Possible Spending Cuts Cause Grief for Lawmakers

President Bush (search) says he wants Congress to cut billions of dollars in federal spending it has already approved to pay for hurricane relief (search). Republican leaders of the House say they want that too, but it's not the kind of thing that happens much on Capitol Hill.

For one, Senate Republicans are not ready to follow their House colleagues. In addition, congressional Democrats say they want to eliminate tax cuts for the wealthy, which House Republicans oppose.

Click in the video box to the right of to watch a report by Fox News' Major Garrett.

The costs of cleaning up Hurricanes Katrina and Rita keep piling up. The latest disaster — the Pakistan (search) earthquake — only adds to disaster relief expenses. With the ongoing cost of the Iraq (search) war, the national debt keeps rising.

This year's deficit is expected to total $317 billion when it's all counted out. The nation's debt is $7.9 trillion.

"You're talking about a real problem facing this country at the very moment when we're expecting something like 70 to 80 million baby boomers to retire and to add additional costs to Social Security and Medicare. We're headed towards a fiscal cliff," said former Clinton Chief of Staff Leon Panetta.

Government spending on all programs costs about $22,000 per household. Even after accounting for inflation, that's the highest ratio of program costs to households since World War II.

The War on Terror is partly to blame. Defense spending is up 64 percent since Sept. 11, 2001.

But domestic spending is up, too. Education spending has gone up 100 percent. Health research spending is up 61 percent. Farm subsidies have risen 16 percent and veterans benefits have increased by 51 percent.

"Most lawmakers are coming to the conclusion that the spending spree we're seeing right now is unsustainable," said Brian Riedl, a federal spending expert at the Heritage Foundation.

Late last week, House GOP leaders, heeding intense pressure from rank-and-file conservatives, vowed to find upwards of $70 billion in savings.

Some of it could come from Medicaid (search), the federal-state health care program for low-income and indigent families. Medicaid costs have risen nearly 10 percent each year for the past five years.

Reducing future Medicaid increases by just 1 percent over five years could save between $10 billion and $15 billion.

"We won't grow at 40 percent. We'll grow at 39 percent and when you talk about that, it changes the whole perspective," said Sen. Tom Coburn, R-Okla.

But Senate Republican leaders appear unwilling to endorse savings as large as those proposed by House GOP leaders.

"The Senate is clearly dragging its feet on spending reform. Some senators have called for instead reversing the tax cuts," Riedl said.

The White House opposes any effort to rollback any Bush tax cuts and is seeking new, targeted tax cuts to boost business investment throughout the Gulf Coast.

Top Washington Democrats say they will press hard to repeal tax cuts for Americans with incomes above $200,000. They also intend to slam Rrepublicans for cutting spending at home to pay for Katrina when they didn't cut domestic spending to pay for the war in Iraq. The argument, Panetta said, could lead to gridlock.

"If you have to deal with any deficit, it takes some very tough decisions on spending, it takes tough decision on revenues, and very frankly, I haven't seen either party willing to try to engage in that kind of tough discipline," he said.

House GOP leaders say they are getting tougher, endorsing a 2 percent across-the-board spending cut that would, for the first time since the Sept. 11, 2001 attacks hit defense and homeland security.