House Approves Blueprint for 2005 Budget

Republicans may have a tough time forging a compromise House-Senate budget, with their highest-profile problem one they would rather not spotlight this election-year: record federal deficits (search).

Two weeks after the Senate approved a fiscal outline for next year, GOP leaders pushed a similar $2.41 trillion plan through the House on Thursday. The vote was 215-212, as 10 Republicans defected over issues ranging from veterans spending to the measure's lack of curbs on enacting expansions for benefits like Medicaid (search).

"We hope to do it next week," Speaker Dennis Hastert, R-Ill., told reporters of his desire to reach a compromise before the House begins its spring break next Friday. But he acknowledged, "We may have to push it back."

President Bush congratulated the House in a written statement and urged lawmakers to quickly approve a compromise "based on my principles of funding what's necessary to protect America and keep our economy growing, while restraining spending elsewhere."

If talks on a final budget are prolonged, the biggest reason will likely be the effort by moderate Republicans - especially in the Senate - and Democrats for procedures aimed at preventing budget shortfalls from worsening. The deficit is projected to near $500 billion this year.

The House budget shaves 0.5 percent off Bush's planned 10 percent boost for anti-terrorism programs (search) at home. It also provides the full 7 percent increase he wanted for defense and related expenses - to $421 billion - but holds domestic agencies to $369 billion, the same as last year and $1.3 billion less than Bush sought.

It proposes $13 billion in five-year savings from benefit programs that could include Medicaid. While it is a relatively small figure, it leaves Republicans in a position of advocating savings from politically sensitive programs.

The coalition of moderate Republicans and Democrats forced the GOP-dominated Senate to include a proposed requirement that tax increases or spending cuts pay for any tax cuts or increased benefit payments.

Bush and top House and Senate Republicans favor such restrictions on new spending, but not on tax cuts. They have shown little inclination to reach an agreement, meaning some moderate GOP senators may have to back down in order to complete a budget.

"I'd rather not have a budget resolution than have" the restrictions apply to tax cuts, Rep. Roy Blunt of Missouri, the No. 3 House GOP leader, told reporters.

House Republican leaders won votes from some GOP lawmakers after Hastert promised a vote on budget restrictions by Memorial Day. It was unclear, however, precisely what the House would vote on.

Also at issue are differing tax cut plans. The Senate budget would pave the way for $80 billion in five-year tax reductions; the House $138 billion. Bush proposed $181 billion in tax cuts for that period, but his longer-range plan for another $1 trillion in tax reductions over the following five years is being ignored by lawmakers leery of making deficit projections even more grim.

The House budget largely mirrors Bush's fiscal proposal, but makes changes that reflect a Republican worry that enormous federal deficits may haunt them in the November elections. The GOP plan pinches Bush's tax reductions and spending proposals and accelerates his goal of halving deficits in five years.

It passed only after Republicans mowed down three Democratic alternatives, each of which pared some already enacted tax cuts on the wealthiest Americans so the money could be used for deficit reduction and added funds for schools, veterans and other programs.

That prompted a daylong battle using themes sure to be heard on the campaign trail all year. Republicans accused Democrats of trying to raise taxes, exactly the wrong prescription for an economy still struggling to produce jobs.

"Let's give it a gut punch," House Budget Committee Chairman Jim Nussle, R-Iowa, said of how the Democrats' budgets would affect the economy. "Let's kill the jobs."

Democrats said that Republicans' support for tax cuts to the rich would cause lasting damage to the economy and the government's books.

"These additional tax cuts can only have one effect," said Rep. John Spratt of South Carolina, top Democrat on the House budget panel. "They'll add dollar for dollar to deficits that are already enormous."

Congress' budget does not become law, but sets limits on tax and spending bills to follow.

Its enactment also provides procedural protections that could make it easier for the Senate to approve tax cuts this year and for the House to avoid a direct vote on a needed - but politically embarrassing for Republicans - increase in the government's $7.4 trillion debt limit.

The House plan claims to cut this year's projected $477 billion deficit in half by 2008, a year earlier than Bush claimed to do the same.

Still, the smallest deficit over the budget's five-year projections would be $234 billion. Like the plans by Bush and the Senate, most reductions come not from specific budget savings, but from assuming that a growing economy will produce more federal revenue.