Congress, You, and Your Pocketbook

The work of the 105th Congress, which ended its first session last week, will touch an overwhelming majority of Americans - primarily in the pocketbook.

From inheritance taxes to Medicare premiums, from retirement accounts to tax cuts for college education, this Congress's first session produced an array of legislation intended to ease the load of the average taxpayer.

Evaluations of how Congress did its job this year vary, however, depending usually on whether the evaluator has an "R" or a "D" after his or her name.

"It's actually been a pretty productive session," says House Speaker Newt Gingrich (R) of Georgia. "We've accomplished a lot of the things we set out to do." He gives this session an "A" compared with other Congresses but a "B minus" compared with Republican expectations.

House minority leader Richard Gephardt (D) of Missouri takes a more pessimistic view. "This session has largely been a waste of time," he says.

This was the year that Congress finally balanced the budget and cut taxes, changing the terms of the debate over future federal programs. That involved a process of painstaking negotiations among majority Republicans and minority Democrats on Capitol Hill and the Democratic president that took most of the year. Another round of negotiations followed, as Congress passed the 13 spending bills that implement the budget agreement and fund the federal government.

But regardless of how partisans grade the session, Americans are already beginning to see the effects of Congress's handiwork.

Taxes. Radio ads have hit the airwaves pushing "Roth IRAs," a new individual retirement account allowing all but the wealthiest taxpayers (couples earning more than $150,000 yearly or individuals earning more than $95,000) to make after-tax contributions of up to $2,000 annually with no tax on the interest. For regular IRAs, Congress expanded eligibility by raising income limits $5,000, which will keep rising through 2002. Withdrawals will be permitted for first-time homebuyers or educational purposes.

Families with children under age 17 will get a $400-per-child tax cut next year if they make less than $110,000 ($75,000 for individuals), rising to $500 in 1999. In addition, 11 new education tax cuts will be available, including President Clinton's HOPE tax credit of $1,500 for each of the first two years of college, and education savings accounts to which taxpayers can make contributions of up to $500 a year for each child under 18.

Capital-gains taxes will be lower, and the amount of inheritance exempted from estate taxes will rise, for family farms and small businesses, to $1.3 million.

While the 10 percent airline-ticket tax will gradually fall to 7.5 percent in 2000, a new per-passenger tax of $1 is now in effect for each segment of a domestic flight. The tax on international departures has doubled from $6 to $12.

Balancing the budget. Assuming the economy performs moderately well over the next five years, the federal budget is likely to reach balance by 2002, perhaps earlier. The US may even see its first surplus since 1969. That has more than theoretical effects: The less money the government borrows to finance deficits, the less pressure on interest rates. That can help make everything cheaper - from home mortgages to car loans. And as the accumulated federal debt declines, less of the federal budget will be needed to make interest payments, leaving more for other programs.

Health care. The national health-insurance program will stay healthy for the next 10 years because of changes Congress enacted last summer. Medicare beneficiaries will now have the option of remaining in the traditional program or enrolling in a managed-care plan. Moreover, about 400,000 seniors will be allowed to set up medical savings accounts and use tax-free withdrawals to pay for medical expenses. Beneficiaries will see their premiums for doctors' services go up from $43.80 a month to $67 by 2002. Medicare also now covers some new preventative medical screening.

Congress provided $24 billion to states to expand health coverage to low-income, uninsured children. Each state can choose from a range of options in crafting its program.

Lawmakers also reformed the Food and Drug Administration to streamline approval for new drugs and medical devices.

Other issues. In other action, Congress moved to encourage local authorities to reduce the amount of time children spend in foster care and to make it easier to permanently remove children from abusive families.

It bailed out Amtrak to the tune of $2.3 billion, ensuring that passenger train travel will still be available and attempting to make the troubled government corporation more efficient.

Lawmakers could not agree on a new long-term highway and transit bill, but they extended the current program for six months, ensuring that states and cities will get federal money to help repair roads and bridges and run transit systems.

Congress also left a whole host of unfinished business. Besides failing to pass a new highway bill, it did not grant the president the "fast-track" trade-negotiating authority his predecessors have had, did not renew the Superfund program to clean up toxic-waste sites, did not mandate electricity deregulation, and did not agree on whether or how to reform financing of federal political campaigns. The House passed a bill to give taxpayers more clout with the Internal Revenue Service; the Senate plans to take action early next year.

Money for the International Monetary Fund and for repaying US debt to the United Nations was dropped from the foreign-operations bill over an abortion dispute. A reorganization of the State Department and other foreign-affairs agencies also got caught in the controversy. Republicans and the White House reached no agreement over lawsuit reform.

The strategy of accommodation employed by the White House and GOP leaders sorely tried both parties' unity. In the House, a small group of conservative Republicans plotted unsuccessfully to overthrow the Speaker. Liberal Democrats, who have felt increasingly ignored by the president, deserted Mr. Clinton in droves over the fast-track proposal.

In the ultimate pocketbook issue, however, Congress approved a new gold-colored dollar coin to replace the Susan B. Anthony coin. It also authorized minting 50 new quarters, five per year beginning in 1999, commemorating each state of the Union.