please find attached l-pager on key points to be made when discussing the
President's budget as well as questions and answers.
Unable to convert ARMS_EXT: [ATTACH.D621MAIL45103775L.016 to ASCII,
The following is a HEX DUMP:
Hex-DumP Conversion
A Balanced Budget Plan that's Tough but Fair
Key Points to Make About the President's Budget
Tough Choices are Made Now. The President's budget makes the hard choices today
to balance the budget by 2002. It locks in savings of $3 50 billion over five years --
including $137 billion in discretionary spending, $100 billion in Medicare, and $34
billion in corporate tax subsidies. The credibility of the budget is underscored by the fact
that it is the first Presidential budget declared "alive on arrival" since 1981.
Cuts are Sustainable and Workable. The President's budget cuts non-defense
discretionary spending by 9 percent in real terms over five years, while protecting
investments in the President's priorities. The spending path is reduced slowly and
steadily.
Built on Solid, Conservative Economic Forecasts. The President's budget is based
on prudent and conservative assumptions about future economic performance. For four
years in a row, growth has been higher and the deficit has been lower than the
Administration had predicted. The actual deficit has been $50 billion lower we had
forecast a year earlier -- a healthy break from the rosy scenarios of the previous two
Administrations, in which the deficit was larger than forecast in 10 out of 12 years. In
1996, the President's budget office's estimate of growth and the deficit were too cautious
-- and more accurate than the Congressional Budget Office's forecasts.
Major Investment in Education. The President's plan makes a dramatic investment to
open the doors of college to more Americans. It includes the largest increase in the
maximum Pell Grant in two decades, provides a yearly $1,500 HOPE scholarship tax
credit, and creates a $1 O,OOO-a-year tuition tax deduction for college costs to make
education more affordable. It also expands lRAs, which in conjunction with the tuition
tax deduction, allows families to save and pay for college tax-free.
Expanding Health Care and Investments in Children. The President's plan makes
critical savings in health care, while expanding coverage for as many as 5 million
children. It also expands Head Start to meet our target of 1 million children by 2002;
and increases funding in children's nutrition and prenatal programs (WIC) to $4.1 billion.
Hard-Nosed Measures to Trim Corporate Subsidies. The President's plan achieves
more than $34 billion dollars by cutting corporate subsidies. Those savings -- achieved
by closing unwarranted and unnecessary tax loopholes, and by stiffening compliance
measures -- are three times as much as the proposed savings in GOP Budget Chairman
John Kasich's plan.
Hex-Dump Conversion
QUESTIONS & ANSWERS
Q: DOESN'T YOUR BUDGET AVOID ALL THE PAINFUL DECISIONS NEEDED
TO ELIMINATE THE DEFICIT?
A: Not at all. We are locking in savings of $350 billion over the next 5 years --
including $137 billion in discretionary spending, $100 billion in Medicare
savings ($138 billion over 6 years), and $34 billion in reducing unneeded
corporate tax subsidies -- and cutting the deficit by $252 billion. Our budget
will eliminate the deficit by the year 2002, the first time we will have
balanced the budget since 1969.
We have carefully examined the budget for areas in which we can achieve
savings. Our Medicare and Medicaid proposals achieve $110 billion in
savings over the next five years, and extend the life of the Medicare Trust
Fund to 2007, while maintaining the integrity of both programs. Our
non-defense discretionary outlays follow a smooth, steady decline -- falling by
9 percent in real terms between FY 1997 and 2002.
The Budget includes specific, credible cuts in many areas. In addition to the
savings from Medicare, Medicaid, and unwarranted corporate subsidies, the
budget reduces non-defense discretionary spending by 9 percent in real
terms over 5 years. As just a few examples, we are reducing funding for
Federal building construction; for the Corps of Engineers (as part of our
effort to target new construction to projects that are national priorities); for
P.L. 480 farm subsidies (farm incomes are at record levels); and for Clean
Coal Technology projects that are no longer economically viable. We're also
cutting USDA buildings and facilities, international conferences and
contingencies, the Overseas Private Investment Corporation, and GSA Operations.
Q: DOESN'T YOUR BUDGET ACHIEVE 75 PERCENT OF ITS SAVINGS IN THE
FINAL TWO YEARS?
A: Our budget is not backloaded. Just take a look ~t our record. We've
already cut the deficit from $290 billion in 1992 to $107 billion last year.
When the President took office, the deficit had to be cut by a cumulative
$2.75 trillion between 1993 and 2002 in order to reach balance by 2002. We
have already locked in $2.5 trillion of those savings, and this budget would
lock in the extra $250 billion needed. Thefact is that we've done most of the
work in our first 4 years.
We are making the hard decisions now. We are locking in savings of $350
billion over the next 5 years -- including $137 billion in discretionary
spending and $100 billion in Medicare savings ($138 billion over 6 years) --
and cutting the deficit by $252 billion. Hex-Dump Conversion
As with any credible budget plan, the savings from making those hard
decisions now grow over time. Our savings are not backloaded: 67 percent
of the $350 billion in savings occur in the last two years. That's within the
range that Robert Reischauer, the former director of the CBO, has proposed
as showing that the budget cuts are smooth and not backloaded. And over 6
years, only 61.7 percent of our savings occur in the final two years.
Q: DOESN'T YOUR BUDGET FAIL TO BALANCE UNDER CBO ASSUMPTIONS?
A: We have submitted a plan that balances the budget in 2002 under our
assumptions. Our assumptions have proven to be conservative over the past
four years: every year, the deficit has been lower and growth has been higher
than we had predicted. Our current assumptions are equally prudent and
conservative.
Since we took office, the actual deficit has on average been about $50 billion
lower than we had projected the year before. CBO has been less accurate:
they have overestimated the deficit by $59 billion on average.
It is important that the numbers we use as part of a balanced budget
agreement be credible and conservative -- and that they are supported by
both the markets and the public. Our projections for GDP growth and
inflation over the next five years match those of the Blue Chip private sector
consensus.
If, despite our expectations, our assumptions do not prove correct, we will
pursue an expedited process with Congress to agree on how to close any
budget gap. And in order to ensure that we eliminate the deficit in 2002, we
have identified precisely what steps would be taken by statute if our
assumptions prove inaccurate and the expedited process with Congress
doesn't work. Specifically, most of our tax cut proposals would sunset in
2001, and a 2.25 percent across-the-board reduction in spending (except
Social Security) would be triggered. The discretionary spending reductions
would start in 2001 and the reductions in mandatory programs would begin
in 2002.
Q: YOU HAVE INCLUDED A HOME HEALTH CARE TRANSFER GIMMICK IN THE
BUDGET. HOW CAN YOU POSSIBLY DEFEND IT?
A: Let's be clear: our savings of $138 billion in Medicare over 6 years ($100 billion
over 5 years) does not include the home health care transfer from Part A to Part B
of the program. The $138 billion is the net reduction of Medicare spending
relative to the budget baseline -- and thus is the amount by which our
HexADump Conversion
Medicare changes contribute to deficit reduction. The transfer does not
contribute to the $252 net deficit reduction in our package.
The policy you mentioned was in our budget last year and it was in the House
Republican budget in 1995 which every Republican in the House voted for. It is
also included in this year's Blue Dog Coalition budget,
Shifting long-term home health visits (other than the first 100 visits following
a hospitalization) away from Part A of the Medicare program makes sense
because home health care has increasingly become a chronic care benefit not
linked to hospitalization. It was also the established policy prior to the 1980s.
And it protects the Medicare Trust Fund until 2007, while not imposing
harmful cuts on hospitals or other priorities, or excessive burdens on
beneficiaries.
[Background: Originally designed as a post-acute care benefitfor beneficiaries who
had been hospitalized, home health care has increasingly become a chronic care
benefit, not linked to hospitalization. Our proposal restores the original split of home
health care benefits so that the first 100 home health visits following a 3-day
hospitalization would be reimbursed by Part A and all other visits - including those
not following hospitalization - would be reimbursed by Part B.}
Q: FOLLOW: IF THE HOME HEALTH TRANSFER IS NOT A GIMMICK, THEN
WHY DON'T YOU INCLUDE IT AS PART OF THE PART B PREMIUM?
A: We have always been concerned about out-of-pocket costs for Medicare
beneficiaries. Older Americans spend, on average, 20 percent of their
income on health care and three-fourths have incomes lower than $25,000.
We have to be careful that as we reform the Medicare program, we do not
place undue burden on lower-income seniors.
Q. DOESN'T YOUR BUDGET CREATE $60 BILLION IN NEW ENTITLEMENTS?
A. No. My budget actually saves $121 billion in entitlement spending over the next
5 years.
We are proposing some new additions to our health care programs, but they are
aimed at reducing the number of uninsured Americans and are not open-ended
entitlements. For example:
-- Our program to provide health insurance for unemployed workers is capped.
The program is structured as a grants program to States. While there are
Automated Records Management System
Hex-Dump Conversion
provisions to help States that have unanticipated increases in unemployment, there
is an overall Federal cap on spending that cannot be breached. Moreover, the
program is sunset after 4 years.
-- There are no new entitlements in children's health as well. The children's
health initiative also contains no new individual entitlement. It provides States
with grants that, by law, will not exceed $750 million in each year. Medicaid
spending itself, under my plan, will be capped for the first time in its history.
The Federal funding limits are set based on the number of people covered so that
States - not the Federal government - make the decisions about coverage.
We are also proposing some changt?s to the welfare reform legislation that was
enacted last year, but our purpose is to fix unnecessary and damaging provisions
in that legislation -- involving legal immigrants and Food Stamp recipients. We
do not view these changes as new spending or new entitlements.
It is ironic that we are sometimes criticized for phasing out new proposals -- such
as school construction -- and simultaneously for creating permanent new
mandatory spending programs. Our phase-outs are designed to allow an
evaluation of how well the new programs are working -- and we have been careful
to avoid creating permanent new entitlements without knowing the effects.
Q: WHY DO YOU ELIMINATE MANY OF YOUR NEW PROGRAMS BEFORE
2002?
A. Many of our proposals -- such as school construction, welfare to work, skill
grants, and health insurance for the unemployed -- are new programs. They are
untried. We want to see how they work before the government funds these
initiatives permanently.
For example, our school construction initiative -- providing $5 billion over 4 years
-- is explicitly designed to jump-start $20 billion in local projects. The Federal
government has traditionally not been involved in school construction and
renovation; our proposal is therefore not supposed to be a permanent Federal
program.
==================== ATTACHMENT 1 ====================
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT: [ATTACH.D621MAIL45103775L.016 to ASCII,
The following is a HEX DUMP:
Hex-DumP Conversion
A Balanced Budget Plan that's Tough but Fair
Key Points to Make About the President's Budget
Tough Choices are Made Now. The President's budget makes the hard choices today
to balance the budget by 2002. It locks in savings of $3 50 billion over five years --
including $137 billion in discretionary spending, $100 billion in Medicare, and $34
billion in corporate tax subsidies. The credibility of the budget is underscored by the fact
that it is the first Presidential budget declared "alive on arrival" since 1981.
Cuts are Sustainable and Workable. The President's budget cuts non-defense
discretionary spending by 9 percent in real terms over five years, while protecting
investments in the President's priorities. The spending path is reduced slowly and
steadily.
Built on Solid, Conservative Economic Forecasts. The President's budget is based
on prudent and conservative assumptions about future economic performance. For four
years in a row, growth has been higher and the deficit has been lower than the
Administration had predicted. The actual deficit has been $50 billion lower we had
forecast a year earlier -- a healthy break from the rosy scenarios of the previous two
Administrations, in which the deficit was larger than forecast in 10 out of 12 years. In
1996, the President's budget office's estimate of growth and the deficit were too cautious
-- and more accurate than the Congressional Budget Office's forecasts.
Major Investment in Education. The President's plan makes a dramatic investment to
open the doors of college to more Americans. It includes the largest increase in the
maximum Pell Grant in two decades, provides a yearly $1,500 HOPE scholarship tax
credit, and creates a $1 O,OOO-a-year tuition tax deduction for college costs to make
education more affordable. It also expands lRAs, which in conjunction with the tuition
tax deduction, allows families to save and pay for college tax-free.
Expanding Health Care and Investments in Children. The President's plan makes
critical savings in health care, while expanding coverage for as many as 5 million
children. It also expands Head Start to meet our target of 1 million children by 2002;
and increases funding in children's nutrition and prenatal programs (WIC) to $4.1 billion.
Hard-Nosed Measures to Trim Corporate Subsidies. The President's plan achieves
more than $34 billion dollars by cutting corporate subsidies. Those savings -- achieved
by closing unwarranted and unnecessary tax loopholes, and by stiffening compliance
measures -- are three times as much as the proposed savings in GOP Budget Chairman
John Kasich's plan.
Hex-Dump Conversion
QUESTIONS & ANSWERS
Q: DOESN'T YOUR BUDGET AVOID ALL THE PAINFUL DECISIONS NEEDED
TO ELIMINATE THE DEFICIT?
A: Not at all. We are locking in savings of $350 billion over the next 5 years --
including $137 billion in discretionary spending, $100 billion in Medicare
savings ($138 billion over 6 years), and $34 billion in reducing unneeded
corporate tax subsidies -- and cutting the deficit by $252 billion. Our budget
will eliminate the deficit by the year 2002, the first time we will have
balanced the budget since 1969.
We have carefully examined the budget for areas in which we can achieve
savings. Our Medicare and Medicaid proposals achieve $110 billion in
savings over the next five years, and extend the life of the Medicare Trust
Fund to 2007, while maintaining the integrity of both programs. Our
non-defense discretionary outlays follow a smooth, steady decline -- falling by
9 percent in real terms between FY 1997 and 2002.
The Budget includes specific, credible cuts in many areas. In addition to the
savings from Medicare, Medicaid, and unwarranted corporate subsidies, the
budget reduces non-defense discretionary spending by 9 percent in real
terms over 5 years. As just a few examples, we are reducing funding for
Federal building construction; for the Corps of Engineers (as part of our
effort to target new construction to projects that are national priorities); for
P.L. 480 farm subsidies (farm incomes are at record levels); and for Clean
Coal Technology projects that are no longer economically viable. We're also
cutting USDA buildings and facilities, international conferences and
contingencies, the Overseas Private Investment Corporation, and GSA Operations.
Q: DOESN'T YOUR BUDGET ACHIEVE 75 PERCENT OF ITS SAVINGS IN THE
FINAL TWO YEARS?
A: Our budget is not backloaded. Just take a look ~t our record. We've
already cut the deficit from $290 billion in 1992 to $107 billion last year.
When the President took office, the deficit had to be cut by a cumulative
$2.75 trillion between 1993 and 2002 in order to reach balance by 2002. We
have already locked in $2.5 trillion of those savings, and this budget would
lock in the extra $250 billion needed. Thefact is that we've done most of the
work in our first 4 years.
We are making the hard decisions now. We are locking in savings of $350
billion over the next 5 years -- including $137 billion in discretionary
spending and $100 billion in Medicare savings ($138 billion over 6 years) --
and cutting the deficit by $252 billion. Hex-Dump Conversion
As with any credible budget plan, the savings from making those hard
decisions now grow over time. Our savings are not backloaded: 67 percent
of the $350 billion in savings occur in the last two years. That's within the
range that Robert Reischauer, the former director of the CBO, has proposed
as showing that the budget cuts are smooth and not backloaded. And over 6
years, only 61.7 percent of our savings occur in the final two years.
Q: DOESN'T YOUR BUDGET FAIL TO BALANCE UNDER CBO ASSUMPTIONS?
A: We have submitted a plan that balances the budget in 2002 under our
assumptions. Our assumptions have proven to be conservative over the past
four years: every year, the deficit has been lower and growth has been higher
than we had predicted. Our current assumptions are equally prudent and
conservative.
Since we took office, the actual deficit has on average been about $50 billion
lower than we had projected the year before. CBO has been less accurate:
they have overestimated the deficit by $59 billion on average.
It is important that the numbers we use as part of a balanced budget
agreement be credible and conservative -- and that they are supported by
both the markets and the public. Our projections for GDP growth and
inflation over the next five years match those of the Blue Chip private sector
consensus.
If, despite our expectations, our assumptions do not prove correct, we will
pursue an expedited process with Congress to agree on how to close any
budget gap. And in order to ensure that we eliminate the deficit in 2002, we
have identified precisely what steps would be taken by statute if our
assumptions prove inaccurate and the expedited process with Congress
doesn't work. Specifically, most of our tax cut proposals would sunset in
2001, and a 2.25 percent across-the-board reduction in spending (except
Social Security) would be triggered. The discretionary spending reductions
would start in 2001 and the reductions in mandatory programs would begin
in 2002.
Q: YOU HAVE INCLUDED A HOME HEALTH CARE TRANSFER GIMMICK IN THE
BUDGET. HOW CAN YOU POSSIBLY DEFEND IT?
A: Let's be clear: our savings of $138 billion in Medicare over 6 years ($100 billion
over 5 years) does not include the home health care transfer from Part A to Part B
of the program. The $138 billion is the net reduction of Medicare spending
relative to the budget baseline -- and thus is the amount by which our
HexADump Conversion
Medicare changes contribute to deficit reduction. The transfer does not
contribute to the $252 net deficit reduction in our package.
The policy you mentioned was in our budget last year and it was in the House
Republican budget in 1995 which every Republican in the House voted for. It is
also included in this year's Blue Dog Coalition budget,
Shifting long-term home health visits (other than the first 100 visits following
a hospitalization) away from Part A of the Medicare program makes sense
because home health care has increasingly become a chronic care benefit not
linked to hospitalization. It was also the established policy prior to the 1980s.
And it protects the Medicare Trust Fund until 2007, while not imposing
harmful cuts on hospitals or other priorities, or excessive burdens on
beneficiaries.
[Background: Originally designed as a post-acute care benefitfor beneficiaries who
had been hospitalized, home health care has increasingly become a chronic care
benefit, not linked to hospitalization. Our proposal restores the original split of home
health care benefits so that the first 100 home health visits following a 3-day
hospitalization would be reimbursed by Part A and all other visits - including those
not following hospitalization - would be reimbursed by Part B.}
Q: FOLLOW: IF THE HOME HEALTH TRANSFER IS NOT A GIMMICK, THEN
WHY DON'T YOU INCLUDE IT AS PART OF THE PART B PREMIUM?
A: We have always been concerned about out-of-pocket costs for Medicare
beneficiaries. Older Americans spend, on average, 20 percent of their
income on health care and three-fourths have incomes lower than $25,000.
We have to be careful that as we reform the Medicare program, we do not
place undue burden on lower-income seniors.
Q. DOESN'T YOUR BUDGET CREATE $60 BILLION IN NEW ENTITLEMENTS?
A. No. My budget actually saves $121 billion in entitlement spending over the next
5 years.
We are proposing some new additions to our health care programs, but they are
aimed at reducing the number of uninsured Americans and are not open-ended
entitlements. For example:
-- Our program to provide health insurance for unemployed workers is capped.
The program is structured as a grants program to States. While there are
Automated Records Management System
Hex-Dump Conversion
provisions to help States that have unanticipated increases in unemployment, there
is an overall Federal cap on spending that cannot be breached. Moreover, the
program is sunset after 4 years.
-- There are no new entitlements in children's health as well. The children's
health initiative also contains no new individual entitlement. It provides States
with grants that, by law, will not exceed $750 million in each year. Medicaid
spending itself, under my plan, will be capped for the first time in its history.
The Federal funding limits are set based on the number of people covered so that
States - not the Federal government - make the decisions about coverage.
We are also proposing some changt?s to the welfare reform legislation that was
enacted last year, but our purpose is to fix unnecessary and damaging provisions
in that legislation -- involving legal immigrants and Food Stamp recipients. We
do not view these changes as new spending or new entitlements.
It is ironic that we are sometimes criticized for phasing out new proposals -- such
as school construction -- and simultaneously for creating permanent new
mandatory spending programs. Our phase-outs are designed to allow an
evaluation of how well the new programs are working -- and we have been careful
to avoid creating permanent new entitlements without knowing the effects.
Q: WHY DO YOU ELIMINATE MANY OF YOUR NEW PROGRAMS BEFORE
2002?
A. Many of our proposals -- such as school construction, welfare to work, skill
grants, and health insurance for the unemployed -- are new programs. They are
untried. We want to see how they work before the government funds these
initiatives permanently.
For example, our school construction initiative -- providing $5 billion over 4 years
-- is explicitly designed to jump-start $20 billion in local projects. The Federal
government has traditionally not been involved in school construction and
renovation; our proposal is therefore not supposed to be a permanent Federal
program.
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