Congree Passes Budget with Cuts in Medicaaid and in Taxes

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April 29th, 2005 1:28 pm
Congress Passes Budget With Cuts in Medicaid and in Taxes

By Sheryl Gay Stolberg / New York Times

WASHINGTON, April 28 - The House and Senate broke a lengthy impasse over federal spending Thursday night, narrowly adopting a $2.56 trillion federal budget for 2006 that aims to trim the growth of Medicaid by $10 billion over five years, add $106 billion in tax cuts and clear the way for oil drilling in an Alaskan wildlife refuge.

The back-to-back votes - 214 to 211 in the House and 52 to 47 in the Senate - ran mostly along party lines. As the roll was called in the Senate, shortly before midnight, Vice President Dick Cheney sat in the chamber, ready to cast his vote to break a tie, if necessary.

The passage came just hours after House and Senate negotiators reached a budget deal, resolving differences that revolved largely around Medicaid, the government insurance program for the poor. The budget resolution instructs lawmakers to freeze spending in most domestic programs, but not for the military and for domestic security.

Congress has failed to adopt a budget for two of the last three years, and Republican leaders hailed the votes as a victory. With the federal deficit at a record level, President Bush and Congressional Republicans - prodded by fiscal conservatives in their party - have promised to rein in government spending. Adopting a budget was a test of their ability to make good on that vow.

At his news conference Thursday night, moments after the House passed the budget but before the Senate voted, Mr. Bush cited the resolution as an example of his ability to get things done on Capitol Hill.

"There's the budget agreement," the president said, "and I'm grateful for that. It shows we are making progress."

Earlier in the evening, Representative Tom DeLay of Texas, the House majority leader, called the spending plan " the best since the historic Balanced Budget Act of 1997."

Shortly before the House began its vote, Mr. DeLay said, "This is the budget the American people voted for when they returned a Republican House, a Republican Senate and a Republican president to the White House last November."

Democrats derided the budget as misguided, saying it would slash spending on programs for the most vulnerable members of society, give lavish tax cuts to the wealthiest Americans, force veterans to spend more on health care and deepen the deficit, instead of reducing it, as Republicans contend it will.

The House Democratic leader, Representative Nancy Pelosi of California, called it "a missed opportunity" and "an assault on our values." Senator Kent Conrad of North Dakota, the senior Democrat on the Senate Budget committee, called it "a mistake for the country."

Although the budget resolution is nonbinding, it is important because it provides an economic blueprint that lawmakers can use to pass specific tax and spending legislation later in the year. For instance, the resolution assumes $106 billion in tax cuts over the next five years, and explicitly directs Congress to enact legislation providing for $70 billion of those cuts. The intent, its authors say, is to extend Mr. Bush's tax cuts on capital gains and dividend income.

The budget resolution also directs lawmakers to come up with $2.4 billion in energy revenues - a provision that Congress can use to pass legislation opening the Arctic National Wildlife Refuge to oil drilling.

"It's high time," said one leading advocate of drilling, Senator Pete V. Domenici, the New Mexico Republican and chairman of the Senate Energy Committee.

Senator Lisa Murkowski, the Alaska Republican who has led the fight in Congress to open the refuge, gave the thumbs-up sign and said, "Love it!"

But in the House, the drilling provision drew objections from some Republicans who voted against the budget because they opposed opening the Arctic refuge to oil exploration, Speaker J. Dennis Hastert said. Mr. Hastert seemed unruffled when asked about the closeness of the vote. "But we won," he said.

In the Senate, three Republicans - Senators George V. Voinovich and Mike DeWine of Ohio, and Lincoln Chafee of Rhode Island - joined with 43 Democrats and one independent to oppose the plan. Senator Joseph I. Lieberman, Democrat of Connecticut, was absent.

This year is the first time since 1997 that Congress has used the budget to trim the explosive growth of so-called entitlement programs, particularly Medicaid. It directs lawmakers to reduce the growth of entitlements - including farm subsidies and a federal pensions guarantee as well as Medicaid - by a total of $35 billion over the next five years.

Mr. Bush originally proposed a $51 billion reduction. The architects of the Congressional budget say the $35 million is significant nonetheless.

"This is a major step," Senator Judd Gregg, Republican of New Hampshire and chairman of the Senate Budget Committee, said of the entitlement trims.

Mr. Gregg and his House counterpart, Representative Jim Nussle of Iowa, say the budget will fulfill Mr. Bush's goal of cutting the federal deficit in half over five years, bringing the figure down to $210 billion in 2010.

Democrats dismiss that contention as flawed, saying the budget ignores shortfalls in Medicare, the health insurance plan for the elderly, as well as the cost of the war in Iraq.

"We now face record budget deficits, and we face them for as far as the eye can see," Senator Conrad said, pointing to charts that resembled a flood of red ink.

Democrats also said the budget would be devastating to poor people who depend on programs like Medicaid.

"We're attacking the most vulnerable in our society," Senator Jon Corzine, Democrat of New Jersey, said.

Some moderate Republicans, led by Senator Gordon H. Smith of Oregon, agreed, and the resulting dispute over Medicaid threatened to derail the entire budget process. When the budget passed the Senate last month, Mr. Smith led a successful effort to eliminate any spending reductions on Medicaid and instead create a bipartisan commission to study the future of the program.

Mr. Smith's proposal passed the Senate on a bipartisan vote. But the House budget recommended steep cuts in the growth of Medicaid, setting off a dispute between the two chambers. That prompted weeks of intense negotiations On Thursday, Mr. Smith said that he had agreed to the demands of the Republican Senate leadership for $10 billion less in Medicaid spending growth and that White House officials had agreed to create a bipartisan commission that would probably finish its work in 18 months."