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House Sends Budget Savings Package to White House

FEBRUARY 1, 2006 -- House Republicans cleared a $39 billion budget savings package on Wednesday, sending President Bush the first cuts in entitlement programs such as Medicare, Medicaid, and student loans since 1997. The vote was 216–214.

Not a single Democrat voted for the package of cuts (S 1932), which will save $39 billion over five years and $99 billion over a decade. Republicans had to struggle to round up the last few votes. Among the last to vote "yes" were Frank A. LoBiondo, R-N.J., and Nancy L. Johnson, R-Conn.

Final action on the savings package sets the stage for a House–Senate conference on a $70 billion package of tax cuts (HR 4297) that will be shielded from filibusters in the Senate under the budget reconciliation process.

The House was forced into a second floor vote on the final version of the savings package after Senate Democrats used budget rules Dec. 22 to strip out three minor provisions. The House had adopted the conference report 212–206 Dec. 19 in a pre-dawn vote and then left for the holiday recess.

The budget savings package will cut about 0.3 percent of federal spending over five years, and will put only a small dent in the budget deficit. But it nonetheless sparked spirited debate, with Republican leaders arguing for overhauling entitlement programs to cut the growth in mandatory spending in advance of the retirement of the baby boom generation. Democrats charged that Republicans were carving needed dollars from programs that help the poor and the middle class to partially offset tax cuts for the wealthy.

Democrats, who are sure to use the vote as fodder for the fall elections, noted that millions of poor Medicaid recipients will be asked to shoulder higher costs for medical care and prescription drugs, and college students and parents will pay higher interest rates on loans. They also highlighted conference deals that spared insurance companies and drug manufacturers from tens of billions of dollars in cuts proposed by the Senate, terming those deals part of a "culture of corruption."

The package also trims agriculture subsidies and child support enforcement aid to states.

The measure includes provisions requiring a conversion to digital television by 2009, $1 billion to continue an expired milk subsidy program for two years, and $1 billion for heating subsidies for low-income Americans in fiscal 2007. It also requires companies with defined benefit pension plans to pay higher premiums for their federal insurance, an effort to shore up the Pension Benefit Guaranty Corporation.

Second Round Ahead?
It remains unclear how hard GOP leaders will push for a fiscal 2007 budget savings package, given the difficulty they had guiding this year's legislation through Congress. President Bush is expected to urge more cuts in mandatory spending when he sends his next budget to Capitol Hill on Feb. 6.

GOP budget leaders have called for such a package, but many rank-and-file members are not so eager in an election year.

Bush, meanwhile, shied away from specifics in his State of the Union address Jan. 31, proposing instead a bipartisan commission to examine Medicare, Medicaid, and Social Security costs. Bush said he will propose cutting 140 government programs, saving $14 billion next year, but gave no specifics.

Opponents of the fiscal 2006 budget bill hope that their efforts—which included lobbying for months in the districts of moderate GOP lawmakers—will make the majority more reluctant to seek a reprise. But fiscal conservatives, noting projections of trillions of dollars in red ink to come, have termed the $39 billion package a warmup for what will be needed in the future.

The House vote was viewed as important to the chances of Roy Blunt, R-Mo., to be elected majority leader in Republican Conference elections Thursday. A defeat on the budget bill would have given ammunition to his rivals, John A. Boehner of Ohio and John Shadegg of Arizona, although Blunt and Boehner denied any connection between the leadership race and the budget vote.

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