A bipartisan coalition of senators is poised to restore $15 billion of Medicaid savings targeted in the Senate's 2006 budget blueprint, a move that could unravel much of President Bush's efforts to slow the explosive growth of entitlement spending, lawmakers said.
The budget resolution under debate in the Senate would effectively cut domestic spending under Congress's discretion over the next three years, while ordering $32 billion in entitlement savings over the next five years, from agriculture subsidies and Medicaid to housing and student loans. GOP leaders have framed the debate as the first real test of the party's budget-cutting mettle in the face of record budget deficits.
But Sen. Gordon Smith (R-Ore.) said he has a majority of the Senate, including at least half a dozen Republicans, behind an amendment that would delete budget language instructing the Senate Finance Committee to produce $15 billion in savings from entitlement programs under its jurisdiction, primarily from Medicaid. The current language in the budget would protect such legislation from a filibuster, allowing entitlement cuts to pass with a simple, 51-vote Senate majority.
Instead of ordering Medicaid cuts, Smith's amendment would establish a commission that would work with governors and the White House on a package of Medicaid changes for fiscal 2007.
If it passes, Smith's amendment would reduce by half the amount of entitlement savings requested in this year's Senate budget. And it may be the first of several amendments that would temper budget cuts in agriculture, community development and other popular programs. The vote could come as early as today.
"If this is the way we are going to approach these entitlement programs, then shame on us," said Sen. Lindsey O. Graham (R-S.C.).
But supporters of Smith's efforts say the GOP leadership is asking its rank and file to walk a political plank, voting for cuts to popular spending programs even as they reserve room to extend expiring tax breaks aimed largely at the affluent, especially the capital gains and dividends rate reductions that are set to expire in 2008.
"It's all an issue of fairness and balance, and expanding responsibility to both sides of the ledger," spending and taxes, said Sen. Olympia J. Snowe (R-Maine). As it is now written, a vote for the budget will be "difficult, when you're thinking about who [the tax cuts] will benefit versus who Medicaid benefits," she added.
The Medicaid cuts are proving particularly sensitive, given the trouble state governments are already having financing the primary health insurance program for the poor.
"I've seen my state already without these cuts have to eliminate dental care and eye care," said Sen. Mike DeWine (R-Ohio), a co-sponsor of Smith's Medicaid amendment. "So this [budget] would be devastating for the state of Ohio and the poor in Ohio."
But the Medicaid cut may only be the first cut to be dropped. Sen. Norm Coleman (R-Minn.), with the backing of 57 senators, will try to protect the Department of Housing and Urban Development's community development block grant from White House efforts to sharply cut its funding and shift it to the Commerce Department. The amendment could restore nearly $2 billion in cuts to community development that Bush has requested. Farm-state senators will also try to strip out budget language ordering $2.8 billion in cuts to agriculture subsidies.
If those cuts are removed, House Budget Committee Chairman Jim Nussle (R-Iowa) suggested the House and Senate may not be able to reach an agreement on a budget that sets bottom-line limits for spending and tax cuts next year.
"It's very disappointing to us what's going on over there," Nussle told reporters yesterday.
"I hate to be a naysayer about this at all, but I'm not sure how we get a conference with the Senate with where they're at. Last year, they were at least, I think, trying. This year, I think they almost gave up before they started the process," Nussle said.
Nussle has problems of his own. The House budget blueprint could come to a vote as early as today, but a group of House conservatives are threatening to balk unless they are given new budget rules that ensure the spending cuts are adhered to.
Most Republicans see the passage of a tough budget as necessary, given the hand-wringing within the party over a federal deficit that reached $412 billion in 2004.
"We're going to have to show some guts around here and make some tough choices," said Sen. Chuck Hagel (R-Neb.).
At the same time, GOP leaders appear to have beaten back efforts to reimpose budget rules requiring that future tax cuts be paid for by equal proportions of spending cuts and revenue increases.