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From the CQ Newsroom: House Budget Would Meet Bush Discretionary Cap, Nick Mandatory Spending

MARCH 29, 2006 -- The House Budget Committee on Wednesday began work on a fiscal 2007 budget resolution that would endorse President Bush's proposed discretionary spending limit and seek $6.8 billion savings over five years from mandatory spending.

The plan presented by Chairman Jim Nussle, R-Iowa, would stick to Bush's proposed $873 billion discretionary spending cap, a 3.6 percent increase over fiscal 2006, and assumes a $347 billion deficit. Although appropriators allocate the spending under the overall cap, Nussle's mark assumes they will fully fund the president's request for a 7 percent increase in Defense spending while making cuts to domestic discretionary programs.

But GOP moderates have already put leaders on notice that they will fight reductions in those programs, and amendments seeking to add spending are expected to be offered Wednesday afternoon.

Nussle's $6.753 billion proposal for savings from mandatory spending would give reconciliation instructions to eight committees, including $4 billion from the Ways and Means Committee. Although it is up to the committees to determine where to find the savings, the assumed savings would not come from Medicare, Medicaid, or student loans, according to Republican staff.

Bush had proposed $65 billion in reconciliation savings over five years, with more than half coming from Medicare, but that was quickly dismissed by congressional Republicans facing mid-term elections at a time when the president's popularity is low.

The Nussle blueprint assumes that existing tax cuts will be extended at a cost of $227 billion over five years, but it provides no reconciliation instructions to do so. Ways and Means Chairman Bill Thomas, R-Calif., said Tuesday that tax cut instructions could end up in the final resolution.

Among the savings proposals assumed in the blueprint is a sale of tungsten, changes to various fees, elimination of a flood insurance subsidy for second homes, and changes to pension laws.

Committees given reconciliation instructions were: Agriculture, $55 million; Armed Services, $175 million; Education and the Workforce, $1.323 billion; Financial Services, $400 million; International Affairs, $250 million; Judiciary, $500 million; and Transportation and Infrastructure, $50 million.

Nussle also is proposing a new rule that would require appropriators to get approval from the Budget Committee or its chairman for some emergency spending. His mark sets aside $4.3 billion to cover natural disasters other than Hurricane Katrina relief. Any natural disaster spending beyond that amount would have to be approved by the committee or its chairman.

But appropriators are already resisting the proposed restrictions.

"We support the concept of budget for emergencies but the Budget Committee's proposal is ill conceived and would have the effect of slowing down Congress' response to natural disasters," said House Appropriations spokesman John Scofield.

Nussle's proposal is one of several that would curtail the powers of appropriators, with Nussle and House leaders also pledging to move line-item rescission authority and so-called "earmark reform."

Nussle's mark also assumes a $50 billion reserve fund for Defense for the war in Iraq and Afghanistan. Additional emergency funds for that purpose could be added without Budget panel approval.

Jim Cooper, a conservative Democrat from Tennessee, said he would offer an amendment with Chris Chocola, R-Ind., to use accrual accounting methods to calculate the size of the budget deficit instead of a cash basis.

Cooper noted that fiscal 2005 ended with a $319 billion deficit on a cash basis, but the accrued deficit was much higher, $760 billion.

Other Democrats were expected to offer amendments to restore billions of dollars for education, health, and community development that would be cut under the assumptions in the Republican budget plan.

Update: The markup wrapped up Wednesday evening, and House floor consideration will likely take place this week.

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