Clinton, Congress head for veto showdown on $240 billion tax cut
Sharp differences remain on host of issues
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
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.
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.