The House on Wednesday narrowly approved Congress' first attempt in eight years to slow the growth of benefit programs like Medicaid and student loan subsidies, sending the measure to President Bush.
The bill passed by a vote of 216-214, largely along party lines. Republicans hailed the five-year, $39 billion budget-cutting bill as an important first step to restoring discipline on spending. Democrats attacked the measure as an assault on college students and Medicaid patients and said powerful Washington lobbyists had too much influence on it.
The measure is a leftover item from the GOP fall agenda. Bush is eager to sign it into law.
It blends modest cuts to Medicaid, Medicare and student loan subsidies with a renewal of the 1996 welfare reform bill and $10 billion in new revenues from auctioning television airwaves to wireless companies. There's also $1 billion in new spending to extend an income subsidy program for dairy farmers and a reprieve for physicians who had faced a 4 percent cut in Medicare fees.
The $39 billion in cuts are generally small — a 0.4 percent cut in Medicaid funding and 0.3 percent cut in Medicare over five years — compared with deficits expected to total $1.3 trillion or more through 2010. Still, the bill set off a brawl between Democrats and Republicans and whipped up opposition from interest groups like AARP.
The House passed a nearly identical bill on Dec. 19, but the chamber held an unusual revote because Senate Democrats forced technical changes that the House needed to accept before the bill could be sent to Bush's desk.
Republicans said the measure is a necessary first step to reining in the burgeoning growth of so-called mandatory spending programs like Medicare, which threaten to swamp the budget as the baby boom generation starts retiring.
"The Deficit Reduction Act seeks to curb the unsustainable growth rate of mandatory programs that are set to consume 62 percent of our total federal budget in the next decade if left unchecked," said Rep. Adam Putnam, R-Fla. He said many such programs "are outdated, inefficient and excessively costly."
But Democrats attacked the measure, especially for its cuts to the federal child support enforcement program and for allowing states to reduce Medicaid coverage and charge increased fees for the Medicaid program for the poor and disabled.
Democrats contend the budget cut bill concentrates spending cuts on vulnerable groups like Medicaid beneficiaries while protecting powerful corporate interests such as drug makers and health insurance companies, which won big victories in end-stage negotiations carried on behind closed doors.
"This is a product of special interest lobbying and the stench of special interests hangs over the chamber," said Rep. John Dingell, D-Mich.
Democrats also said the measure, when combined with an upcoming bill cutting taxes by about $70 billion, would lead to an increase in the deficit.
As if on cue, the Senate kicked off debate on a tax cut bill that would revive some expired tax breaks and safeguard millions more families from paying the alternative minimum tax. The House version of that bill would extend tax cuts for capital gains and dividends.
The powerful AARP seniors lobby, student groups, pediatricians and others have mounted a monthlong campaign against the bill, making some lawmakers uncomfortable with their votes in December.
"Over the intervening month, people that I know and respect have gone through the details of this legislation ... and they've said, 'This is really a disaster,"' said Rep. Rob Simmons, D-Conn., who switched his vote from "aye" to "nay."
The bill comes as Capitol Hill Republicans are trying to burnish their party's budget-cutting credentials amid increased concern about the rising deficit and the costs of the Iraq war and Hurricane Katrina.
Bush is anxious to sign the bill and move on to next year's budget cycle. On Feb. 6, he is to release his 2007 budget plan, which is likely to call for new cuts to benefits programs like farm subsidies, Medicaid, food stamps and Medicare. Many lawmakers and budget experts are skeptical of the chances for another budget-cut bill during an election year.
AARP is opposed to a provision tightening Medicaid nursing home care rules regarding people who shed assets to qualify for such care. It argues that money given to charities, churches and family members within the previous five years could unfairly disqualify seniors from long-term care.
Pediatricians say provisions allowing states to eliminate some guaranteed Medicaid child health care services and charge new and increased co-payments end up hurting children. Their argument was bolstered by a new Congressional Budget Office study that predicts that much of the Medicaid savings would accrue because new co-payment requirements would drive tens of thousands of beneficiaries out of the program.
Student groups charged the bill harmed college student through $11.9 billion in cuts to the student loan program, including higher fees on student and higher interest rates on parent loans. But Republicans countered that the lions share of the savings came from lender subsidies.