Like fussy children, lawmakers on Capitol Hill sometimes need a spoonful of sugar to help the medicine go down. This budget season, the medicine is a $39 billion-plus deficit-reduction bill. The sweetener? Lots of new spending to go along with the budget cuts.
Republicans are touting the upcoming budget bill as the first effort to cut federal benefit programs in eight years. But there’s no shortage of grumbling from fiscal conservatives over the new spending padded into the Senate version of the budget heading to the Senate floor next week.
The nation’s doctors would get an $11 billion reprieve next year from a scheduled cut in their Medicare payments. Dairy farmers won a $1 billion extension of milk income payments. College students would get more than $8 billion in new grants, and more disabled children would retain Medicaid health coverage.
Then there’s $3 billion to help people watch TV. That money will subsidize television converter boxes for an upcoming changeover to digital broadcasts.
The flood of new spending programs is made possible by congressional budget rules that permit deficit-cutting legislation to carry new spending so long as it’s paid for with new receipts or spending cuts elsewhere.
Not so happy
Fiscal conservatives are less than thrilled. They’re pushing to limit spending add-ons so Congress will be able to make net spending cuts that exceed those called for under the budget plan passed earlier this year. The spate of new spending makes that a lot more difficult.
“My concern with the current (bill) is that it’s going to be packed with more goodies that are going to chip away at the effectiveness of it,” said Stephen Slivinski, director of budget studies for the conservative CATO Institute.
All told, Senate committees would add more than $30 billion in new spending, offset by cuts elsewhere and some new revenues. House GOP leaders vow to limit the amount of new spending in an attempt to cut spending by $50 billion. Still, the House version of the budget plan will include at least some new spending, though not as much as the Senate.
The Senate measure is designed to save $35 billion, but the Congressional Budget Office calculates it would actually reduce net spending by $39 billion. Some of the unexpected bonus may be claimed for Katrina relief.
Senate conservatives such as John Ensign, R-Nev., vow to knock some spending out of the bill during floor debate next week.
Depending on the add-ons
For many lawmakers, though, the spending add-ons are critical to winning their votes. In the Senate Agriculture Committee, for example, extending the Milk Income Loss Contract program helped secure the vote of Rick Santorum, R-Pa., for the overall package of farm cuts. The MILC program pays farmers when milk prices are low and its benefits are especially popular in states with smaller dairy herds, like Pennsylvania.
“Some of those spending items are in there, quite frankly, to grease the skids for other stuff,” said G. William Hoagland, top budget aide to Senate Majority Leader Bill Frist, R-Tenn. “If you start taking pieces out, you will jeopardize the final vote.”
Senate Finance Committee Chairman Charles Grassley, R-Iowa, confronted a similar dynamic assembling measure with $10 billion in net cuts to Medicaid and Medicare, the federal health care programs for the poor and elderly. That bill includes $16 billion in spending add-ons, financed by $26 billion in spending curbs.
The new programs in Grassley’s plan, approved by Finance on Tuesday, include modest temporary Medicaid coverage for hurricane victims and a new $800 million plan to help parents with severely disabled children retain Medicaid coverage. Grassley told reporters he could have saved taxpayers more money if he’d assembled the package with ranking Finance Democrat Max Baucus of Montana.
“My (Republican) colleagues are not brave enough,” Grassley said.
The broader budget bill is also partially financed by some easy-to-swallow provisions such as $10 billion to be raised through government auctions of the airwaves. That’s about as close to free money as it gets in Washington.
But only half of the $10 billion in television spectrum sales would help trim the deficit under a spending-heavy plan by Commerce Committee Chairman Ted Stevens, R-Alaska. In addition to $3 billion for digital converter boxes, $1 billion would go to state and local governments for improved communications equipment for first responders, while $500 million would upgrade 911 emergency call centers and fund national alert and tsunami warning centers.
There’s a little sleight of hand in there as well. About $3 billion in projected savings from a new Medicare “pay for performance” initiative for hospitals is illusory. Lawmakers claim $4.5 billion in savings from the plan, which withholds a small portion of hospital Medicare payments and rewards better performing hospitals later on.
But most of that is phantom savings generated by simply shuffling money between fiscal years. Still, it’s used to offset real spending increases.
“Two-thirds of that ($4.5 billion) ... is totally bogus,” said Sue Nelson, a former aide to Senate Budget Committee Democrats. “It’s a payment shift.”