Last-Minute Swap Let Spending Bill Through

Times Staff Writer

The 770-plus page budget-cutting bill that went to the Senate floor this week was considered a political must-pass by Republican leaders, who were loathe to go home for the holidays without demonstrating at least some concern about the red ink that has swamped the federal government. Because every budget cut hurts some people while sparing others, lining up votes usually comes down to horse-trading.

This year, the process turned into an unusually stark demonstration of how the game is played.

As they prepared to send the spending cuts to the floor, Senate Majority Leader Bill Frist of Tennessee and his GOP lieutenants realized they were headed for defeat unless they secured one more vote. And to get that, Frist had to meet the asking price of one of two GOP senators, Norm Coleman of Minnesota or Gordon H. Smith of Oregon.

Smith vowed not to support the bill unless it was changed so that proposed savings on Medicaid, the federal healthcare program for the poor, were achieved at the expense of drug companies and other providers instead of coming in the form of lower benefits for Medicaid recipients.


Coleman’s price for supporting the package was removing from the bill a provision that would have eliminated $30 million in subsidies for sugar beet growers, many of them in his home state.

In the end, sugar farmers got to keep their subsidy and Frist got Coleman’s vote. With the Minnesota lawmaker on board, the bill passed: 50 senators in favor of it, 50 against, and Vice President Dick Cheney cast the tie-breaking yes vote -- as is his prerogative as president pro tempore of the Senate.

It was the sort of deal, involving a call to Coleman by top White House political aide Karl Rove, that politicians usually prefer not to talk about. In this case, however, Frist laid it out in public by issuing a press release. “Sugar farmers will not face any cuts in this important budget agreement,” he said, “and Sen. Coleman will support the package.”

Every budget bill involves making trade-offs -- money for bombers or bridges, perhaps, or environment or education. As they try to put together majorities, legislative leaders consider what it will take to get each vote they need.

In this case, the House and Senate had passed very different versions of the budget-cutting bill. In particular, the House voted to cut Medicaid benefits and increase co-payments that beneficiaries would have to pay when they received care. The Senate achieved its Medicaid savings by letting the government negotiate more favorable rates from drug manufacturers and managed care facilities.

As House and Senate negotiators labored to write a compromise bill that both chambers could support, it was clear that the 100-member Senate was almost evenly divided. The Senate’s Republican leaders figured they could not count on the support of any of the 44 Democrats or the one independent; that meant they could afford no more than five defections from their own ranks.

Coleman was one of seven Senate Republicans who wrote a letter expressing concern over “the impact to America’s lowest income and most vulnerable from policies implemented to secure budget savings.” In this group were the five lawmakers who had voted against the original bill, plus Smith and Arlen Specter of Pennsylvania, who had voted for it.

For the compromise bill, the administration and House Republican leaders were insisting that the Medicaid savings come in the form of lower benefits, not negotiations for lower prices from drug companies and managed care systems -- a step that would probably cost them Smith’s vote. Smith had voted for the original Senate budget bill because its Medicaid cuts landed on the drug and managed care companies and held the beneficiaries themselves harmless.


With Rove’s help, the House-Senate negotiators in effect swapped Coleman for Smith in the ranks of Republicans supporting the bill. They did it by stripping the original bill’s $30 million worth of cuts to the sugar beet industry.

“Karl Rove called me and asked me what I wanted,” Coleman told Congress Daily. “A few hours later, it was out of the bill.”

After the vote, Coleman said in a statement: “I could not stand for a budget ... package that singled out sugar farmers.”

Specter also ended up voting for the bill, saying the Medicaid provisions gave the states the flexibility “to ameliorate hardships resulting from the proposed reductions.”


Medicaid supporters felt outmaneuvered.

“It certainly sounds to me that they made a calculation to get Coleman’s support,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. “With Coleman, they no longer needed Smith. And if they no longer needed Smith, they could cut Medicaid recipients instead of the pharmaceutical companies and managed care providers.”

The bill is still not quite ready for Bush’s signature. After the House passed the compromise bill and adjourned for the holidays, the Senate made some minor changes that require another House vote. That will have to wait until House members return to Washington in January.

Greenstein said the episode provided a case study of the importance of money in politics. There were 568,000 Medicaid recipients in Minnesota last year, and 40,000 people whose livelihood depended on sugar beets.


But in the contest between Medicaid recipients and pharmaceutical manufacturers to avoid budget cuts, drug company political action committees have made $107,000 in campaign contributions to Coleman since his successful election campaign of 2002. Medicaid recipients have no PACs.

And the pharmaceutical industry has long been a major contributor to Republicans. “You can see the political clout of the moneyed interests,” Greenstein said.

Efforts to reach the sugar beet growers organization for comment were unsuccessful.