Budget cutters line up targets

Congressional leaders seek to cut $39-50 billion over five years.

In the House, the GOP leadership is considering cutting $844 million out of food stamps. One proposed change would make legal immigrants wait seven years until they become eligible for food aid, instead of the current five.

In the Senate, by contrast, Medicare is a budget target. Senators are currently debating whether to eliminate a $10 billion fund intended to entice private insurers into the giant government health program.

This week Washington's budget-cutting effort enters the realm of specifics. The Senate has begun debate on its outline of $39 billion in reductions over five years, while the House leadership is putting final touches on its own $50 billion cut plan.

For many lawmakers, this is when the hard part begins. It's one thing to talk tough about the need to restrain federal spending. It's something else to see close up who and what may be affected - while affected parties lobby hard to keep their programs intact.

"I figured they'd get to about here and then find it difficult," says Stan Collender, a veteran budget expert in the Washington office of Financial Dynamics Business Communications. "These cuts aren't real until you see the details."

Of course, the fact that Congress is pursuing large budget-reduction packages in some ways represents a turnabout of fortune. Only a month and a half ago, then-House Majority Leader Rep. Tom DeLay (R) of Texas told reporters that federal spending had already been pared down "pretty good." House members could pursue fiscal responsibility on their own, he said, but it wasn't one of his top priorities.

Then some House conservatives, fed up with what they considered the big-spending ways of the Bush administration, revolted. Mr. DeLay had to resign his leadership post following his criminal indictment in Texas. And the scale of federal spending on hurricane relief and reconstruction drove many lawmakers to think about cutting other spending.

The result: Both chambers of Congress are moving budget-cut packages that are larger than they had planned.

The full Senate this week is debating its blueprint, which focuses on modest reductions in Medicare and Medicaid. It includes an unrelated but controversial provision that would open up the Arctic National Wildlife Refuge to oil drilling. A vote could come as early as Thursday.

The Senate's less ambitious proposals reflect the fact that moderates make up key swing votes both in the full chamber and on key panels such as the Senate Finance Committee. Reductions in Medicare and Medicaid largely would not directly affect beneficiaries, for instance. Instead, the plan takes aim at drug companies, insurers, and other health-related entities.

The $10 billion fund that senators may vote to eliminate is intended to increase payments to private insurers, to lure them into the program. But such insurers are joining anyway, and an independent commission has already recommended that such payments be cut.

To lure votes, the Senate package also includes some spending increases - doctors, for instance, would be spared some reductions in Medicare reimbursements. Overall, the plan aims to cut $39 billion over five years, with $6 billion of those reductions coming in the fiscal year which began last Oct. 1.

The House plan, for its part, might directly affect more individuals. Liberals have derided it as balancing the budget on the backs of the poor.

"The proposals passed out of House committees do not reflect an approach of shared sacrifice, particularly when viewed as part of a budget reconciliation process that also facilitates the adoption of more tax cuts," concludes an analysis by the generally liberal Center on Budget and Policy Priorities.

The proposed cuts in food stamps, of which the change in immigrant eligibility is only one, might drop about 300,000 people from the program. A bid to trim federal funds for state child support enforcement programs, estimated to save $4.9 billion over five years, has already drawn opposition from the National Governors Association.

Overall, the House is aiming at five-year savings of $50 billion. GOP leaders are currently tying up the work of various committees into one package; the full House might vote on the issue next week.

Compared with the size of the yawning federal deficit - an estimated $1.6 trillion over the next five years - this year's budget cuts can be seen as minimal. The Senate's plan would reduce Uncle Sam's flow of red ink by just 2 percent through 2010.

But Congress has to start to do something, say budget hawks, or future generations of Americans will be burdened with heavy taxes to pay off the swelling federal debt.

US Comptroller General David Walker told reporters on Monday that Congress should think about reimposing legislative budget controls, such as caps on discretionary spending. Medicare and Medicaid, which together now constitute 19 percent of all federal outlays, need to be reined in, he said.

"If we don't change our path, there will be an adverse effect on economic growth, quality of life, and national security," said Mr. Walker at a seminar on fiscal issues.