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Rosty submits his tax bill; congress in year-end struggle.

House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) introduced a major tax bill on Thursday which is likely to be at the center of the national debate next year about federal budget priorities and reviving the economy.

Unlike other pending tax cut proposals from the Congress and White House, the Rostenkowski proposal would not adversely impact cities and towns, nor would it syphon off funds from defense and domestic spending to pay for tax cuts.

Rostenkowski said he would not push his bill--which would increase taxes on the wealthiest Americans and use the revenues to cut taxes for middle class and moderate income taxpayers, and to cut the federal deficit--until next year. President Bush has made clear his own opposition to any action on a major tax cut before Congress finishes this year.

The action came as House and Senate leaders set November 20 as a tentative adjournment date for this session of Congress. But before leaving, Congress and the White House have a number of "must finish" bills:

[section] surface transportation--existing laws expired Septermber 30, depleting public infrastructure funds and adding to recession and unemployment in communities across the country (See related story);

[section] another S&L bailout--the White House has requested an additional $170 billion in off-budget borrowing to avoid shutting down efforts to foreclose failed S&L's, take possession of their properties in cities and towns, and pay off depositors;

[section] a commercial bank bailout--the White House is seeking $115 billion in off-budget borrowing from the taxpayers to shut down failing commercial banks, to foreclose and resell bank real estate and property, and to pay off federally insured depositors. The current federal insurance fund is virtually exhausted (See related story);

[section] agree on a defense authorization bill for the current year-this includes a provision to provide up to $1 billion in domestic, discretionary assistance to the Soviet Union, but no assistance for cities and towns most severely impacted by military base closure;

[section] agree on Dire Emergency Supplemental funding--this would provide emergency relief and assistance for cities and towns hit by hurricanes, floods, fires, and other natural disasters and would make the final U.S. off-budget borrowing for Operation Desert Storm;

[section] complete the final two 1992 appropriation bills for Labor, Health and Human Services, and for defense;

[section] Jobless aid--agree on legislation to provide extended unemployment benefits.

Rosty bill

Rostenkowski proposed a temporary $46 billion tax cut aimed at middle and moderate income workers to be financed through higher tax rates on wealthy Americans, including a surtax on millionaires. The bill proposes a two-year, refundable tax credit against Social Security and Medicare taxes of $200 per individual and $400 per family.

Rather than breaking the budget agreement by using defense spending cuts to pay for the tax cuts, Rostenkowski proposed to create a new, higher rate of 35 percent for families with taxable incomes in excess of $145,000 annually and a surtax of 10 percent on millionaires.

The higher tax rates would raise approximately $10 billion annually in higher federal revenues--meaning that the proposal would increase the deficit in violation of the budget agreement over the first few years.

Rostenkowski proposed, however, that the higher rates be permanent and that all excess revenues over those necessary to pay for the tax cuts be used to help reduce the federal deficit and national debt.

S&L Bailout

The House Financial Institutions Subcommittee has approved legislation, HR 3435, which would allow the administration to borrow $20 billion more for the bailout, but require that the remaining $60 billion requested by the White House be only on a pay-as-you-go basis. The president has threatened to veto the bill unless the entire amount is approved outside of the budget. Unless action is taken before Congress adjourns the RTC is expected to run out of funds.


House and Senate defense conferees announced they had rached agreement on a defense authorization bill, HR 2100, on November 1 providing for an increase in defense spending over last year, but rejecting any of the NLC-supported provisions to assist cities and towns impacted by base clsoings.

The conferees agrred to make up to $1 billion in Pentagon funds available for domestic assistance to the Soviet Union--an amount acceptable to the White House--and to set up a blue-ribbon panel to assist the Soviets in converting their military-industrial complex to civilian purposes.

According to the Congressional Budget Office, if the current rate of defense spending continues at the rate approved by the conferees, all federal assistance for city and town priority programs would have to be cut by 10 percent in 1994 and 1995. The bill, moreover, authorizes more spending than is permitted under the budget agreement and, therefore, proposes to defer some spending until 1993.

The conferees agreed to put a tentative halt to the B-2 bomber, but agreed to the deployment of a new ballistic missile system.

While the conferees agreed to provide technical assistance on economic conversion and domestic discretionary assistance to the Soviets, they dropped the NLC-supported Johnston-Breaux-Roth amendment, which would have provided cities and towns control and possession of abandoned military bases in this country.

According to the administration, the Senate amendment would have been a "giveaway" which the Pentagon could not afford.

Emergency Disaster Assistance

Senate Appropriations Committee Chairman Robert Byrd (D-W.Va.) and White House Budget Director Richard Darman met last week in an effort to begin negotiations so that Congress could clear the emergency funding bill both to pay the closing U.S. share for Operation Desert Storm and for domestic disasters. The dispute has been over what will be defined as "emergency."

The White House has proposed that all of the Desert Storm money be designated "emergency"--and thus exempt from the budget law, but that only a fraction of the domestic disaster assistance be designated "emergency." That would mean that any non-"emergency" funds approved by Congress would trigger automatic across-the-board cuts in all other municipal programs.

Unemployment Extensions

The White House and Republican and Democratic leadership continued to negotiate how to pay for an extension of unemployment benefits for workers in cities who have exhausted their current ones, but an agreement appeared elusive.
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Title Annotation:Dan Rostenkowski
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Nov 11, 1991
Previous Article:Commission on National Community Service.
Next Article:Conferees race deadline on transportation.

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