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From <Em>CQ Today</Em>: GOP Begins Effort to Cut Spending

OCTOBER 14, 2005 -- Republican leaders hoping to appease conservatives in an upcoming round of budget cuts face significant hurdles, including a compressed timeline, opposition from Senate moderates, and a shuffled House leadership team.

In the aftermath of Hurricane Katrina's devastation, with images of stranded victims playing incessantly on television screens, moderate Republicans and Democrats voiced strong opposition to cutting safety net programs like Medicaid. At the same time, GOP leaders are faced with a revolt from conservatives demanding spending cuts to offset spiraling costs for hurricane relief.

If Republicans accomplish their budget goals this fall, it would be the first time that Congress has significantly reined in the growth of mandatory spending programs since the Balanced Budget Act of 1997 (PL 105-33).

This year's budget-cutting process began in the spring, when Congress adopted a fiscal 2006 budget resolution (H Con Res 95) that called for authorizing committees to produce a five-year, $34.7 billion savings package this autumn. The savings package, as well as a companion $70 billion tax cut bill, are protected by an expedited, filibuster-proof process known as "reconciliation."

House Speaker J. Dennis Hastert, R-Ill., on Oct. 6 proposed increasing the savings target to at least $50 billion over five years along with an across-the-board cut in discretionary programs.

To help accomplish that goal, House Republican leaders have proposed writing a new budget resolution—a highly unusual move that will be the first significant test for House leadership in the wake of the indictment of Rep. Tom DeLay, R-Texas, and his removal as majority leader.

Every Democrat voted against the fiscal 2006 budget resolution, so Republicans have little room for error. GOP leaders also must overcome reluctance within their ranks to doling out budget pain before next year's midterm elections, even though the size of the proposed cuts is small compared to the federal budget deficit and previous deficit reduction packages enacted in the 1990s.

If Congress successfully rewrites its budget, it will be the first time it has done so since 1977, Hastert said. The gambit forced House GOP leaders to delay until Oct. 28 a deadline for authorizing committees to produce their packages of recommended cuts. The panels had been expected to deliver their cuts this week.

Under the reconciliation process, authorizing committees send their packages to the Budget committees, which must assemble them without changes into a bill that is sent to the floor.

The Senate, which so far has rejected the idea of amending the budget resolution, remains on schedule for an Oct. 26 markup by the Budget Committee.

Uncertain Goals
In both chambers, lawmakers are uncertain as to how much savings they ultimately will be asked to produce.

For now, the authorizing committee chairmen have targets established by the fiscal 2006 budget resolution.

To push the total savings from $34.7 billion to $50 billion, House Budget Chairman Jim Nussle, R-Iowa, has proposed that the authorizing committees receive the same percentage increase in their savings targets, but that is not set in stone. And there has been talk within the GOP caucus of slicing significantly more than $50 billion.

Senate leaders also hope to find additional savings in mandatory programs, but have rejected moving forward with a new budget resolution because of a tight schedule that includes passing remaining appropriations bills and debate over Supreme Court nominee Harriet Miers.

Senate Budget Chairman Judd Gregg, R-N.H., and Majority Leader Bill Frist, R-Tenn., have sought to cajole authorizing panels and moderates to approve more savings. Under budget rules, authorizing panels can slice more than the $34.7 billion target without a new budget resolution, said Betsy Holahan, a spokeswoman for Gregg.

"It's a floor, not a ceiling," she said.

Savings Still Small
Even if Congress can find $50 billion in savings in entitlement programs, it would be a minor snip at spending compared with previous efforts at budget-cutting. In 1997, a bipartisan budget-balancing deal sliced $198 billion.

It also would be a mere drop from the bucket of red ink that the government is expected to generate. Even before Hurricane Katrina barreled into the Gulf Coast, the Congressional Budget Office projected a $1.6 trillion cumulative deficit over the next five years. A $50 billion cut represents less than 1 percent of the projected $7.8 trillion in mandatory spending over that period.

And as Democrats are quick to point out, this year's budget resolution would increase the deficit overall, because it envisions as much as $106 billion in tax cuts, including up to $70 billion protected under special reconciliation rules that prohibit filibusters. "The deficit would be in better shape if they just stayed home," said Richard Kogan of the liberal-leaning Center for Budget and Policy Priorities.

G. William Hoagland, chief budget adviser to Frist, called the spending cut package "must-do" legislation, but acknowledged the vote could be so close that it would require Vice President Dick Cheney to break a 50-50 tie.

Added Incentive
While Republicans leaders cite deficit reduction as their chief reason for pursuing the spending cuts, budget rules provide another strong incentive; they would have to shrink their $70 billion tax cut bill unless they have implemented the spending cuts first.

"You've got to eat your spinach before you can have your dessert," Hoagland said.

Maya C. MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, said though the savings plan is relatively small and largely symbolic, she hopes it could pave the way for more savings in the future.

"Maybe it serves as little more than a warmup for what needs to happen," she said. Ultimately, Congress will need to look at both higher taxes and budget cuts to address the country's long-term fiscal woes, she said.

Stephen Slivinski, a conservative budget analyst at the Cato Institute, gave a mild cheer to Hastert for seeking deeper cuts, but said the proof will be in whether a deal actually happens.

"I'm still not convinced that it's anything more than lip service," Slivinski said. He added that he also worries that much of the savings will come from revenue increases from items like auctioning off radio spectrum and charging companies higher pension fees rather than true belt tightening.

"Republicans used to pride themselves on being the Grinch, and now they pride themselves on being the Santa Claus party," Slivinski said.

Contentious Debates Ahead
The hot-button issues that complicate the chances of enacting the budget package include:

  • A plan by GOP leaders to include language that would open Alaska's Arctic National Wildlife Refuge to oil drilling. More than two dozen Republicans in the House and seven in the Senate oppose the plan.
  • A planned $10 billion cut to Medicaid opposed by two key moderate Republicans on the Senate Finance Committee, with possible cuts to Medicare posed as an alternative by Chairman Charles E. Grassley, R-Iowa. Grassley has warned that resistance from the White House and conservative Republicans to his bipartisan proposal for Medicaid relief for low-income hurricane victims threatens to scuttle the savings package.
  • Efforts to add about $10 billion to stave off a scheduled reduction in Medicare payments to physicians, which would require offsetting cuts.
  • Opposition from corporate interests to increasing pension insurance premiums.
  • Billions of dollars in proposed cuts to student loan subsidies.
  • A fight over possible cuts to agricultural subsidies and food stamps, complicated by a regional war over an expiring $600-million-a-year milk subsidy program.

Special Senate Rules
Once the budget packages reach the Senate floor, special rules apply that protect the bill. In addition to prohibiting filibusters, amendments must be germane and debate is limited. However, an amendment to strike a provision is always in order.

Once passed in each chamber, the reconciliation conference committee and subconferences could involve dozens of members of Congress, many of whom were not involved in the last major reconciliation deal eight years ago.

Democratic leaders and left-leaning interest groups, meanwhile, are girding for battle, charging that Republicans are cutting programs for the poor to help pay for another round of tax cuts for the wealthy.

A coalition of labor unions and liberal interest groups launched Emergency Campaign for America's Priorities, a group modeled on the campaign to defeat President Bush's Social Security plan, Oct. 13.

Gerald W. McEntee, the president of the American Federation of State, County and Municipal Employees, said the group will spend "as much as necessary" to stop reconciliation.

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