Senate approves billions in spending cuts

Reuters

Senate approves billions in spending cuts

By Richard Cowan

WASHINGTON (Reuters) - The U.S. Senate on Thursday approved around $36 billion in net spending cuts over five years in a first step toward slowing the explosive growth of popular programs that help the poor and the elderly as well as students, farmers and others.

The partisan 52-47 vote came as Democrats mostly boycotted the initiative and argued that even more onerous cuts on the poor being advanced by the House of Representatives would end up in the final version of legislation.

Republicans touted the spending-cut bill, the first of its kind since 1997, as an "aggressive proposal" to bring mandatory programs under control. Even so, the estimated $36 billion in savings would be dwarfed by the $13.8 trillion the government is expected to spend over the next five years under a Republican budget plan approved in April.

"Today, the Senate took an important step forward in cutting the deficit. I commend Senate leadership and the other senators who supported this spending-reduction legislation," President George W. Bush said in a statement.

"Congress needs to send me a spending-reduction package this year to keep us on track to cutting the deficit in half by 2009," he said.

Democrats ridiculed the effort, saying the Republican-named "Deficit Reduction Act of 2005" would, in the words of Sen. Frank Lautenberg of New Jersey, be more aptly called the "Moral Disaster of Monumental Proportion Reconciliation Act."

Democrats say the bill would actually achieve no deficit-reduction if Republicans also succeed with plans to pass additional tax cuts for the wealthy and others.

With a $70 billion price tag, the tax bill would add $34 billion to U.S. deficits after counting the spending cuts.

GRAB-BAG OF CUTS

Besides saving about $10 billion over five years by restructuring some Medicare and Medicaid health programs for the elderly and poor, the Senate plan is a grab-bag of spending reductions, including nearly $1.3 billion over five years on farm subsidies and $5.4 billion in higher premiums companies would pay to a federally backed pension fund.

Also as part of the bill, big oil won a victory with narrow approval of a controversial plan to allow oil drilling in Alaska's Arctic National Wildlife Refuge (ANWR).

Gulf Coast states, devastated by Hurricane Katrina last summer, would get nearly $3 billion in new funds to help restore coastal areas and aid schools.

The bill also provides an $11.4 billion blueprint for funding Amtrak operations and capital needs. The plan includes proposals to competitively bid some routes and reform business practices of Amtrak, the federally subsidized railroad.

While the Bush administration supports the spending-cut goals of the Senate and House, it has warned senators that it could veto the bill. It objected to a provision that deletes a Medicare fund the White House believes ensures that private health-care plans take part in the federal health care program.

Across Capitol Hill, the House Budget Committee, on a nearly party-line 21-17 vote, approved a Republican plan to cut a net $54 billion from mandatory programs over five years.

The proposal includes $844 million in food stamp cuts for the poor by tightening some eligibility requirements and cutting programs related to child support and child welfare.