Senate Panel OKs Scaled-Back Version of Bush Budget

WASHINGTON – A Senate panel Thursday approved 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 party-line 11-10 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 like education and homeland security.

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

"I'm not going in with the votes, I can tell you that much," Gregg told The Associated Press. "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 failing to address 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 Democratic amendments offered Thursday would increase spending on a variety of programs, including veterans' medical care, ports security and firefighter grants. They were rejected by early afternoon votes.

Gregg's plan hasn't won much better reviews from Republicans, including Pete Domenici of New Mexico, Lamar Alexander of Tennessee and John Cornyn of Texas.

They said it failed to address the spiraling long-term growth of Social Security, Medicare and other benefit programs that threaten to swamp the budget with the retirement of the baby boom generation.

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

Domenici, an old-school member of the powerful Appropriations Committee, is also unhappy that the measure endorses Bush's stringent $873 billion cap on domestic programs funded by annual appropriations bills, including education, water projects and health care research.

For his part, Gregg says he would like to be more ambitious on spending cuts, but does not have the votes to pass them, since so many senators are jittery about voting for them in an election year.

Bush's tax cuts generally expire in 2010; Gregg's budget assumes extending them would cost $154 billion the following year. If they were allowed to expire, the 2011 deficit would be just $23 billion, assuming the rest of Gregg's plan were to be adopted.

Given all the election-year nervousness, is not clear whether the House and Senate will be able to agree on a final budget — even assuming the Senate passes its plan next week.

The House has postponed work on its version until late this month at the earliest; the modest Senate plan may not go far enough for conservatives in the House.

The GOP blueprint also revives last year's battle over allowing oil drilling in an Alaskan wildlife refuge by awarding filibuster-proof protection for a provision opening the area to exploration.

Domenici, chairman of the Senate Energy and Natural Resources Committee, wants to set up the Alaskan oil exploration measure in the budget so Democrats are blocked from stalling it through a filibuster.

Last year, the drilling effort failed because Republican opponents in the House teamed up with Democrats fighting GOP budget cuts to knock out the plan.

Congress' annual budget resolution is a nonbinding blueprint that sets the limits of subsequent bills.

Since Senate GOP leaders don't anticipate using the fast-track budget process to give filibuster-proof protection in the Senate to new tax cuts or spending curbs, there's considerably less pressure to adopt a budget than there was last year.