Senate, House Differences Complicate Spending Bill

By Richard Simon and Joel Havemann

Nov. 19, 2005 12 AM PT

Times Staff Writers

WASHINGTON —

For House Republican leaders, passage of wide-ranging spending cuts by a razor-thin margin early Friday morning may be the easy part. Now they have to reach a compromise with the Senate, which has passed a bill that differs in many ways.

A basic difference is the price tag -- the House bill would cut federal spending by $50 billion over the next five years; the Senate’s measure calls for reductions totaling $35 billion.

In seeking a compromise, the GOP could find itself caught between two party factions: conservatives who complain that spending has grown out of control, and a smaller group of moderates who champion the social programs targeted for cuts.

Also complicating the coming talks are differences in the chambers unrelated to spending. The Senate bill, for example, would authorize energy exploration in Alaska’s Arctic National Wildlife Refuge; the House version would not.

As a result of these factors, it is far from certain that the House and Senate will be able to reach an agreement on the first effort since 1997 to slow the growth of federal benefit programs.

“There’s a reason” Congress does not try to pass a complex deficit-reduction package every year, House Speaker J. Dennis Hastert (R-Ill.) said Friday. “It ain’t easy to do.”

Hastert made his comment after the House spending-cut bill passed, 217-215.

Robert L. Bixby, executive director of the Concord Coalition, which lobbies for balanced budgets, said: “The House and Senate are far apart, not just in dollars but in content.... It is going to be very difficult for negotiators to put them together in a way that doesn’t make the whole thing unravel.”

As if obtaining a compromise on a spending-reduction bill won’t be hard enough, looming behind it are different House and Senate tax-cut measures.

Passage of both a spending-cuts bill and a tax-reduction measure is seen as a crucial test of President Bush’s determination to keep taxes low without adding more to the federal deficit, which was $319 billion for the fiscal year that ended Sept. 30.

The $50 billion in cuts sought by the House bill would be barely more than 0.3% of projected federal spending over five years. But Brian M. Riedl, a budget expert at the conservative Heritage Foundation think tank, said making those cuts would be an “important first step to prepare lawmakers for larger reforms next year and after.”

Conservatives have vowed to seek spending cuts at least equal to the amounts allocated for reconstruction of the hurricane-damaged Gulf Coast, currently about $62 billion.

The House bill would achieve its cuts in part by trimming benefits provided by Medicaid health insurance for the poor, as well as food stamps, student tuition aid and other programs.

The Senate bill, approved earlier this month, would shield food stamp and Medicaid beneficiaries from cuts, instead reducing payments to providers of federal benefits, such as pharmacies and drug companies.

The Senate measure also includes a provision opposed by the White House that would cut funding for a program to encourage health insurers to participate in the new Medicare prescription-drug benefit.

The House bill, meanwhile, contains two items not in the Senate version: splitting the U.S. 9th Circuit Court of Appeals into two benches and changing mining laws to permit the sale of public lands in the West for private development. Both provisions face opposition in the Senate.

A fight among House Republicans over spending cuts underscored the challenge facing Congress in trying to reach a compromise bill.

House leaders made concessions to moderates in order to pick up their votes -- such as pledging to seek more home-heating assistance for low-income families. But in doing so, they angered conservatives.

Some House Republicans also objected that their chamber’s version of the bill did not include opening the Arctic National Wildlife Refuge to energy exploration. They have threatened to vote against a final bill emerging from House-Senate negotiations if it does not authorize the drilling.

Reaching agreement on the tax cut bills also is expected to be tricky.

A Senate bill to cut taxes by $60 billion, approved early Friday, omitted an extension of one of Bush’s favorite tax cuts: a reduced tax rate for dividends and capital gains that is due to expire in 2008. A proposed $57-billion tax-cut bill in the House, expected to come up for a vote early next month, would extend the lower tax rates for investment income through 2010.

The Senate bill also includes a one-year extension of provisions designed to shorten the reach of the alternative minimum tax, a 1969 provision to prevent the wealthiest taxpayers from sheltering most of their income from the IRS. Under the Senate measure, taxpayers facing the minimum tax would be limited to about 3 million, compared with the 15 million who would otherwise have to pay it.

Whether or not House and Senate Republicans reach agreement, spending and tax cuts are emerging as issues in next year’s battle for control of Congress.

“We will be hearing a lot about these votes in the fall of 2006,” Bixby said.

Riedl added: “Candidates are already making budget restraint a central issue in their campaigns.”

In a preview of a GOP campaign message next year, Rep. Eric Cantor (R-Va.) assailed House Democrats -- none of whom voted for the chamber’s spending-cut bill Friday -- for what he called their “old tax-and-spend ways.”

Democrats say GOP policies would cut spending largely for the neediest members of society while providing more tax cuts for the wealthiest.

Rep. Henry A. Waxman (D-Los Angeles) said Friday: “I just think the Republicans have gone so far to the extreme right that even conservative Democrats couldn’t swallow it.”

Riedl of the Heritage Foundation remained optimistic that the GOP-controlled Congress could reach an agreement on spending cuts and tax reductions.

“Politically, [Republicans] have no choice,” he said. “A defeat would be politically devastating to the GOP and the final straw for many taxpayers.”

(BEGIN TEXT OF INFOBOX)

Side by side

Key differences between the House and Senate versions of legislation to cut federal spending over the next five years. The two chambers will attempt to reach a compromise.

Medicaid

House: Allows states to impose co-payments of their choice on recipients above the poverty line. For poor beneficiaries, increases the $3 co-payment annually with inflation.

Savings: $11 billion

Senate: Reduces the prices Medicaid must pay drug companies. Cuts funding for program to encourage insurers to participate in prescription drug benefit.

Savings: $8 billion

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Child support

House: Trims spending for enforcement of child support laws by up to 40% in 2010.

Savings: $5 billion

Senate: No comparable provision

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Student loans

House: Establishes new charges to borrowers and their families.

Savings: $14 billion

Senate: Similar provisions, but also establishes a new grant program.

Savings: $10 billion