Budget deal reveals wide cuts, more politics to come

McClatchy NewspapersApril 11, 2011 

WASHINGTON — Look for cuts in high-speed rail, community development projects, and other social programs from the spending reduction agreement between the White House and Congress.

Some of the cuts are already in effect, and Congress will vote on the rest later in the week.

And that could be only the beginning. More dramatic reductions could be coming, as President Barack Obama and Republicans in the House of Representatives escalate their battle this week over how to slash government debt.

Obama plans to speak about his long-term plans Wednesday afternoon at The George Washington University, while House Republicans are expected to debate and vote on their very different budget blueprint on Thursday or Friday.

"Obviously, you can expect that the president is feeling some pressure to do something given the changing climate," said David M. Walker, a former U.S. comptroller general who now leads a group promoting fiscal responsibility.

Now that the fight over short-term spending is nearly over, Walker said, the White House sees "the increasing frustration among the American public. They know the debt ceiling limit debate is coming up. I think the president feels the need to step out" and show Americans he is trying to do something about out of control spending.

White House officials Monday declined to speculate on potential changes to Medicare, Medicaid, Social Security and tax policy or on the dollar amounts of spending cuts. Nor would they say whether Obama's speech would offer specifics beyond the broad themes he's been addressing for months.

White House Press Secretary Jay Carney said Obama will very clearly lay out his vision for reducing the debt and deficit, expected to hit a record $1.65 trillion this fiscal year, and that his policies would be "balanced" and "bipartisan."

Chances are that any long-term spending cuts could wind up as part of legislation to raise the nation's $14.3 trillion debt ceiling, which could be reached next month.

With the White House now sensing a protracted fight with some Republicans over the debt ceiling, Obama, through Carney, also said Monday that he had erred as a senator in 2006 when he voted to oppose a higher debt limit.

"Obama regrets that vote and thinks it was a mistake," Carney said. "He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it's not a vote that, even when you are protesting an administration's policies, you can play around with."

Obama's speech this week comes at a time when Republicans are largely driving the budget agenda. The drama is unfolding in three chapters.

Shrinking current spending: House GOP leaders wanted $40 billion in cuts over the rest of the fiscal year, which ends on Sept. 30, while Democrats sought $33 billion. Negotiators agreed to ax $38.5 billion.

The House is expected to vote on the accord Wednesday, with the Senate to follow Thursday. The plan is expected to cut billions from labor, education, health and human services, State Department and foreign operations programs; the final numbers are still being worked out.

Quick passage is expected, though a number of liberals and conservatives are unhappy.

Rep. Alcee Hastings, D-Fla., tore into Obama as well as House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., for the budget plan.

Hastings noted that $13 billion nationwide would be cut from labor, education and health and human services programs.

He suggested Obama was already looking to the 2012 presidential elections and the need to distance himself from his liberal base. "This guy does not stand for anything," he said of the president.

On the other side, Sen. Rand Paul, R-Ky., Monday wrote colleagues that he'd oppose the compromise.

"This discussion is simply not credible or serious, and unfortunately, it has not been from the beginning," he said. "I will vote a resounding NO this week to this so-called deal. And I urge my colleagues, if they are serious about cutting government spending, to do the same."

Sealing the budget deal: Because lawmakers need a few days to write legislation containing the precise details of their agreement, Obama Saturday signed legislation to keep the government open through Thursday.

That plan includes $2 billion in cuts. The community development fund, which includes grants for neighborhood projects, would be reduced. So would funding for transportation planning, research and development, as well as money for high speed and intercity passenger rail.

The rail provision allows states to keep high-speed rail money they already have, but makes it harder to get new funds.

"It would have helped," California High-Speed Rail Authority spokeswoman Rachel Wall said of the lost funding Monday. "Obviously, if there was money available, we could put it to work."

Any such cut would complicate plans for an initial 123-mile route linking Bakersfield to rural Madera County. The state is currently seeking additional federal funds to extend the initial route to Merced, and possibly beyond. Officials hope to use state and federal money for the project.

The long-term plan: Once the short-term issues are dealt with, the bigger fight begins in earnest.

The House's 10-year proposal, likely to be debated and voted on Thursday and Friday, would cut $6.2 trillion from anticipated spending over the next 10 years.

It would revamp Medicare, the health care program for seniors and some disabled people, and Medicaid, the joint federal-state health care program for lower-income people.

Medicare would end after 2021, and instead provide a payment and a list of "guaranteed coverage options," where new retirees would pick a coverage plan. The GOP would convert the federal Medicaid share to a grant to states, "tailored to meet each state's needs."

While the Republican-authored proposal is expected to pass the House, where the GOP has a 241-to-192 majority, its prospects are dim in the Democrat-dominated Senate, particularly with Obama ready with his veto.

The fight over cuts, though, could become part of the debt limit fight. Republicans say they'll insist on major cuts before they'll go along with a higher debt, while Obama doesn't want the debt limit decision linked to other conditions.

"This is shaping up to be a major battle with real consequences," said Robert Bixby, the executive director of the Concord Coalition, a nonpartisan budget watchdog group. But when Obama speaks Wednesday, Bixby said, he's likely to be raising the same ideas he unveiled in his fiscal 2012 budget in February.

"Expect the budget again," Bixby said, "plus gloss."

(Michael Doyle and Lesley Clark contributed to this article.)

ON THE WEB:

Medicare eligibility tool

House Republicans' budget plan

Sen. Rand Paul letter to colleagues

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