Panel Drops Tax Breaks From Bush's Budget

Associated Press
Friday, March 10, 2006

A Senate panel approved yesterday a scaled-back version of President Bush's budget, shorn of signature initiatives such as tax relief and cuts to federal benefit programs such as Medicare.

With Republicans nervous about cutting popular programs in an election year and still nursing wounds from a bruising round of benefit cuts last year, the Budget Committee gave a party-line 11 to 10 approval to a budget that takes few risks but also makes little progress in addressing the long-term fiscal problems facing the government.

Driven by political concerns, Budget Committee Chairman Judd Gregg (R-N.H.) dropped Bush's proposals for expanding tax-free medical accounts and restraining Medicare spending. He also seeks to shift about $5 billion from the Pentagon and foreign aid budgets to cash-strapped domestic programs such as education and homeland security.

The measure will head to the Senate floor Monday, but with congressional election-year anxiety running high, there is no guarantee the full Senate will pass the GOP budget blueprint.

"I'm not going in with the votes, I can tell you that much," Gregg said. "There's a high level of angst and indecision out there."

Gregg's plan would produce a $359 billion deficit next year. Deficits would drop to $177 billion by 2011.

Democrats castigated Gregg's plan, saying it would produce those lower deficits only by leaving out the long-term costs of the war in Iraq and the price of establishing Bush's Social Security personal accounts, and by not addressing the ever-increasing impact that the alternative minimum tax is having on middle-class taxpayers.

"Now is the time that cries out for bold action," said Sen. Kent Conrad (D-N.D.). "We need to reduce our deficits and rein in the exploding debt that continues under this plan."

But most of the amendments offered by Democrats would increase spending on a variety of programs, including veterans' medical care, port security and firefighter grants. They were rejected in votes early yesterday afternoon.

Gregg's plan has not won much better reviews from Republicans, including Sens. Pete V. Domenici (N.M.), Lamar Alexander (Tenn.) and John Cornyn (Tex.).

They said it does not address the spiraling long-term growth of Social Security, Medicare and other benefit programs, which threatens to swamp the budget as the baby-boom generation retires.

Unfortunately, the budget does not "help Congress reform such programs as Medicaid and Medicare, which both grow at an average rate of around 8 percent each year through 2015 and will continue to eat up more of the total federal budget," Cornyn said.

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