Omnibus Budget Reconciliation Act of 1993

The Omnibus Budget Reconciliation Act of 1993 (or OBRA-93^[1]) was federal law that was enacted by the 103rd United States Congress and signed into law by President Bill Clinton. It has also been referred to, unofficially, as the Deficit Reduction Act of 1993. Part XIII, which dealt with taxes, is also called the Revenue Reconciliation Act of 1993.

Specifics

• It created 36 percent and 39.6 income tax rates for individuals in the top 1.2% of the wage earners.^[2]
• It created a 35 percent income tax rate for corporations.
• The cap on Medicare taxes was repealed.
• Transportation fuels taxes were raised by 4.3 cents per gallon.
• The taxable portion of Social Security benefits was raised.
• The phase-out of the personal exemption and limit on itemized deductions were permanently extended.
• Part IV Section 14131: Expansion of the Earned Income Tax Credit and added inflation adjustments

Alternatives

Some alternatives to the bill included a proposal by Senator David Boren (D-OK), which among other things would have kept much of the tax increase on upper-income payers but would have eliminated all energy tax increases while also scaling back the Earned Income Tax Credit. It was endorsed by Bill Cohen (R-ME), Bennett Johnston (D-LA), and John Danforth (R-MO). Boren's proposal never passed committee.

Another proposal was offered in the House of Representatives by John Kasich (R-OH). He sponsored an amendment that would have reduced the deficit by cutting $355 billion in spending with $129 billion of the cuts coming from entitlement programs (the actual bill cut entitlement spending by only $42 billion). The amendment would have eliminated any tax increases. The amendment failed by a 138-295 vote with many Republicans voting against the amendment and only six Democrats voting in favor of the amendment.

Legislative history

Ultimately every Republican in Congress voted against the bill, as did a number of Democrats. Vice President Al Gore broke a tie in the Senate on both the Senate bill and the conference report. The House bill passed 219-213.[1] The House passed the conference report on Thursday, August 5, 1993, by a vote of 218 to 216 (217 Democrats and 1 independent (Sanders (VT-I)) voting in favor; 41 Democrats and 175 Republicans voting against), and the Senate passed the conference report on the last day before their month's vacation, on Friday, August 6, 1993, by a vote of 51 to 50 (50 Democrats plus Vice President Gore voting in favor, 6 Democrats (Lautenberg (D-NJ), Bryan (D-NV), Nunn (D-GA), Johnston (D-LA), Boren (D-OK), and Shelby (D-AL) now (R-AL)) and 44 Republicans voting against). President Clinton signed the bill on August 10, 1993.

Effect

The government was able to raise additional revenue, which balanced the budget and by the end of the 1990s began to reduce privately held public debt.^[3] An equally if not more powerful influence was the booming economy and huge gains in the stock markets, from the dot-com bubble, which brought in hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries. ^[4]

References

External links

• Senate roll call vote
• House roll call vote
• Summary of OBRA-93
• nysscpa.org