THE WHITE HOUSE
Office of the Press Secretary
______________________________________________________________
For Immediate Release August 31, 2000
REMARKS BY THE PRESIDENT
ON VETO OF DEATH TAX ELIMINATION ACT OF 2000
The East Room
2:39 P.M. EDT
THE PRESIDENT: Thank you very much. I want to thank Secretary
Mineta and John Sumption and his wife, Margaret, for being here. Martin
Rothenberg, thank you very much. And thank you, Sandra, for being here.
I was listening to them talk, wishing I didn't have to say a
word. (Laughter.) It made me proud to be an American, listening to those
two people talk. Didn't they do a good job? (Applause.)
Before I begin with the remarks I have on the estate tax, and
since this is my only opportunity to speak to the American people through
out friends in the press today, I need to make a statement about continuing
efforts to combat one of the worst wildfire seasons in the history of
America.
For months now, we have been marshalling federal resources so
that the men and women fighting these blazes out West will have the tools
they need to protect our public and our lands. There are already 30,000
federal, state and local personnel engaged in the effort to fight the
wildfires, including four full military battalions. Today I'm releasing
another $90 million to ensure that the federal firefighters have the
resources they need. Now a total of $590 million has been spent on
emergency funding to combat these fires.
I want you to remember that for a point I want to make later in
my remarks. These things happen.
There will be no shortage of human effort. Tomorrow we are
dispatching a new Marine battalion from Camp Lejeune, North Carolina, to
help fight the Clear Creek fire in Idaho's Salmon Challis National Forest.
Last night we issued a disaster declaration for Montana, and are expediting
a similar request from Idaho.
There is a lot to be done out there. Those people are working
hard. The Departments of Agriculture and the Interior have begun to move
2,000 federal supervisors into the field to assist the firefighters and to
get adequate compensation for people that are working long and very
stressful hours.
Our nation owes a great debt of gratitude to the firefighters,
the managers and their loved ones who are making extraordinary sacrifices.
Many of them are literally risking their lives today in service to their
neighbors and their country. Our losses this year in wildfires have been
much, much, much greater than the 10-year average.
And I was out in Idaho recently, and I wish every American could
see what they try to do with those fires and how fast they can move, and
how they can go from being a foot high to 100 feet high in no time at all.
So we may have to do more out there, but they're doing their best to
protect as much land and to protect the houses and lives of the people as
possible.
Now, to the matter at hand. As Secretary Mineta said, seven and
a half years ago, we charted a course for a new economy, a new course
focused on giving the American people the tools they needed to make the
most of the Information Age, and creating the conditions which would make
sure that the hard work of our people would be rewarded. And we all know
that since then, we've had the longest economic expansion in history; that
we have the lowest unemployment rate in 30 years, the lowest welfare rolls
in 32 years; we learned last week the lowest violent crime rate in 28
years; and the highest home ownership in history.
We also had these horrible deficits and a debt which had
quadrupled in the 12 years I took office, over the previous 200 years, and
we've begun to pay it down at a record rate. This has effectively worked
as a tax cut. Why? Because all the economic analyses show that when we
went from record deficits to record surpluses and started paying the debt
down, it has kept interest rates lower over these last eight years, much
lower than they otherwise would have been.
What has that been worth in tax cuts? Well, the Council of
Economic Advisors says, that on average, it's worth $2,000 in lower home
mortgages a year for the average home; $200 a year in lower car payments;
$200 a year in lower student loan payments.
We have also supported tax cuts within the context of paying the
debt down. For example, in the Balanced Budget Act, we had the HOPE
Scholarship tax credit and Lifelong Learning tax credits -- the HOPE
Scholarship for the first two years of college, $1,500; and the Lifelong
Learning credits for the junior and senior year, and lifetime education,
which can be even greater. Ten million families are taking advantage of
that to pay for a college education this year.
The Earned Income Tax Credit, which we doubled, which goes to
lower-income working people, will help $15 million families this year work
their way into the middle class. The $500 child tax credit, which was a
part of the Balanced Budget Act, will now go to 25 million families. We
gave upper-income people tax credits to invest in poor areas in America in
the empowerment zones, and it's worked to generate thousands of jobs in
some of the most distressed areas of the country.
In 1997, we also reduced the burden of the estate tax for small
business owners and family farmers by raising the threshold at which it
applies. The typical American family today is paying a lower share of its
income in federal income taxes than at any time during the last 35 years.
That is a pretty good thing to be able to say, and yet we're healthy
financially because we have proceeded in a balanced and disciplined way.
Now, everybody knows there is a lot more hard work to be done,
and there are differences of opinion about what we ought to do and how we
ought to do it. That's why we're having another election this year. And
that's up to the American people to decide.
But I believe that prosperity imposes its own difficult choices,
because there are so many temptations to do things that seem easy that will
have adverse consequences. And I believe it is our job to maximize the
chance that America can make the most of a truly unique moment in our
history, to meet the big challenges that are out there, giving all of our
kids a world-class education, making sure when the baby boomers all retire
and there are only two people working for every one person drawing Social
Security and Medicare, that Social Security and Medicare don't go broke,
and we don't bankrupt our kids or their ability to raise our grandkids;
that we meet the big challenge of climate change and the other
environmental challenges; that we stay on the forefront of science and
technology; that we continue to be a force for peace and freedom around the
world; that we bring prosperity to the people in America who still aren't
part of it and give them a chance to work their way into a good life; and
many other things.
Now, in order to do that, a precondition of doing all that is
keeping the prosperity going and continuing to expand opportunity. I
believe that the only way to do that is to build on what has worked. It's
not as if we haven't had a test run here. We've seen now for almost eight
years that the strategy we have pursued of investing in our people, but
continuing to pay this debt down and doing it within the framework of
fiscal responsibility and trying to be fair in the way we invest money and
allocate tax cuts works. It works. It's good economics and it's good
social policy.
Now, I believe that this latest estate tax bill is another
example where Congress comes up with something that sounds good and looks
real good coming down the street on a tractor. (Laughter.) But if you
look at the merits, it basically would take us off the path that has
brought us to this point over the last eight years. And I don't think we
ought to be kicked off that path; I think we ought to think about how to
accelerate our way down this road.
I believe that this latest bill, this estate tax bill is part of
a series of actions and commitments that, when you add it all up would take
us back to the bad old days of deficits, high interest rates and having no
money to invest in our common future -- the kind of things that our Speaker
has talked about in their commitment to education.
Now, let me give you an example. Last year, the Republicans
passed a huge tax bill in one quick shot, and it was like a cannonball that
was too heavy to fly, and so it went away. But they're still committed to
it. In fact, an even bigger version of the bill that I vetoed last year.
This year, they have a strategy that, in a way, is more clever -- it's like
a snowball and every piece of it sounds good. But when it keeps rolling it
just gets bigger and bigger and bigger. And unless someone stops it, the
snowball will turn into an avalanche and you'll have the same impact you
had before.
Today, a few moments ago, this bill suffered the inevitable fate
of a snowball in August. (Laughter and applause.) I vetoed it not because
I don't think there should be any estate tax changes -- I do believe there
should be some changes; not because I think that the United States
government should never respond to the legitimate concerns of people who
happen to be in upper-income levels and have been successful -- I think
they're entitled to fairness just like all the rest of us -- but because
this particular bill is wrong for our families and wrong for our future.
It fails the test of the future both on grounds of fairness and fiscal
responsibility. And I'd just like to lay out the facts in a little greater
detail.
The cost of their bill is $100 billion over 10 years. That
sounds, in the context of a $2-trillion surplus you may say, well, that's
not all that much. But to get it down to $100 trillion they have to ever
so gradually phase it in. In the second 10 years, when all the baby
boomers retire and we need as much money as we can for Social Security and
Medicare and to keep the burden of the baby boomers' retirement off the
rest of you, the real cost of the bill appears. It's $750 billion.
Now, this is $750 billion for 54,000 families -- 54,000 estates.
We'll come back to the smaller number, $100 billion for 54,000 estates.
That's 2 percent of the estates. Now, if it's a farm or a small business,
that can be misleading because they may employ lots and lots of people.
There may be a lot of people riding on the welfare of the success of the
small business people and the farms.
And I've talked to a number of people who say, you know, I don't
want to have to sell my business, or, I don't want my daughter or my son to
have to sell the business to pay the estate tax -- yes, they'll still have
money, but the business won't be going. Somebody else will be running the
business. So, should something be done to help them? Of course. But keep
in mind, there are millions of businesses in America -- we're talking about
54,000 here -- and it's very important to note that over half of the
benefits to these 54,000 estates go to less than 6 percent of the estates,
less than one-tenth of one percent of the American people, 3,000 of the
estates. So over half the benefit of that bill that came down here on a
tractor goes to 3,000 people. And I'll bet you not a single one of them
ever drove a tractor. (Laughter.)
I'll bet you if I had a tractor-driving contest with any of those
3,000 people, I would win. (Laughter.) And I say that not to build
resentment against them, but to say they have presented a picture of this
bill which is not accurate. The average tax relief for those 3,000
families would be $7 million a person. And it will do nothing for the farm
families like those represented by our Speaker. That is my problem with
this bill. It doesn't really do what it says it's supposed to do.
And for the other 98 percent of the American people, literally
get nothing out of this. That's another thing I think that is important.
This was the first priority. This is the bill that was sent up before an
increase in the Earned Income Tax Credit for low-income working people that
have three or more kids; before doing more on the child care tax credit;
before a long-term care credit for people who have to take care of their
elderly or disabled loved ones and long-term care; before doing anything to
help average families deduct the cost of college tuition to send their kids
to college; before increasing the incentives we want to give wealthy people
to invest in the poor areas of America. This was their top priority.
So, I say, it fails on grounds of fiscal responsibility, it costs
too much, and it fails on grounds of fairness. And let me just mention
something else that Martin alluded to when he stood up here. I have had at
least two billionaires contact me and ask me to veto this bill. And one of
the reasons they cited is that it would lead to a dramatic drop in
charitable contributions.
Studies show that charitable contributions could drop as much as
$5 billion to $6 billion a year -- private contributions to charitable
causes -- if I were to sign this complete repeal. Less money for AIDS
research or cancer studies, fewer resources for adoption, fewer
opportunities for troubled children, fewer new acquisitions for art
galleries and historical museums, and historic preservation.
This is an element of this bill that has been discussed almost
not at all in the public domain. But it is clear that it would be one of
the unintended consequences of a complete repeal of the estate tax.
I say, again, the estate tax repeal is part of a larger
Republican strategy to have, now, over $2 trillion of tax cuts over the
next 10 years. Now, in other words, their aggregate proposals would spend
all the projected non-Social Security tax cut. That leaves nothing for
continued improvements of education when the student bodies are just
getting larger, more and more kids and more and more diverse; nothing for a
voluntary Medicare prescription drug benefit, the biggest problem most
seniors have; nothing to extend the life of Medicare and Social Security
beyond the baby boom generation; nothing to invest in scientific research
and the environment; nothing to pay for their proposal to partially
privatize Social Security which, itself, would require the injection of $1
trillion more into the Social Security trust fund over the next decade;
nothing for emergencies.
Remember I told you, we've already spent $600 million this year
on wildfires in the West. Things happen in life. Things happen in a
nation's life just like they happen in your life. Emergencies happen.
Nothing to pay for low farm prices, bad crop years, or in this
case, bad foreign policy, and no telling how many billion dollars we spent
in the last three years trying to keep people like our family farmer here
in business because we passed the Farm Bill in 1995 that made no provision
for bad years. And, by the way, the $2 trillion surplus is just an
estimate, anyway. And anybody that knows anything about the federal budget
will tell you that there are just three or four technical reasons it is
grossly overestimated.
So I don't think this is a fiscally responsible bill, and I don't
think it is a fair bill. And, therefore, I vetoed it. Now, does it mean
there should be no estate tax relief? Actually, most of us Democrats
believe there should be some. Why? Because of the success of the economy
in recent years, we've had land values go way up for farmers in many places
in the country, and many young people -- and not so young people -- have
enjoyed a lot of success in a hurry in a booming stock market. So that
there are a lot of ongoing enterprises that should be able to continue to
go on, and you don't want them to have to be transferred in ownership just
to pay the tax cut. That's really the unfairness issue that needs to be
addressed here.
And we offered two different options to do that in this debate.
Both of the Democratic bills in the House and the Senate would allow family
farmers and small businesses to leave at least $4 million per couple
without paying any estate tax. That's up from $1 million, where we're
going today.
Unlike the Republican plan, which would make them wait 10 years
to get the full benefits, so as to disguise the real cost of a total repeal
of the estate tax, the Democratic plans provide immediate relief. The
Democratic proposal in the Senate actually eliminated two-thirds of the
families from paying the estate tax, covering virtually every so-called
small business and family farm in the country, and leaving the people that
Martin talked about, for which the estate tax was designed. The House plan
left a few more families in the estate tax, but cut the rate for everybody,
on the grounds that other rates had been cut in recent years.
The point I want to make is that our party is not against
reasonable estate tax relief, nor do we think that people should use all
claim for making a fairness to their government just because they're in
upper-income levels. But this bill is wrong. It is wrong on grounds of
fairness; it is wrong on grounds of fiscal responsibility. It shows a
sense of priorities that I believe got us in trouble in the first place in
the 1980s, and that if we go back to those priorities, will get us in
trouble again.
So I say again to our friends in the Republican Party, John
Sumption and Martin Rothenberg made a lot of sense today. They spoke for
the best of America. We are not against wealth, and we are not against
opportunity. If I were against creating millionaires, I have been an
abject failure in my years as President. (Laughter.) We are not against
making it possible for farmers and small businesspeople to pass their
operations along so that their children do not have to sell the enterprise
just to pay the estate tax. Everybody thinks that's wrong.
We are willing to work with you in good faith to modify this
estate tax and to take a whole lot of people, including the majority of
those now paying it out from under it entirely, if you're willing to work
with us. But we are not willing to turn our backs on the rest of the
American people who deserve tax relief, who have to have good schools, who
have to have good health care, and most important of all, have to have a
fiscal policy that keeps us paying the debt down, keeps interest rates low,
and keeps the future bright.
And I will just leave you with this one last thought. We have a
new study which shows that if we keep on our path and keep paying this debt
down, instead of giving away all the projected surplus in tax cuts, it will
keep interest rates another percent a year lower for the next decade, which
is worth another $250 billion home mortgages, another $30 billion in car
payments, and another $15 billion in college loan payments. That is a very
big amount of relief to most people in this country.
So I ask the Republican Congress again, if you're serious about
wanting to deal with the problems that estate tax presents, let's get after
it and solve them. But we have to proceed on grounds of fiscal
responsibility and fairness. And I will never be able to thank this fine
farmer from South Dakota, and this successful academic and businessman now
from New York for giving us a picture of what America is really all about,
and what we ought to be building on for the new century.
Thank you very much. (Applause.)
END 3:00 P.M. EDT
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