majority (McGregor, Financial Times, 7/23). "These provisions, if signed into law, would enable more Americans to navigate their own long-term care by making insurance more affordable," said Assisted Living Federation of America President Karen Wayne (release, 7/22). Health Insurance Association of America President Chip Kahn added, "HIAA is particularly pleased with the package because tax relief for insurance premiums is a key component of HIAA's InsureUSA plan to provide coverage to the nation's uninsured" (release, 7/22). Speaking in favor of the bill, House Budget Committee Chair John Kasich (R-OH) said, "The more money we have in our pockets, the more power we have." Ways and Means Committee Chair Bill Archer (R-TX), who sponsored the measure, added, "If this money is left in Washington, the politicians will spend every dime of it on more government programs. Let's start today and give it back." But Democrats characterized the bill as a dangerous political gambit. Rep. Charles Rangel (D-NY) said, "It's a Christmas tree. It's decorated with every cut that you can get for your Republican supporters. Your bill is what we call in Harlem a trip to nowhere" (Anderson, AP/Detroit News, 7/23). Earlier in the day, the House rejected 258-173 a 10-year, $250 billion Democratic alternative that would have restricted the tax breaks to deductions for health care and education, among other things (Hitt, Wall Street Journal, 7/23).

Stepping-Off Point?
      Speaking in Lansing, MI, yesterday, President Clinton blasted the bill as taking benefits away from elderly Americans. He said, "If we don't strengthen Medicare and add the prescription drug benefit, it's not because we can't. If we don't meet these clear national needs, it's because we choose not to do so. It will be because, instead, we choose to reward ourselves today by risking our prosperity tomorrow" (Love, AP/San Francisco Chronicle, 7/22). He said if the tax cut bill reaches his desk, "I will send it straight back with a veto." Meanwhile, Federal Reserve Chair Alan Greenspan testified before the House Banking Committee yesterday that "reducing the national debt would do more to boost the economy than a tax cut" (Orr, Newark Star-Ledger, 7/23).

Playbook
      Knowing that the plan faces a veto, some suggested yesterday that House GOP leaders artificially inflated the size of the tax cut for greater bargaining leverage with the president. House Speaker Dennis Hastert (R-IL) said, "We understand that anything that goes to the president's (desk) ... will have to be signed by the president. But, you know, the president started out with no tax relief. He's moved up our way. ... I think we'll move through this process" (Washington Times, 7/23). Rep. Sherwood Boehlert (R-NY) added, "At the end, I envision a $350 billion to $400 billion tax cut over 10 years" (Ullmann, USA Today, 7/23).