Statement of Administration Policy: H.R. 11 - Revenue Act of 1992

(Senate)
(Rostenkowski (D) Illinois and 31 others)

The President's senior advisers will recommend that he veto H.R. 11 if the enterprise zone provisions do not contain sufficiently strong measures to attract job creating investments in the zones; those measures must include capital gains tax incentives. In addition, if H.R. 11 were presented to the President without acceptable pay-as-you-go offsets, his senior advisers would recommend a veto because its revenue losses are not fully offset for purposes of the Omnibus Budget Reconciliation Act of 1990 (OBRA).

The President's FY 1993 Budget contained a responsible, balanced economic growth program which would create jobs, generate longterm economic growth, and promote health, education, savings, and home ownership. The plan would encourage investment and enhance real estate values.

The Administration is encouraged that H.R. 11, as reported by the Senate Finance Committee, contains many of the proposals set forth in the President's FY 1993 Budget (and prior Budgets), and includes six of the seven measures that the President requested in his program for long-term economic growth. However, the Administration is deeply concerned that the legislation: 1) contains an inadequate and deficient enterprise zone proposal; 2) does not reduce the tax on capital gains; and 3) makes permanent the extension of the personal exemption phaseout and the itemized deduction limitation.

In addition, the child welfare social services provisions of H.R. 11 create a new entitlement. The provisions encumber States, reduce their flexibility, interfere with State family law, and do not address rapidly escalating administrative costs. Administrative costs for these social services have increased 2000 percent since 1981. The Administration sought a single grant for States to administer child welfare services at a resource level of $1.3 billion.

The Administration will continue to work with Congress to pass legislation which will provide strong incentives for enterprise zones and promote long-term economic growth.

Pay-As-You-Go Scoring

H.R. 11 affects receipts and outlays; therefore it is subject to the pay-as-you-go requirement of OBRA. Preliminary estimates indicate that the provisions increasing receipts are insufficient to provide year-by-year offsets, as required by OBRA. Final estimates are still under development.