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House panel passes $2.57 trillion budget

Republicans pushed a $2.57 trillion budget through the House Budget Committee on Wednesday, answering record federal deficits by seeking broad cuts in domestic programs and carving deeper into benefits for the poor and students than President Bush proposed.
/ Source: The Associated Press

Republicans pushed a $2.57 trillion budget through the House Budget Committee on Wednesday, answering record federal deficits by seeking broad cuts in domestic programs and carving deeper into benefits for the poor and students than President Bush proposed.

Senate Budget Committee Chairman Judd Gregg, R-N.H., released a similar $2.56 trillion outline that his panel was likely to approve Thursday.

Like the budget Bush sent lawmakers last month, both congressional plans rely chiefly on reduced domestic spending and assumptions of economic growth to curb deficits, while seeking additional tax cuts and beefed up defense and anti-terrorism expenditures.

The Senate plan would pare benefits by $32 billion over the next five years from programs including Medicaid, farm assistance and subsidy cuts to lenders of student loans.

Reflecting the House’s more conservative tenor, its budget seeks $69 billion in such savings, cutting almost $20 billion deeper than the president suggested. That will set the stage for months of partisan battling likely to echo in next year’s midterm congressional elections.

“Personally, I — and I know many of my colleagues — would like to have gone even further” in restraining spending, said House Budget Committee Chairman Jim Nussle, R-Iowa, before his panel approved the budget by a party-line 22-15. “But it’s a good step in the right direction.”

‘Not a radical proposal’
Gregg said his plan is “not a radical proposal.” Its $14 billion in five-year Medicaid savings would be about 1 percent of the $1.12 trillion the program is projected to spend over that period.

Democrats said the GOP plans would harm people who rely on federal programs and mask how bad deficits will be by omitting much of the future costs of wars in Iraq and Afghanistan, a long-term easing of the alternative minimum tax, and Bush’s plan to revamp Social Security.

“I’ll give you credit for being bold and aggressive,” said Rep. John Spratt of South Carolina, the budget panel’s top Democrat. He said the spending cuts “do a world of hurt, but in the end they barely dent this big deficit.”

Congress’ budget sets overall spending and tax targets while leaving specific revenue and expenditure changes for later bills. It does not need the president’s signature.

Final congressional approval of the budget may prove dicey, despite Republican control of both chambers. GOP moderates are eager to limit new cuts in taxes and domestic programs, while conservatives want the deepest possible tax reductions and strict spending restraints.

Plan would require later cuts in entitlements
Should it pass, the budget would require lawmakers for the first time since 1997 to craft later bills carving savings from automatically paid benefits for millions of Americans.

Nussle’s budget did not specify which programs would be hit by the proposed $69 billion reductions. But based on the House committees assigned to find the savings, the Medicaid program for the poor and elderly could be targeted for up to $20 billion in five-year cuts — more than double Bush’s plan — plus other reductions for student loans, welfare, farmers and veterans.

Democrats on the House panel offered a parade of amendments aimed at blocking the use of Social Security surpluses to pay for tax cuts and boosting federal spending for veterans, schools and other programs. All were rejected.

By law, benefit programs grow automatically to cover inflation and population growth. While overall spending for these programs would continue growing under the GOP congressional budgets, that growth would be slowed through lower benefits, lower payments to providers or smaller numbers of recipients served.

The House budget also called for $106 billion in five-year tax cuts, about the same as Bush’s plan. In a nod to moderates, the House measure would give only $45 billion of those procedural protections from Senate filibusters that can kill legislation, though House leaders were aiming eventually to approve the full $106 billion.

Gregg’s budget would protect $70 billion in tax reductions.

House, Senate plans include war costs
While Bush proposed no new spending for wars in Iraq and Afghanistan next year, the House and Senate plans assumed costs of $50 billion in 2006.

Both chamber’s budgets would follow Bush’s plan go increase Pentagon spending by 4.8 percent to $419 billion. Both would also boost anti-terrorism spending at home.

They would also put tight reins on domestic spending, with the House cutting those programs by 0.8 percent. Final decisions on details will await spending bills later this year.

In a victory for advocates of developing domestic energy, the Senate budget would allow mineral drilling in Alaska’s Arctic National Wildlife Refuge and protect the proposal from Senate filibusters that need 60 of 100 senators’ votes to halt. The House budget did not include the drilling language, meaning the fight will have to be resolved later this year.

Following last year’s record $412 billion deficit, the House projects a 2006 deficit of $376 billion while the Senate estimates a $362 billion shortfall.

Both chambers claim to meet Bush’s goal of halving the deficit by 2009, though Bush’s starting point is his overestimated 2004 shortfall of $521 billion.

The two chambers also see shortfalls dipping close to $200 billion by 2010. That is the last year covered by both plans, just as the baby boom retirement is expected to start driving shortfalls higher again.