House Budget Writers Drop Bush's Proposed Medicare Cuts

Bowing to election-year realities, House budget writers dropped President Bush's proposed cuts to hospitals and other Medicare providers Wednesday while preserving his plans to trim spending by most of his Cabinet agencies.

Budget Committee Chairman Jim Nussle, R-Iowa, fashioned a $2.8 trillion plan for the budget year beginning Oct. 1 that omits Bush's cuts in Medicare, Medicaid, crop subsidies and other politically sensitive programs.

The House GOP plan adopts Bush's $873 billion cap on agency budgets renewed by Congress each year. It also assumes $50 billion for the wars in Afghanistan and Iraq and, for the first time, seeks to limit spending for future disasters to the $4.3 billion contained a rainy day fund.

The plan endorses Bush's call for a 7 percent increase in the core defense budget — which doesn't include Iraq war costs — for next year.

The GOP plan also assumes $226 billion in additional tax cuts over five years, more than half of which would go toward extending Bush's 2001 and 2003 tax cuts, most of which are scheduled to expire in 2010.

Nussle credited earlier tax cuts with reviving an economy that was in recession when Bush took office.

"As a result of giving Americans more control over their money, we've seen more investment, more jobs and greater opportunities in this country," Nussle said.

Democrats blasted the Republican blueprint, which would produce deficits totaling more than $1 trillion through 2011 if Congress enacts its policies. It would produce a deficit of $348 billion in 2007.

And they doubted it would even meet that goal, since it doesn't account for the long-term costs of the war in Iraq or for shielding middle-to-upper income taxpayers from the alternative minimum tax.

Rep. John Spratt Jr., D-S.C., said the national debt would almost double to more than $9 trillion under Bush's tenure in office, a natural result "from a fiscal policy that says you can have guns, butter, tax cuts too and never mind the deficit .... It holds no real plan or prospect of balancing the budget."

While the House GOP plan drops $65 billion in benefit cuts over five years proposed by Bush's February budget — such as curbs to Medicare, Medicaid and crop subsidies — it goes further than Bush in attacking appropriated spending, the approximately one-third of the budget passed by Congress each year.

It would cut federal spending on education by more than $5 billion, about 7 percent. And, after allowing for an increase next year, it would cut the budget for veterans medical care below current levels through the rest of the decade. Democrats said that would feel more like a $10 billion cut after inflation and expected growth in the number of veterans seeking benefits is taken into account.

A rival Senate plan passed two weeks ago was rewritten during floor debate to bust through Bush's spending cap by $16 billion, and GOP moderates are pressing to raise the cap in the House to ease cuts to education, health research and block grants to local governments and relief agencies.

After Republicans had enormous difficulty passing a five-year, $39 billion benefit cut bill last year, Nussle proposed just $6.8 billion in savings spread over five years from such so-called mandatory programs, whose budgets rise typically rise with inflation and population growth.

Among the reforms assumed by the GOP plan is eliminating taxpayer subsidies on flood insurance for vacation beach houses.

Nussle said the committee would wrap up debate later in the day.