Republicans Still Plan to Cut Spending

Republicans Still Plan to Cut Spending

By ANDREW TAYLOR
Associated Press Writer

WASHINGTON (AP) -- Republicans are going ahead with long-standing plans to trim Medicaid, food stamps and other benefits, even though party moderates are balking at cutting programs that aid the poor while hundreds of thousands are homeless from Hurricane Katrina.

The amount of savings - no more than $35 billion spread over five years - is modest at best, but it is the first time in eight years that Congress has shown any seriousness about reining in the automatic growth of such benefit programs.

Republican leaders have decided to delay the budget-cutting effort for at least a few weeks following widespread complaints that the government reacted too slowly in coming to the aid of Katrina's victims. When the effort resumes next month, there's less likelihood it will succeed because of Katrina's affect on the political landscape.

The proposed cuts pale when compared to the unprecedented price tag of the Katrina relief and recovery. In the past week alone Congress has appropriated $62 billion to deal with the worst natural disaster in the nation's history. The government is spending more than a $1 billion a day on the relief effort.

For the GOP's fiscal conservatives, however, it's as important as ever for lawmakers to take whatever opportunity they can to cut spending. Recent acts by Congress, including a huge highway bill larded with hometown projects, have reinforced Congress' reputation with the GOP base for playing loose with taxpayers' money.

"The reform of government needs to continue," said House Budget Committee Chairman Jim Nussle, R-Iowa.

Cuts are planned for the Medicaid program for the poor and disabled, student loan subsidies for banks, farm subsidies and food stamps, among others. Katrina has helped solidify opposition to them among moderates in both parties.

"At a time when millions are displaced and seeking federal and state assistance, we believe it is inappropriate to move forward on ... a legislative package that would cut funding for Medicaid, food stamps ... housing and education," Sens. Gordon Smith, R-Ore., Olympia Snowe, R-Maine, Jeff Bingaman, D-N.M., and Blanche Lincoln, D-Ark., wrote in a letter this week to the chairman of the Senate Finance Committee.

Smith and Snowe's votes are needed if $10 billion in Medicaid cuts are to advance over unified Democratic opposition, and their hesitance puts those cuts in doubt.

Democratic leaders say it is folly to cut the very programs that help hurricane and flood victims.

"It makes no sense to consider such a bill at a time when the massive needs of those affected by Hurricane Katrina are still being assessed," Sen. Harry Reid of Nevada and Rep. Nancy Pelosi of California wrote in a letter to GOP leaders.

GOP spending hawks counter that entitlement programs are spiraling out of control and that the pending effort would, according to Senate Budget Committee Chairman Judd Gregg, R-N.H., "reduce the rate of growth of Medicaid over the next five years from 41 percent to 40 percent - 1 percent."

Democrats contend Congress would be better off doing nothing, since a companion plan to extend expiring tax cuts would pad the deficit by $70 billion. The tax cuts include extending cuts on capital gains and dividends taxes, which generally help wealthier taxpayers.

Senate Republicans, however, have shelved indefinitely plans for a vote to repeal the estate tax, which would benefit the heirs of multimillionaires.

Cutting spending is supposed to be what Republicans like to do best. When the GOP class of 1994 stormed Washington a decade ago, its top priority was to balance the budget by reining in federal spending on government benefit plans like Medicaid and the Medicare program for the elderly. Congress last took on the growth in entitlement programs like Medicare and Medicaid in 1997.

The return of big budget deficits from Bush's tax cuts, the Sept. 11 terrorist attacks and the cost of wars in Iraq and Afghanistan prompted this year's effort to try again.

The proposed $35 billion in cuts is barely a dent, just 3/10ths of 1 percent of a budget predicted to total $14 trillion over the next five years. There's little stomach for stronger action, but conservatives say the precedent is urgently needed for when the Baby Boom generation retires and drastically inflated Medicare and Social Security costs force more cuts.

"It's an important experience for lawmakers to get used to," said Heritage Foundation budget analyst Brian Reidl.

Not all of the deficit reduction package would come from spending cuts. The Senate Energy Committee, for example, is poised to approve a hotly contested plan to open the Arctic National Wildlife Refuge to oil drilling. The move would generate $2.4 billion in leasing revenues.

Separately, the Commerce panel is poised to raise $4.8 billion or more by authorizing the auction to wireless companies of analog airwaves that TV stations will relinquish when they switch to digital technology.