THE WHITE HOUSE

Office of the Press Secretary

PRESIDENT CLINTON'S PLAN FOR THE BUDGET SURPLUS:

             Save Social Security Now, Strengthen Medicare, 
             Create Universal Savings Accounts (USAs), and 
                  Prepare America for the 21st Century 

January 23, 1999

In His State of the Union Address, President Clinton Put Forward His Framework To Save Social Security Now -- And Then to Strengthen Medicare, Create Universal Savings Accounts (USAs), and Prepare America for the Future. On Tuesday night, President Clinton proposed a bold plan to allocate the budget surplus over the next 15 years to meet America's challenges. His framework would:

     Save Social Security Now.  The President's framework includes
     transferring 62 percent of the projected budget surpluses over 
     the next 15 years -- more than $2.7 trillion -- to the Social 
     Security system and investing a portion of the transferred 
     surpluses in the private sector to achieve higher returns for 
     Social Security -- just as any state or local government, or 
     private pension does.  This will keep Social Security solvent 
     until 2055.  The President believes we must work on a bipartisan 
     basis to make the hard-headed but sensible and achievable choices 
     to save Social Security until at least 2075, while reducing 
     poverty among single elderly women and eliminating the limit on 
     what older Americans on Social Security can earn.

     Strengthen Medicare for the 21st Century.  After we save Social
     Security, the President's framework would allocate 15 percent of 
     the projected surpluses for Medicare -- $650-$700 billion -- 
     ensuring the Medicare Trust Fund is secure for 20 years.  The 
     President believes that the new resources should be utilized to 
     achieve broader, bipartisan reforms that modernize Medicare, make 
     it more efficient, provide for a long-overdue prescription drug 
     benefit, and still keep Medicare safe until 2020.

     Create New Universal Savings Accounts -- USA Accounts.  After we 
     save Social Security, the President would allocate 11 percent of 
     the projected surpluses to create new Universal Savings Accounts 
     (USAs) so all working Americans can build wealth to meet their 
     retirement needs.  USA Accounts would be a $500 billion tax cut 
     over the next 15 years to help Americans save for their futures.  
     To help Americans save and to strengthen our current pension 
     system, we would provide Americans a flat tax credit to make 
     contributions into their USA Account.  In addition, we would 
     provide additional tax credits to match a portion of an 
     individual's savings -- with more help for lower-income workers.

     Prepare America for the Challenges of the Future.  And after 
     Social Security reform is secured, the President's framework 
     would allocate 11 percent of the projected surpluses for military 
     readiness and pressing national domestic priorities, such as 
     education and research.

     President Clinton's Balanced Budget Includes Targeted Tax Cuts to 

Help Working Families. Since 1993, President Clinton has worked to deliver tax relief to America's working families. In 1993, the President delivered a tax cut to 15 million working families through an expanded EITC. Then in 1997, the President delivered a $500 child tax credit and $1,500 HOPE Scholarships to make the first two years of college universally available. The result: the lowest federal tax burden in two decades for middle-income families. To build on this record of tax relief for working families, President Clinton is proposing a range of new tax cuts that are fully paid for in his balanced budget plan:

     A $1,000 Tax Credit to Support Families with Long-Term Care Needs.
     This initiative, for the first time, acknowledges and supports
     millions of Americans with long-term care needs or the family 
     members who care for and house their ill or disabled relatives 
     through a $1,000 tax credit -- providing needed financial support 
     to about 2 million Americans, including 1.2 million older 
     Americans, over 500,000 non-elderly adults, and approximately 
     250,000 children.

     Tax Credits to Build Modern Schools for Our Children.  A 
     centerpiece of the President's tax cut agenda is to provide tax 
     credits to help states and school districts provide modern 
     schools and to accommodate smaller class sizes.  To help 
     modernize and build over 5,000 public schools, the President 
     proposes Federal tax credits to pay interest on nearly $25 
     billion in bonds issued by communities.

     Tax Relief for Child Care for Three Million Working Families.  
     The President's proposal increases the Child and Dependent Care 
     tax credit for families earning under $60,000, providing an 
     additional average tax cut of $354 for these families and 
     eliminating income tax liability for almost all families with 
     incomes below 200 percent of poverty ($35,000 for a family of 
     four) that claim the maximum allowable child care expenses.

     Tax Relief to Parents Who Stay at Home.  The President is 
     proposing to enable parents who stay at home with children under 
     one-year old to take advantage of the Child and Dependent Care 
     Tax Credit by claiming assumed child care expenses of $500.  The 
     President's budget proposal will provide an average tax credit 
     of $178 and will benefit 1.7 million families.

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