Senate imposes budget cuts - barely - that trim Medicaid and student loans

Kicking off a marathon day of key votes and procedural jousting, the Senate Wednesday passed a $39.7 billion budget cuts package. Vice President Cheney, rushing back from an overseas trip, cast his vote to break the 50-50 tie.

But Democrats, citing violations of Senate rules, also succeeded in forcing changes in the bill that now send it back to the House for final consideration, expected early next year.

If it clears the House, the bill would mark the first cut in the growth of mandatory spending in programs such as Medicare and Medicaid since 1997, including $6.4 billion shaved from Medicare and $4.7 billion from Medicaid over the next five years. Overall, the bill cuts spending by less than 0.5 percent.

Republicans argue that the bill is needed the bill to slow the growth of entitlement spending, expected to rise to 62 percent of total federal spending in the next decade, if no action is taken. "Without some changes, these important programs ... will be driven into the ground," said Sen. Charles Grassley (R) of Iowa.

Democrats, making the case that most of the cuts were directed toward the most vulnerable Americans, made a final stand on procedural grounds. Citing the Byrd rule, which bans unrelated items on a budget-reconciliation bill, Sen. Kent Conrad (D) of North Dakota successfully challenged provisions that now must be stripped from the bill in the House.

Five GOP moderates - Sens. Lincoln Chafee of Rhode Island, Susan Collins and Olympia Snowe of Maine, Mike DeWine of Ohio, and Gordon Smith of Oregon - voted with Democrats against the bill.

The delay forces Republicans to take the bill up in an election year and gives opponents time to regroup. "This budget represents bad policy and AARP will now work to explain the full impact of this vote to its more than 36 million members," said AARP's CEO in a statement.