Thursday, February 02, 2006

House passes, sends Bush $39 bln spending cuts

House passes, sends Bush $39 bln spending cuts

By Richard Cowan

WASHINGTON (Reuters) - Republicans in the House of Representatives narrowly won passage on Wednesday of a controversial bill to trim about $39 billion from domestic spending over five years, capping a yearlong push to cut health care for the poor and elderly and other programs.

By a partisan vote of 216-214, the House approved the bill, sending it to President Bush for signing into law.

Bush said in a statement he was eager to sign the measure and that he would propose further "spending restraint" in the fiscal 2007 budget he will unveil on Monday.

The bill, approved in the Senate in December after Vice President Dick Cheney cast a rare tiebreaking vote, was approved by the House late last year. A small change made by the Senate forced another House vote.

The spending cuts are a high priority of conservative Republicans who want to continue cutting taxes amid huge budget deficits, which could top $400 billion this year.

"Today we can begin the process of controlling out-of- control government spending," said Rep. Jeb Hensarling of Texas, a conservative Republican.

Referring to $70 billion in proposed Republican tax cuts, Rep. Steny Hoyer, a Maryland Democrat, said, "You don't have to be much beyond sixth grade to know that's going to add to your deficits" when offset by only $39 billion in spending cuts.

The Senate on Wednesday began debating a $70 billion tax-cut measure that would extend alternative minimum tax relief through 2006, ensuring that millions of middle-class families will not end up paying the tax that originally was intended for the very wealthy.

Besides the debate over whether the "Deficit Reduction Act" would actually live up to its name, lawmakers argued over how the spending cuts were being carried out.

Republicans said the reductions would begin to rein in "entitlement" programs that will account for a growing part of federal spending as the baby-boom generation qualifies for government health benefits.

"These programs need our reform," said House Budget Committee Chairman Jim Nussle, an Iowa Republican, who said the spending cuts would force improvements.

Democrats blasted provisions to save about $8 billion over 10 years by cutting federal enforcement of child-support payments and saving billions by allowing college student loan costs to rise.


The nonpartisan Congressional Budget Office said this week that cuts to Medicaid spending would affect 13 million poor people, 20 percent of the program's participants. Many of those would be children, the CBO said.

The savings would include higher out-of-pocket costs for prescription drugs and other medical care for the poor.

Lonny Lefever, 53, who lives in the small town of Rosewood in western Ohio, is a Medicaid participant diagnosed as HIV-positive in 1995.

Lefever told Reuters in a telephone interview that higher co-payments on the $1,800 in life-saving prescription drugs he takes each month would erode his only source of income, Social Security disability payments.

Asked how he would cope with higher out-of-pocket costs, Lefever said: "I'll be honest with you. My thought would be to get it (money for prescription drugs) any way I could. But I don't want to go to jail." He added: "I would just hope I'd last until we got some other responsible government in position to change these laws. It's scary."

Besides slowing the growth in many domestic programs, the legislation has a wide impact on U.S. policies.

It would change some banking regulations and increase the premiums companies would pay to the federal pension insurer, the Pension Benefit Guarantee Corporation.

It also would end a U.S. trade law, declared illegal by the World Trade Organization, that let the government distribute duties it collects on foreign goods to American companies.

The bill also sets February 17, 2009, as the deadline when television stations must switch to airing only new digital broadcasts. It provides up to $1.5 billion to help some consumers buy converter boxes so existing televisions do not go dark after the transition.