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Gregg Pitches Idea for $43 Billion in Mandatory Spending Cuts

APRIL 14, 2005 — Budget writers negotiating the fiscal 2006 budget resolution are mulling a split-the-difference solution to the gulf between the House and Senate over the level of mandatory spending cuts to be included in an upcoming budget reconciliation bill.

House and Senate GOP aides said Budget Committee Chairman Judd Gregg, R-N.H., — under pressure from the House to produce far larger cuts than passed by the Senate — has told his House counterpart that the Senate would consider cuts of no more than $43 billion over five years from mandatory spending programs, such as agriculture, Medicaid, and student loan subsidies.

Gregg and House Budget Committee Chairman Jim Nussle, R-Iowa, are conducting informal talks on the fiscal 2006 budget resolution (H Con Res 95). Adoption of a budget is a precursor to any subsequent budget reconciliation bill, a special measure in which savings from various mandatory programs would be bundled together and passed under fast-track rules.

The $43 billion figure on mandatory cuts represents the halfway mark between the House and Senate resolutions. It is far higher than the $17 billion in budget cuts the Senate voted for in adopting its budget resolution on March 17. And it is higher than Gregg's initial budget, which was approved by the committee with $32 billion in cuts.

During the Senate debate, lawmakers adopted an amendment, by Gordon H. Smith, R-Ore., to strip instructions to the Finance Committee to produce $15 billion in budget cuts, the bulk of which was to come from Medicaid.

Neither earlier Senate figure impressed the House, which has voted to instruct eight committees to produce $69 billion in mandatory savings.

But House GOP leaders may not be so quick to reject the latest Senate offer. For starters, the House would be hard-pressed to produce actual spending cuts that would hit that figure, especially after 43 GOP House members signed a letter circulated by Heather A. Wilson, R-N.M., protesting up to $20 billion in cuts to Medicaid.

And Gregg and Senate GOP aides insist that mandatory spending cuts beyond what they have offered would make it impossible to pass a budget. That message may be sinking in.

"We want to make sure we can come up with some reconciliation instructions that really do lead to a bill that we can pass," said a House GOP leadership aide.

A Senate GOP aide said Gregg also told Nussle that the absolute limit for cuts in Medicaid is $12 billion. But a health care lobbyist said "the Medicaid number is probably more solid around the $8 billion level."

In any event, the Senate Finance Committee — with jurisdiction over Medicaid, Medicare, the Supplemental Security Income programs for the poor, and unemployment insurance, among others — would figure prominently in achieving the higher figure. The House Energy and Commerce and Ways and Means committees, which share jurisdiction with Finance, are saddled with reconciliation instructions totaling $38.7 billion. Energy and Commerce has jurisdiction over Medicaid.

Other Senate committees with reconciliation instructions less than their House counterparts include: Agriculture, whose $2.8 billion instruction is $2.5 billion below that House panel; and Health, Education, Labor, and Pensions, whose $8.6 billion instruction is $12.8 billion below the House instruction to the Education and the Workforce Committee.

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