Senate Preserves Medicaid in Budget

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The Senate delivered a slap at President Bush and its own Republican leaders Thursday by voting to erase his plans for cutting Medicaid (search), community development, school aid and other parts of next year's $2.6 trillion budget.

In a surprise, the Senate also voted to practically double the budget's tax cuts to $134 billion over the next five years, even more than Bush and the more conservative House have sought.

Foreshadowing clashes ahead, the House approved its own fiscal outline relying on far deeper reductions in Medicaid and other domestic programs. After its 218-214 passage, top House Republicans chided the other chamber for not clamping down more on spending at a time of massive federal deficits.

"I'm not real pleased with what I'm hearing the Senate say" with its votes on spending, said House Budget Committee Chairman Jim Nussle (search), R-Iowa. He said he was looking forward to seeing what the Senate would "limp off the floor with."

Overall, the tax cuts and spending increases the Senate approved during Thursday's votes would cost more than $80 billion over the next five years even as GOP leaders say they want to stanch federal red ink.

It was unclear whether the Senate's larger tax cut, or the other changes, will survive in the eventual House-Senate compromise budget. The tax cut was approved 55-45.

Senate Budget Committee Chairman Judd Gregg (search), R-N.H., said budgets often go from being "cute little bunny rabbits to camels" during debates, then "hopefully get back to cute little bunny rabbits" when the House-Senate compromise is completed.

Sen. Jim Bunning (search), R-Ky., who sponsored the deeper tax reduction, suggested it be used to roll back Social Security tax increases imposed on some higher-income recipients in 1993. That decision will be made in later legislation.

In the Senate's watershed 52-48 roll call, a coalition of Democrats and moderate Republicans voted to yank all $14 billion in proposed five-year cuts from Medicaid, the federal-state health-care program for the poor and disabled.

Those reductions, 1 percent of expected Medicaid spending over the period, are the keystone of plans by Bush and GOP congressional leaders to start controlling federal deficits that surged to a record $412 billion last year and show little sign of abating.

Sen. Gordon Smith, R-Ore., who led the fight against the Medicaid cuts, conceded the House-Senate compromise budget will likely contain some Medicaid savings and said he would vote for it. Even so, the Senate vote highlighted many lawmakers' unease with making even modest cuts in rapidly growing benefits, which consume nearly two-thirds of the budget.

"The courage simply isn't here," said Senate Budget Committee Chairman Judd Gregg, R-N.H., who said benefit savings were needed to avoid passing unbearably high debts to younger generations.

Without naming his fellow Republicans who opposed the Medicaid savings, he added, "You just have to ask yourself how they get up in the morning and look in the mirror."

The budget sets overall tax and spending targets to guide Congress as it writes bills later in the year that make actual changes in programs and tax laws. That means some policies the budget suggests may never be enacted, though the votes are often precursors for what lawmakers will eventually do.

Bush proposed $8.5 billion in five-year Medicaid savings, while the House would rely on up to $20 billion in reductions from the program.

Overall, Bush has proposed $51 billion in five-year savings from benefit programs, also including farm, veterans, student loans and other areas. The House wants $69 billion in such reductions and the Senate $17 billion following Thursday's Medicaid vote.

Smith's amendment, which passed after heavy lobbying on both sides, would have set up a commission to spend a year studying potential Medicaid savings. He said a pause was merited because the program serves "the lame, the poor, the blind, the needy, those who have no recourse if we pull away this central strand in the safety net."

GOP leaders want this to be the first year since 1997 that Congress has made reductions in benefits. Passage of the budget would protect later bills making those cuts from filibusters, Senate delays that take a hard to achieve 60 of 100 senators' votes.

On the Senate's fourth day of debating the budget, it marched through a parade of amendments, rejecting many but also edging away from many of the president's savings.

Senators approved amendments restoring money Bush proposed cutting from education, water projects and local police, fire and emergency workers. They also voted to kill Bush's plan to combine community development block grants, a favorite of many mayors, with dozens of other programs and cutting them by about $2 billion.

In a win for Bush, the Senate did vote against removing $2.8 billion in agriculture savings from the budget.

The House and Senate budgets follow the general course set by Bush of slowly reducing federal deficits by trimming domestic programs while allowing growth for defense and anti-terrorism programs at home. All three would also extend expiring capital gains and other tax cuts this year, Bush by $100 billion over five years, the House by $106 billion and the Senate by $134 billion — including the $64 billion added by the Bunning amendment.

In a statement released by the White House, Bush said nothing about the Senate's votes but praised the House's budget.

"It closely follows my budget proposal and reflects our shared commitment to be wise with the peoples money and restrain spending in Washington," Bush said.