Surprise! Congressional Leaders' Tax Bill Favors Business Over Working Families

In a cynical partisan maneuver, Republican leaders in Congress shoved a $240 billion tax cut package through the House Oct. 26 that favors the wealthy, fails to address the nation's school construction needs and provides billions to HMOs. President Clinton promised a veto if the bill is approved by the Senate and sent to the White House. The action came as Congress was attempting to wrap up its business and hit the campaign trail, after allowing the people's business to languish all year.

"It's disgraceful that the Republican leadership in Congress pushed through its partisan tax relief bill, holding important concerns of working families hostage to business interests," AFL-CIO President John Sweeney said.

The bill does include a $1-an-hour raise over two years in the minimum wage. But Sweeney said, "Congress should send the president a clean minimum wage increase that is not burdened with so many partisan tax measures designed to benefit the rich and business interests."

White House press secretary Jake Siewart said the bill, "Fails to address our concerns on school construction, health care and pension coverage that would affect millions of middle-class Americans. If H.R. 2614 reaches the president's desk, he will be forced to veto it." He also stressed Clinton's commitment to raise the minimum wage, but not if such an increase is packaged as part of the unacceptable tax bill.

Both Sweeney and Clinton slammed Republican leaders for ignoring a bipartisan school construction bill (H.R. 4094, America's Better Classrooms Act). The measure would address these problems by authorizing federal tax credits to help states and local school districts build, modernize and repair their public school facilities. It also would ensure that workers on federally funded school facilities projects are paid local prevailing wages, so that this construction does not undermine community wage standards.

Sweeney also said the bill's provision allowing tax deductions for individuals who pay 50 percent of their health insurance costs, "in reality would be of no value to individuals with no tax liability and of little value to those in the lowest tax brackets—the very people who need coverage the most."

He also warned employers could "rationalize ending group health insurance by saying the deduction is more beneficial than employer-provided coverage."

The package provides some $30 billion in Medicare payments to HMOs, hospitals and nursing homes, but HMOs receive most of the funding.

"The power that the managed care industry wields over this body is absolutely staggering. HMOs serve one-sixth of Medicare beneficiaries, but this bill gives them 50 percent of the funding," Rep. Sherrod Brown (D-Ohio) said during debate on the bill.