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Clinton, Congress head for veto showdown on $240 billion tax cut

Sharp differences remain on host of issues

October 26, 2000
Web posted at: 10:49 p.m. EDT (0249 GMT)

WASHINGTON -- President Clinton warned Congress on Thursday he will veto a $240 billion tax-cut bill that includes a $1-per-hour hike in the minimum wage and nearly $30 billion for Medicare providers because the legislation falls short in school construction financing, pension reform and other areas.

The tax bill passed the House earlier Thursday by a 237-174 margin, mostly along partly lines.

Graphic
 

The tally fell 52 votes short of the 289 needed to override a veto.

"Doesn't sound like a veto-proof majority to me," said White House Press Secretary Jake Siewert.

The bill would allow wage-earners to increase tax-free 401K allocations from $10,000 to $15,000 per year. It would also increase tax-free IRA contributions from $2,000 to $5,000. It also would make health insurance premiums for the self-employed tax-deductible.

But the White House cited the bill's lack of support for Clinton's initiative to rebuild and modernize some 6,000 public schools across the country. And the White House has raised concerns that too much of the money goes to HMOs at the expense of hospitals and other providers.

The president also said he would veto a $37.5 billion spending bill for the departments of Commerce, State, and Justice because of a fight over amnesty for illegal immigrants and other matters.

Republicans said almost all the elements in the tax package -- including the minimum-wage hike -- would die with the veto but said they would rework the immigration language because that spending bill must pass or portions of the government would run out of funding and shut down.

Hastert
House Speaker Dennis Hastert  

The veto threat was a setback for the Republican-led Congress, whose leaders hoped to finish work by the week's end so members could return home to campaign for re-election.

Several members predicted Congress will work through the weekend but won't finish until sometime next week.

Republicans blamed Clinton for not accepting a compromise package, but the White House blamed Congress for ignoring its warnings about provisions it took issue with in the two bills.

Nonetheless, members of both parties predicted their political bases would be energized by the 11th-hour fight.

Negotiations over a third contentious bill -- the spending plan for the departments of Labor, Health and Human Services, and Education -- did not take place Thursday as attention focused on salvaging the first two. However, a session is scheduled Friday morning.

In a letter to House Speaker Dennis Hastert, R-Illinois, Clinton called the tax package "a partisan legislative package that ignores our key concerns on school construction, health care, and pensions policy."

Republicans said they were "shocked" by the veto threat.

"We've bent over backwards to make this bill acceptable to the president," Majority Leader Dick Armey, R-Texas, said on the floor. "We also listened to the president and made some bothersome changes to the bill to accommodate his concerns."

Included in the tax bill is a provision concerning foreign sales taxes designed to avert a dispute with the European Union. There are also provisions to modernize retirement plans and to provide a 100 percent deduction for the self-employed who buy their own health insurance.

A "community renewal" plan sponsored by Clinton and Hastert -- designed to bolster investments in poor neighborhoods through tax incentives -- is also in the bill.

Republican aides said those and other provisions will be lost if the president carries through on his veto threat.

But the aides said language to restore billions of dollars in Medicare funding to health-care providers would be passed in another form. The money is designed to make up for cuts Medicare providers suffered under the 1997 Balanced Budget Act.

The White House also wants a broad amnesty plan for all illegal immigrants who have been in the U.S. since 1986. Republicans prefer a narrower bill aimed at about 400,000 immigrants who have been involved in legal disputes with the Immigration and Naturalization Service since the mid-1980s. The GOP plan also makes provisions for about 600,000 relatives of permanent residents.

Republicans dropped a fight with the administration over funding the government's lawsuit against the tobacco companies, as well as hate crimes language the White House had fought to have included.

Both the House and Senate passed a sixth continuing resolution which will keep the government funded until the end of the day Friday.

CNN Producers Ted Barrett and Christy Darden and White House Correspondent Major Garrett contributed to this report.

 
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