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. ###