Budget Items Spur Backlash by GOP Moderates

Moderate Republican lawmakers are leaning on House Speaker Newt Gingrich (R-Ga.) to get rid of a range of controversial tax and spending provisions that the House is considering as part of its plan to balance the federal budget by 2002.

Even as the House Budget Committee on Thursday easily approved major parts of a gargantuan bill that embodies most of the Republicans’ budget-balancing plan, moderates are telling Gingrich that they oppose provisions that would, for example, allow oil drilling in the Alaska wilderness and make it easier for corporations to drain excess assets from employee pension funds.

“There is an accumulation of offensive provisions,” said Rep. Sherwood Boehlert (R-N.Y.), a leader of the moderate faction. “Our message to the leadership is: ‘Don’t take our votes for granted. Our votes are clearly in jeopardy.’ ”

House Budget Committee Chairman John R. Kasich (R-Ohio) acknowledged that some of the bill’s provisions are running into opposition and that the leadership may try to change them before the bill reaches the House floor. “I don’t know if that will stay,” he said of the Alaska oil drilling proposal.

That is just one of the many controversial but less-noticed provisions of the omnibus budget bill slated to go before the House and Senate later this month. Much of the attention in this year’s budget debate has focused on Medicare and Medicaid, welfare reform and tax cuts for businesses and individuals.

But the budget bill also will include scores of other provisions recommended by other House and Senate committees to help meet Republicans’ ambitious deficit-reduction targets. Those recommendations were bundled into a single package and approved by the House Budget Committee on Thursday on a 24-16 vote, largely along party lines.

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After that vote, the committee worked into the night putting finishing touches on the package that will go to the House floor later this month.

“We’re going to pass a plan that will represent the most significant amount of change we’ve seen in federal spending in 60 years,” Kasich said.

But Rep. Martin Olav Sabo (D-Minn.) called the bill “a fundamental attack on vulnerable people in our society to benefit the most affluent.”

The bill includes proposals, approved earlier by other House committees, to transform Medicaid into a block grant to states, eliminate the Department of Commerce, curb spending for college student loans, eliminate some business tax breaks while creating some new ones and make other changes in federal entitlement programs.

The package before the Budget Committee on Thursday night would make about $562 billion of the $894 billion in savings that Republicans estimate will be needed to balance the budget by 2002. The rest will come from provisions to be added later, including proposed savings from Medicare and welfare reform.

Also missing from the bill are the details of plans to overhaul government employees’ pensions and to save more than $13 billion in farm programs over the next seven years. The House committees that handle farm and pension programs deadlocked over efforts to draft those politically sensitive budget cuts, leaving the job to Kasich and the GOP leadership. Those proposals will be added before the bill goes to the floor.

Once they get all the pieces assembled, Republican leaders then face the delicate task of appeasing different factions that are threatening to bolt if one part or another of the package is not changed--a balancing act similar to those performed to engineer passage of other big bills earlier this year. Gingrich and Kasich have considerable discretion to propose changes to the bill before sending it to the House floor.

The emerging complaints from GOP moderates is the opening shot in the intra-party battle over the details of this, the most important single bill on the Republican agenda. A group of 30 to 40 moderates met Thursday to draft a list of provisions in the emerging reconciliation bill that they want changed.

Many moderates are staunchly opposed to a plan to allow oil and gas drilling in Alaska’s Arctic National Wildlife Refuge--a provision that is anathema to environmentalists like Boehlert who want to continue protecting that wilderness area.

Kasich acknowledged that the provision’s future is in question, saying: “There are growing concerns within the Republican Party that we need to make sure . . . the environment is taken care of.”

Moderates have also objected to provisions calling for the repeal of the Davis-Bacon Act, a 1931 law that requires federal contractors to pay workers the local prevailing wage on federal construction jobs, which often means paying union wages. Northeastern Republicans with strong labor constituencies objected to the repeal of Davis-Bacon, and one said that the leadership had assured him it would be stripped before the budget bill hits the House floor.

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Boehlert and others also criticized proposals to sharply reduce the taxes corporations pay if they withdraw excess assets from their employee pension plans. The taxes were enacted to make it prohibitive for firms to take money from pension funds for other corporate purposes, an action that became common during the merger mania of the 1980s.

Moderate Republicans are also renewing their demand for stricter eligibility limits on a proposed $500-per-child tax credit. As approved as part of a big tax-cut bill earlier this year, the tax credit would go to families earning up to $200,000 a year. That tax bill, which would have cost the Treasury $354 billion over seven years, will have to be pared back to fit within the $245-billion allotment for tax cuts in the budget-balancing plan.

Tony Blankley, Gingrich’s spokesman, said that the Speaker welcomed input from the moderates but would have to balance their complaints and demands against what he hears from other factions within the party.