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House Works on Budget Outline

House Republicans proposed a $2.57 trillion budget Wednesday that would cut a wide range of domestic programs while gradually reducing record federal deficits.

The spending plan would trim $69 billion from benefit programs over the next five years. While decisions about which specific programs will be targeted will be made in separate bills later this year, the Republican-led House is expected to cull savings from Medicaid (search), student loans, farm programs, veterans and perhaps welfare and unemployment insurance (search).

By law, benefit programs grow automatically each year to accommodate for inflation and population growth. While overall spending for these programs would continue growing under the House plan, that growth would be slowed by $69 billion over the next five years -- savings that would have to come from lower benefits, lower payments to providers or smaller numbers of recipients served.

Domestic programs, excluding benefits, would be cut by 0.8 percent. Such programs range from national parks to food safety protection, but final decisions on exactly where the cuts will fall will be made in later bills.

Defense spending would grow by 4.8 percent while spending on domestic security programs would grow by 2.3 percent. Overall, spending on security and domestic programs that Congress must approve annually would grow by 2.1 percent to $843 billion next year.

The Senate Budget Committee (search) was set to begin working later in the day on a similar package.

The House budget calls for $106 billion in tax cuts over the next five years, about the same as President Bush proposed. But only $45 billion of those cuts would be granted procedural advantages that would let them avoid Senate filibusters, procedural delays that could kill them.

While the details of tax cuts, too, will be decided in later bills, the budget leaves room for reductions that Bush proposed for capital gains and dividends taxes.

The GOP fiscal outline claims to leave a deficit next year of $376 billion. Last year's shortfall was a record $412 billion. The budget claims to reduce the deficit to $203 billion by 2010.

The House budget also assumes that Congress will approve the $81 billion that Bush requested for wars in Afghanistan (search) and Iraq (search) this year, plus another $50 billion for 2006. The budget Bush presented lawmakers last month excluded any new war spending for next year. Both the president's and the House budgets also omitted any costs for Bush's plan to overhaul Social Security, which some analysts say could exceed $1 trillion over the next decade.

Congressional budgets set overall tax and spending targets, leaving details for later bills. Budgets don't have to provide details, but often they supply some political push for the budget panel's priorities.

For the first time since 1997, both chambers' budgets will order billions in savings from automatically paid benefits like Medicaid, the federal-state health program for the poor and disabled.

On another front, moderate Republicans are forcing Rep. Jim Nussle, R-Iowa, and Sen. Judd Gregg, R-N.H., the two budget chairmen, to lower their initial tax-cutting goals.

Bush proposed $100 billion in tax cuts for the next five years. Gregg's plan is focused on about $70 billion in tax cuts over the next five years, while Nussle's is centered on less than $50 billion in tax reductions, said congressional aides. These aides said House GOP leaders hope to enact additional tax cuts this year.

The Senate's $70 billion in tax cuts -- and the $50 billion figure the House prefers -- would get crucial procedural protections against filibusters, delays that can kill a bill unless 60 of the 100 senators vote to end them.

Senate Republicans hold a 55-44 majority; the only independent leans Democratic.

Overall, the House budget will include room for five-year tax cuts of about $100 billion, while the Senate will allow tax cuts beyond $70 billion but require they be paid for with other savings, aides said. But the House and Senate will only give procedural protections to about $50 billion and $70 billion, respectively, in tax reductions.