Friday, March 18, 2005

In Blow to Bush, Senators Reject Cuts to Medicaid

The New York Times
March 18, 2005
In Blow to Bush, Senators Reject Cuts to Medicaid

WASHINGTON, March 17 - President Bush's plans to reduce the explosive growth of Medicaid, the government insurance program for the poor, ran into a roadblock on Thursday when the Senate voted to strip its 2006 budget of all proposed Medicaid cuts. But in a surprise move, the Senate voted to approve $34 billion more in tax cuts than Mr. Bush requested.

"It provided a huge amount of tax cuts," said Senator Pete Domenici, Republican of New Mexico and one of a handful of members of his party to vote against the tax cuts. "We didn't know what we were doing."

The senators agreed, 52 to 48, to strike language calling for $14 billion in Medicaid spending cuts over the next five years. Instead, they decided to create a commission to study the program and recommend changes, reporting back in one year.

The Medicaid vote, a rebuke to both the White House and the Senate leadership, put the House and Senate on a collision course. It came just hours before the House, by a vote of 218 to 214, approved its own $2.57 trillion budget resolution that included $69 billion in cuts to entitlement programs, including Medicaid.

The Senate late Thursday night passed its budget for $2.6 trillion, by a vote of 51 to 49.

With the two chambers so far apart on spending reductions, the chairman of the House Budget Committee, Jim Nussle, Republican of Iowa, warned that reconciling the two documents would prove difficult.

"We have arguably our work cut out for us now," Mr. Nussle said.

He characterized the Medicaid vote as a setback for Mr. Bush's domestic agenda, suggesting that "the momentum" of the entire package, including spending control, Social Security and tax code changes, was now at stake.

"If the Senate is not going to follow in the first item on the president's agenda," he said, "then that is, I think, a signal that the president needs to receive and react to immediately."

Mr. Bush praised the House budget in a statement, saying, "It closely follows my budget proposal and reflects our shared commitment to be wise with the people's money and restrain spending in Washington." He did not comment on the action in the Senate.

The Senate's decision to strike the Medicaid cuts came in a chaotic, daylong voting marathon as lawmakers rushed to finish work on the budget before leaving for their two-week Easter recess, breaking only to consider legislation that would have allowed a federal court to review the case of Terry Schiavo, a Florida woman who is in a vegetative state and whose feeding tube is scheduled to be removed on Friday.

Senators spent nearly the entire day in the chamber, voting on more than two dozen budget amendments, on matters including national security, vocational education grants and prescription drugs.

The tax cut measure, offered by Senator Jim Bunning, Republican of Kentucky, nearly doubled the amount in the budget to pay for tax cuts, adding almost $64 billion to the $70 billion that Republican leaders originally proposed.

Mr. Bunning's measure would repeal an unpopular tax on Social Security benefits that was enacted in 1993. It passed 55 to 45, with five Democrats backing the plan and five Republicans breaking ranks to oppose it.

"Let us be clear," Senator Kent Conrad of North Dakota, the senior Democrat on the budget panel, said. "the Bunning amendment doubles the tax cut."

The Senate voted 66 to 31 to keep financing for urban development grants despite a White House proposal to trim them substantially.

It rejected, 54 to 46, a Democratic effort to strip cuts in farm subsidies from the budget. And a proposal to allow the Department of Health and Human Services to negotiate directly with pharmaceutical companies when buying prescription drugs for Medicare beneficiaries was narrowly defeated, 50 to 49.

But the amendment striking the Medicaid cuts, sponsored by Senator Gordon Smith, Republican of Oregon, was by far the most troubling to the Republican leadership. Seven Republicans joined with the Senate's 44 Democrats and one independent to approve the proposal.

Mr. Smith, who had been under intense pressure from party leaders to change the measure or withdraw it, said that he thought the vote sent a strong message that his colleagues were uneasy about the reductions.

"I think a lot of us have trouble just looking at a ledger," Mr. Smith said, "while ignoring some of the most sensitive needs of the poor."

The issue brought forth such passion that Senator Judd Gregg, an ordinarily taciturn New Hampshire Republican who, as chairman of the Senate Budget Committee, proposed the $14 billion in spending reductions, addressed Mr. Smith in deeply personal terms on the Senate floor. Mr. Smith's amendment, Mr. Gregg said, would "gut the only thing in this budget" that would help tame the deficit and enforce fiscal discipline.

"And it's being done by Republicans," Mr. Gregg added. "You know, you just have to ask yourself how they get up in the morning and look in the mirror."

The debate over cuts in Medicaid and other so-called entitlement programs has been especially contentious on Capitol Hill this year. With the federal deficit at record levels, Mr. Bush has proposed a budget that, for the first time since 1997, seeks to reduce federal spending by cutting back entitlements. Such programs, where spending is determined by eligibility, are growing at a rapid clip.

Mr. Bush has proposed $51 billion in entitlement savings. The House budget goes further, calling for $69 billion in spending reductions on entitlements. The version proposed by Senate Republicans included $32 billion in entitlement reductions, $14 billion of it directed at Medicaid. Fiscal conservatives see the cuts as the only way to chip away at the deficit. But because the states and the federal government split the cost of Medicaid, governors around the country, including many Republicans, have voiced displeasure. In the past weeks, they have been lobbying intensely to resist the reductions.

"We need to make reforms," said Senator Mike DeWine, Republican of Ohio, who voted in favor of Mr. Smith's amendment. But Mr. DeWine also said he wanted states to have flexibility to make changes to Medicaid before any reductions.

In addition to Mr. DeWine and Mr. Smith, the Republicans voting for the amendment were Senators Susan Collins and Olympia J. Snowe of Maine, Lincoln Chafee of Rhode Island, Norm Coleman of Minnesota and Arlen Specter of Pennsylvania.

In the House, adoption of the budget was briefly threatened by a revolt among Republican fiscal conservatives, who formed a rare alliance with moderates in a bid to force the House leadership to accept new rules that would make it harder for lawmakers to exceed budget limits when they pass spending measures.

The big question now is what will happen when the House and Senate try to reconcile their budgets. "Things are not starting off on a good note," said Representative Jeb Hensarling, Republican of Texas, who led the conservatives' revolt.

The budget is important because it sets fiscal and tax priorities for the coming year. But this year, it also has extra provisions that Republicans desperately want to become law. On Wednesday, the Senate used a budget maneuver to clear the way for opening up the Arctic National Wildlife Refuge in Alaska to oil drilling; if the budget does not pass, the drilling measure is doomed.

Senator Smith said he would probably vote for whatever bill emerged from the House-Senate conference because he did not want to doom the budget process.

Carl Hulse and David D. Kirkpatrick contributed reporting for this article.