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A Broad Overview of Clinton’s Economic Plan

February 18, 1993

Undated (AP) _ Detailed provisions of the economic package announced by President Clinton in a message to a joint session of Congress:


Clinton proposes a tax on most fuels, based on energy content. The first of three equal installments would take effect July 1, 1994. The tax would be fully effective two years later. The Treasury Department estimates this would raise the price of gasoline 7 1/2 cents a gallon; home-heating oil, 8 1/4 cents; natural gas, 26 1/4 cents per 1,000 cubic feet; and an average home electric bill by $2.25.

The energy tax would be at least partly offset for most people making $30,000 and less by increasing the earned-income credit and spending for food stamps and special energy assistance for low-income families.

Couples with adjusted gross incomes over $180,000 and singles over $140,000 would pay a new, maximum 36 percent income tax rate. A 10 percent surtax would be imposed on taxable incomes over $250,000. All of most workers’ wages would be subject to the 1.45 percent Medicare tax; the maximum taxable now is $135,000.

The 34 percent maximum corporate tax rate would be raised to 36 percent. Only 50 percent of meals and entertainment expenses could be deducted for business purposes, down from 80 percent.


Clinton wants to squeeze $38.4 billion from Medicare and Medicaid over the next four years.

Most cuts would hit doctors and hospitals. But it would also be harder to shift assets as a way of qualifying for Medicaid coverage of nursing home bills. And in 1996 monthly Medicare premiums would go up from their current $36.60 level to pay for 27 percent of the costs of Medicare Part B - doctor bills and other out-of-hospital costs - instead of the current 25 percent.

That would cost beneficiaries a total of $5 billion in 1996 and 1997, $6.5 billion in 1998, and more after that.

Clinton rejected an across-the-board freeze on Medicare payments. But hospitals would see Medicare fee increases cut by 1 percentage point in both 1994 and 1995, for $5.2 billion in savings over four years. And Clinton would delay the annual Medicare fee update for hospitals to save $4.6 billion.

Clinton hopes to save $3.1 billion by setting lab fees at ″market rates,″ $1.9 billion by reducing extra payments to teaching hospitals and $1.2 billion by reducing doctor fees in 1994 except for those paid to primary care physicians.

Meanwhile, Clinton wants an extra $1.2 billion over four years for public health, including the fight against AIDS and women’s health initiatives. He hopes to save $1 billion through improved management of veterans hospitals.


Clinton wants full funding for Head Start by 1999, raising spending by $785 million next year and by $3.1 billion in 1997 to more than double the current level.

His economic stimulus package would devote $500 million to a summer Head start program this year to ″help disadvantaged children retain the social and intellectual gains made during the school year.″ Continuing the summer Head Start in 1994 would cost $514 million.

Clinton proposes spending $1.1 billion between 1994 and 1997, including $60 million in 1994, to respond to ″sensitive, emerging issues in parenting and family support,″ including help for disadvantaged parents who take care of their children at home.

Strengthening child support enforcement would save $27 million in 1994 and $505 million from 1994 through 1998, according to the administration. The arsenal for use in cracking down on ″deadbeat dads″ would range from a national data bank to Internal Revenue Service help with collections.

Improvements in Social Security disability insurance processing and the purchase of computers and other equipment would receive $302 million this year and would cost $200 million a year by 1995.

Clinton also proposes a $1 billion fund for long-term automation by the Social Security Administration. Spending is estimated at about $145 million in 1994 and $245 million in each of the next four years.

The Social Security Administration would charge states a fee for the administration of supplements to federal Supplemental Security Income program. Savings would be $50 million in 1994 and $190 million by 1998.

Clinton also wants to save $1.8 billion over four years by matching only 50 percent of state costs of administering major welfare programs, including food stamps, Aid to Families with Dependent Children, and Medicaid.

Clinton hopes to raise $1 billion more from Food and Drug Administration user fees paid by drug companies that market new medications.

Streamlining the 126,000-worker Health and Human Services Department would save $199 million in 1994; $500 million in 1995; $832 million in 1996; $1.17 billion in 1997; and $1.51 billion in 1998.


Clinton’s package envisions spending nearly $5.8 billion over the next four years to help students pay for college. The idea, advocated by Clinton in his campaign, would enable students to pay off government loans through community service. But aides said details are still being worked out.

Meanwhile, Clinton would not replace the troubled guaranteed student loan program but would restructure it instead.

The package calls for a commission to set national standards for elementary and secondary schools and would establish a $3.2 billion pool to award grants to states for programs designed to meet the standards.

The president recommends spending an additional $2 billion on the Pell Grant program that aids students. And he calls for a commission to set standards for elementary and secondary schools with a $3.2 billion pool to finance programs aimed at meeting those standards.

Clinton is also calling for an apprenticeship program to provide job skills to high school graduates who elect not to go to college.


Partially to offset the impact of new taxes on energy, the economic package includes sharp increases in federal programs to help low-income homeowners pay utility bills and make homes more fuel efficient.

Energy Department grants for insulating homes of low-income families and fuel subsidies for homes and schools would be increased by about a third next year with an extra $66 million. Congress provided $185 million for it this year.

Clinton calls for long-term investments of about $3 billion over the next four years for energy conservation and renewable energy programs, fusion research and improving the energy efficiency of federal buildings.

He seeks sharp cuts in spending for nuclear weapons programs, including a phaseout of a proposed program to build a $5.4 billion reactor that produces tritium, a gas needed in warheads. The reactor phaseout was expected to save $200 million this year and $1.2 billion through 1998.

Plans call for continued construction of the controversial $8.2 billion super collider atom smasher in Texas, although its completion date will be stretched to the year 2003. The proposal calls for spending $640 million next year, more than Congress provided for this year but less than what the Bush administration had wanted to keep the program on schedule.

The government’s uranium enrichment program would be phased out with an expected saving of more than $240 million next fiscal year, including closing the program’s plant in Portsmouth, Ohio. Last year’s energy law calls for turning the enrichment program over to private hands. The administration also envisions buying enriched uranium from Russia.

Clinton also is asking for continued funding at slightly increased levels of the environmental cleanup program at nuclear weapons plants. Cleanup and environmental protection spelding would be more than $6.2 billion next year.


Clinton is aiming for savings of $163 billion in the Interior Department by lowering funds for Bureau of Reclamation water projects, such as dams and irrigation projects in the West.

He would cut the Environmental Protection Agency’s Superfund hazardous waste cleanup fund by $308 million and EPA administrative costs by $221 million. Phasing in inland waterway user fees would bring in $820 million while $76 million would be gained by increasing by increasing grazing fees on federal land.

Clinton envisions gaining $147 million through higher user fees for Interior Department recreational facilities that could range from park entrances to boat ramps.

A $100 annual fee to hold a mining claim for minerals on federal lands would become permanent. Projected savings: $320 million.

Imposing royalties on gold, silver and other hardrock minerals extracted from federal lands would bring in an estimated $471 million. Democratic bills in Congress propose an 8 percent royalty on gross sales of minerals, but the administration has not signed off on a specific amount.

The package calls for gaining $165 million through tighter enforcement of harbor maintenance fees.

Part of Clinton’s economic stimulus package envisions $845 million for grants to local agencies for waste water treatment projects. That comes on top of $1.9 billion in the current year and by administration estimate would create 50,000 new jobs.

The package calls for $23 million more for so-called green programs - already funded at $8 million this year - to help industry convert to energy efficient technology.


Clinton wants $1 billion of his short-term economic stimulus to enlarge the summer youth employment and training program to cover 1.3 million disadvantaged young people.

He seeks $3.2 billion in fiscal 1993 and $2.4 billion next year to extend for seven months the emergency federal unemployment insurance program for laid off workers whose state jobless benefits have expired.

The funds would also permit local agencies to identify those with little hope of regaining their previous jobs and provide new training and help in finding other work.

Clinton calls for $4.1 billion over four years for job assistance and training. This includes $2 billion for those out of work because of military cuts and the North American Free Trade Agreement; $625 million for youth; $35 million for older workers; $330 million for the Job Corps, plus another $50 million for maintenance. It earmarks $250 million for labor market career centers to provide one-stop shopping for employment and.


Clinton plans to devote $4.16 billion of his immediate stimulus package to transportation, with a goal of creating 70,000 jobs this fiscal year and next.

Just under $3 billion is targeted for federally assisted highway projects, $750 million for mass transit, $250 million for airport improvements and $188 million for Amtrak rail improvements.

None of the immediate stimulus money is earmarked for the financially ailing aviation and airline industries.

The president also proposes investing another $14 billion over four years to expand transportation programs, including technological research and aviation. The money is aimed at creating 187,000 jobs through 1997.

The package envisions $8.4 billion in spending over four years with cuts totaling $1.3 billion in low-priority programs and projects and a shrinkage of $112 million in administrative costs.


Clinton’s plan includes $2.5 billion in community development block grants in the Department of Housing and Urban Development. The grants, which fund ″ready-to-go″ public works projects, are cited by Housing Secretary Henry Cisneros and lawmakers as an ideal way to generate jobs immediately.

The package also contains $3.1 billion in fiscal 1997 and $9.6 ’illion over four years for community development block grants, enterprise zones, assisted housing and tax credits for low-income housing.

Clinton says HUD should eliminate special purpose grants, to save $5 million in fiscal 1994 and $665 million over five years. He recommends that HUD eliminate, consolidate or downscale public housing construction, administrative fees and housing preservation programs to save $46 million in fiscal 1994 and $790 million over five years.

The agency also is being asked to absorb a $104 million cut in fiscal 1994, totaling $1.4 billion over five years as part of a general belt-tightening.

Meanwhile, the plan includes $423 million for aid to homeless people in the form of grants for advocacy groups, substance abuse rehabilitation facilities and those who work with the homeless mentally ill.


Clinton’s plan would not make immediate major changes in big farm payment programs. But it would target subsidies to farmers with off-farm incomes below $100,000. Savings: $470 million.

The president would eliminate $32 million in subsidies for honey producers and limit payments on wool and mohair to $50,000 per person for savings of $212 million.

Clinton would reduce the number of wheat, feed grains, cotton and rice acres eligible for support payments and to make changes in the crop insurance program - proposals that could not be implemented until 1995 when Congress is planning to write a major farm bill.

The plan calls for fully funding the Women, Infants and Children nutrition program, reaching $984 million in 1997. It also proposes nutrition improvement and food safety initiatives with a 1997 price tag of $102 million.

Rural water and waste loans and grants as well as community and business development for rural areas would cost $620 million in fiscal 1997 and $1.5 billion over four years.

In a move to streamline the Agriculture Department’s bureaucratic sprawl, the plans would create a Farm Service Organization to consolidate activities of Agricultural Stabilization and Conservation Service, Farmers Home Administration, Federal Crop Insurance Corp. and Soil Conservation Service. Savings: $730 million. Reducing programs of the Economic Research Service and the Foreign Agricultural Service would save a projected $96 million.

The department would start charging overtime expenses for meat and poultry inspections for a gain of $416 million.

Meanwhile, it would phase out below-cost timber sales for a projected $274 million in savings. Reduced Rural Electrification Administration 5 percent loan subsidies would produce savings of $374 million over four years, by the administration’s yardstick.

Reducing direct Farmers Home Administration loans 25 percent, replacing them with guaranteed loans to neediest, would produce perhaps $31 million.


Clinton plans to spend $837 million over the next four years on a crime initiative that calls for putting 100,000 more police officers on the America’s streets.

Clinton wants $50 million next year and $300 million through 1997 for state and local aid to improve community policing.

The plan calls for college scholarships in exchange for commitments from students to serve as police officers, costing $25 million next year and up to $150 million over four years.

Grants to states to upgrade criminal record-keeping and computer links with FBI’s databases in part to facilitate background checks for handgun purchases as called for by the Brady Bill, costing $25 million next year and up to $50 million over four years.

The crime initiative would allow $1.15 billion in savings in the Weed and Seed program, said OMB official Jim Carter. Under Weed and Seed, police sweep through an area to eliminate drug dealers and other lawbreakers and then social service agencies provide help to the community.

White House figures showed the Justice Department would lose $7 million next year in prison construction and another $25 million as part of government streamlining.

Over the four years, prison construction would be cut $331 million and government streamlining would save another $138 million from the department’s budget. The technical adjustments, meanwhile, would add $233 million.


Clinton is calling for a $76 billion reduction in spending over four years, a deeper cut than he advocated during the election campaign, as outlined by congressional sources.

In the next fiscal year, military spending would total $277.7 billion, a cut of $6.7 billion from former President Bush’s adjusted budget.

Defense spending would fall steadily to $249.1 billion for fiscal 1997.

The defense budget in fiscal 1998 would increase slightly, to $252.7 billion.

Pentagon officials said program cuts would mean reductions of 200,000 men and women in uniform - to a force of 1.4 million instead of 1.6 advocated by former President Bush - as well a smaller Strategic Defense Initiative and slimmed down budgets for intelligence and nuclear weaponry programs.


Clinton’s economic stimulus package includes increases in spending for the mixed bag of business and technology programs operated by the Commerce Department.

It envisions $17 million for the National Institute of Standards and Technology (NIST), which includes the Advanced Technology Program, a government arm providing research grants to business.

Plans call for increases of $2 million for the Minority Business Development Agency, $81 million for modernization of the National Oceanic and Atmospheric Administration and $94 million for the Economic Development Administration, which is to help in defense conversion.

Under Clinton’s long-term economic development plan, standards and technology funding will climb from $381 million in 1993 to $1.369 billion in 1997.

The department’s program to foster telecommunications technology will go from $54 million in 1994 and then $150 million a year in 1995, 1996 and 1997.


The economic stimulus package includes a $235 million supplemental appropriation for construction projects that could generate 4,700 jobs.

The VA said in a statement that it had identified some 1,300 projects at 156 hospitals and six cemeteries for potential funding through the president’s initiative.

The projects would include repairs, installation of high-tech equipment, modernization of treatment areas, and projects for hazardous waste control, energy conservation and asbestos removal.

The VA provides treatment to some 2.6 million individual veterans annually, mostly those with service-connected disabilities or without the financial means for private care. The VA’s National Cemetery System is composed of 114 cemeteries in 38 states and Puerto Rico.

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