Spending Cuts Would Barely Trim Deficit

For all the time and speeches it has devoted to deploring the budget deficit, Congress will adjourn for the year without making more than a dent in it.

The Senate is expected to vote today on a package of cuts that have passed the House. But the whole package would trim about $3 for every $1,000 the government would otherwise spend.

In its particulars, the legislation has spawned considerable outrage -- notably over cuts in spending for Medicaid, welfare reform and student loans. The measure barely squeaked through the House. And the Senate vote is considered such a cliffhanger that Republicans and Democrats have gone to extraordinary lengths to maximize their votes.

Vice President Dick Cheney cut short a Middle East trip to be available to cast the decisive vote in case of a tie. Across the aisle, Democratic Sen. Christopher J. Dodd, who had been home in Connecticut recuperating from knee surgery, was called back to the Capitol so he could vote against the legislation.

With Sen. Edward M. Kennedy (D-Mass.) slamming the package as “a bill Scrooge would love,” all 44 Democrats and one independent were expected to oppose it. That means Republicans can afford to lose no more than five votes, and at least five Republicans seemed poised to vote no.

A sixth defection -- by Sen. Norm Coleman of the sugar-beet-producing state of Minnesota -- was headed off when Republican leaders restored $30 million in subsidies for sugar producers.

“Sugar farmers will not face any cuts in this important agreement,” said Senate Majority Leader Bill Frist (R-Tenn.), “and Sen. Coleman will support the ... package.”

A testament to how difficult it is to narrow the gaping deficit is that it remains unclear whether Republicans can pass a bill that would trim less than one-half of 1% in projected federal spending.

Spending cuts are rarely popular under the best of circumstances. They are even harder to achieve while also maintaining the tax cuts of President Bush’s first four years and dealing with such costly events as the conflicts in Iraq and Afghanistan and the cleanups from hurricanes Katrina and Rita.

In tandem with the spending-cut bill, Congress has prepared legislation to extend some of the temporary tax cuts that it enacted in 2001 and 2003. The spending bill would save $40 billion over the next five years. The tax bill, which Republican congressional leaders hope to bring to a vote early next year, would cost $70 billion.

“Put the two together,” said Sen. Kent Conrad of North Dakota, the top Budget Committee Democrat, “and guess what: You have increased the deficit, not reduced it.”

The size of the deficit depends on spending and tax revenue. The spending-cut bill would reduce the $1.6 trillion in deficits projected for the next five years by 2.5%. The spending and tax bills combined would increase the deficits by 2%.

Much of the criticism of the measure came from groups speaking for the poor, the elderly and college students.

“The provisions ... would cause considerable hardship among low-income families and people who are elderly or have disabilities,” said the liberal Center on Budget and Policy Priorities.

Medicaid recipients, particularly those just above the poverty line, would have to pay more for their healthcare or accept fewer medical services. Some could be forced to pay as much as $100 for services that now cost $3, the center said.

For elderly and disabled Medicare recipients, the premium that covers visits to the doctor would be increased.

A previously enacted reduction of 4.4% in the fees received by doctors for treating Medicare patients would be erased.

The bill would also reauthorize the 1996 law that transformed the nation’s main welfare program and renamed it Temporary Assistance for Needy Families. In particular, the Congressional Budget Office said it would require the states to impose stricter work obligations on aid recipients. States that provide aid to couples would be hit especially hard by the formula used for determining penalties.

The bill would provide an extra $1 billion for child care for working welfare parents, $7.4 billion less than the Congressional Budget Office estimated would be needed to accommodate the work requirements.

Student loans take the biggest hit in the bill -- about $21 billion in cuts, partly offset by $8 billion in new grant money. Students would absorb about 70% of the cuts through higher interest rates upon graduation, said Luke Swarthout, higher education specialist with the state Public Interest Research Group, and banks and other lending agencies would cover the rest.

Officials in the Washington office of California Gov. Arnold Schwarzenegger said they were pleased. The bill awaiting Senate action excludes House-passed provisions to increase the states’ share of child-support enforcement costs, to increase from five to seven the number of years that foreigners would have to be in the country legally to qualify for food stamps, and to split in two the U.S. 9th Circuit Court of Appeals, based in San Francisco.

Los Angeles County officials said in a report that a preliminary assessment of the 700-page package showed it would result in a “significant loss of federal funding and shift in costs to California and the county.”