Lawmakers are drafting proposals that would cut billions of dollars from the growth of Medicaid, slice into student loans just as students return to college, pare back food stamps and trim farm price supports in the midst of a midwestern drought.
The raft of bills, due out of 16 committees in the House and Senate by Sept. 16, will present the Republican Party its toughest test of fiscal austerity in nearly a decade. For years, the party has embraced the rhetoric of small government while overseeing legislation that has helped boost federal spending by more than a third since the GOP took control of Congress 10 years ago. Now, Republican lawmakers will be faced with the tough votes needed to slow that growth and enact the first cuts in entitlement spending since 1997.
The impact of the bills will be broad:
* The energy committees will produce legislation to open Alaska's Arctic National Wildlife Refuge to oil drilling to secure $2.4 billion in royalties and other payments.
* The Senate Finance Committee is trying to find as much as $10 billion in savings from Medicaid, trimming anticipated growth by as much as 13 percent at a time when states such as Tennessee and Missouri are throwing tens of thousands of people off their Medicaid rosters.
* The Senate agriculture committee will try to trim farm price supports by $2.4 billion through 2010 while cutting an additional $600 million from food stamps.
* Senate aides are crafting legislation to cut $7 billion from the federal student loan program.
* The House and Senate education and labor committees are expected to draft legislation to raise the premiums corporations pay to the troubled Pension Benefit Guaranty Corp. from $16 to $31 per worker, a move that would improve the government's balance sheet by $6.5 billion.
The bills are mandated by a budget resolution that passed this spring, after acrimonious debate. The budget blueprint mandated $35 billion in entitlement savings over five years, along with $70 billion in tax cuts over that period. By parliamentary rules, the resolution ensures that both the spending and tax cut packages cannot be filibustered, and thus can pass the Senate with a simple majority of 51 votes.
Such rules were established by the Congressional Budget and Impoundment Control Act of 1974, specifically to facilitate passage of tough deficit-reduction measures. But since the GOP took control of Congress and the White House, the rules have been used instead to ease passage of President Bush's major tax cuts. This year, amid pledges of fiscal discipline, Republican lawmakers vowed to restore the budget act's original intent. Now, they have just weeks to turn the abstract pledges of the 2006 budget resolution into detailed legislation.
"It's been off the radar screen, but I can assure you it will be front and center very soon," said Jim Manley, spokesman for Senate Minority Leader Harry M. Reid (D-Nev.).
Congressional aides cautioned that no legislation will take final form until lawmakers return. But a series of meetings through July helped aides begin to shape the bills that must be passed in the coming weeks.
Medicaid will be the largest target. Even with the cuts, the program would grow from $184 billion this year to $250 billion, as Medicaid rosters swell with population growth and the working poor are dropped from employer-provided health plans. The budget resolution mandated that the Senate Finance Committee produce legislation that would carve $10 billion out of entitlement programs under its jurisdiction.
Finance Committee Chairman Charles E. Grassley (R-Iowa) had hoped to find all $10 billion from Medicaid, but committee and Senate leadership aides say divisions in the panel may force him to lower that Medicaid target. Instead, some savings will have to come from Medicare and welfare programs.
Record high gasoline prices should ease passage of legislation to open Alaska's Arctic wilderness to oil drilling, a move that environmentalists have thwarted for decades.
"Timing's everything in this town," said a senior Senate GOP aide, who spoke on the condition of anonymity because the proposals have not been finalized.
But timing will make other proposals far more difficult, aides conceded. Cuts in farm price supports would come as farmers in Illinois, Missouri and parts of Iowa cope with drought. Senate aides say they can find $7 billion in savings from federal student loans by squeezing the banks that act as middlemen. But with students just returning to school, the timing of the proposal will feed into Democratic attacks.
"For the student, this shouldn't feel like anything," the senior Senate aide said. But, he conceded, "This one's going to cause some consternation."
The increase in premium payments to the Pension Benefit Guaranty Corp. is strongly opposed by business interests that maintain the move could prompt companies to drop traditional pension plans rather than face the added cost.
Democrats intend to make the Republicans squirm, especially since the sixth tax cut in five years will be moving simultaneously.
"These [spending] cuts are deeply misguided and are only needed to make a partial down payment on the deep tax cuts coming," said Thomas S. Kahn, Democratic staff director of the House Budget Committee.
The cost of the tax cut measure must total $70 billion. But Grassley hopes to craft legislation that would cut taxes by $90 billion over five years, while closing enough tax loopholes to bring the net cost down to the $70 billion price tag that can pass the Senate without a filibuster.
Under Grassley's proposal, the deep cuts in the tax rates on dividends and capital gains, approved in 2003, would be extended through 2010 from their expiration date of 2008. A tax deduction for college tuition, which is set to expire this year, would also be extended through 2010, as would a tax incentive for low-income savers. The package would also include a one-year measure to slow the reach of the alternative minimum tax, a parallel income tax designed to ensure the affluent pay taxes but which is increasingly affecting the middle class.
A senior GOP tax aide said $20 billion in tax loophole closures should blunt Democratic charges that Republicans are cutting programs for the poor to pay for capital gains and dividend cuts for the rich.
But Democrats say that will be precisely the point they will try to drive home. "The Democrats will make very clear that there's really only one bill here," Kahn said.
Chris Taylor, left, checks Richardo Alvarez. The Hill wants to trim Medicaid.