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House, Senate budgets vastly different, prompting fears of deadlock

WASHINGTON—The House and Senate passed vastly different budgets for fiscal 2006 on Thursday, raising doubts about their ability to find common ground on domestic spending reductions and tax cuts.

In a blow to President Bush's efforts to cut the deficit in half by 2009, the Senate on Thursday voted to delay reductions in Medicaid. But in a surprise turnabout, the Senate expanded the size of the president's proposed tax cuts to more than $130 billion over five years.

The votes further distanced the Senate from the budget that the House passed Thursday. The Medicaid vote in particular riled House Republicans, who see this year as the biggest opportunity to rein in some of the federal government's biggest programs.

Though no lawmaker was ready to predict a stalemate, the lack of a budget would seriously undermine Republican efforts to extend some of Bush's first-term tax cuts and to reduce spending.

"It appears it's going to be challenging," Rep. Jim Nussle of Iowa, the Republican chairman of the House Budget Committee, said shortly after the House passed its budget version by a slim 218-214 vote. "So far I'm not real pleased with what I'm hearing the Senate say. We've got some work to do."

The Senate passed its version of the budget 51-49, with four Republicans voting against it.

House-Senate deadlocks prevented Congress from adopting a budget for the past two years. Sen. Judd Gregg, R-N.H., the chairman of the Senate Budget Committee, said that it will be even harder to cut spending next year.

"It will be difficult, (2006) is an election year," he said. "This is the year to do the heavy lifting on issues like restraining spending and major entitlement reforms."

The budget is a crucial financial tool, especially in the Senate, because it can protect tax cuts and spending reductions from tactics that can delay or kill measures. Those tactics, called filibusters, require 60 votes to overcome in the 100-member Senate—a difficult threshold for the 55-member Republican majority.

The House and Senate budgets also set limits for discretionary spending at $843 billion this year, excluding spending for the wars in Iraq and Afghanistan. That number reflects a 4 percent increase in defense spending. Non-defense spending is reduced by nearly 1 percent.

"We just adopted the most conservative, responsible budget since the Reagan years," said Rep. Mike Pence, R-Ind., a leader of Republican conservatives who had quarreled with Republican leaders over how to keep spending bills within the budget caps.

The House's budget closely followed Bush's $2.57 trillion fiscal plan. It calls for $69 billion in reductions in mandatory spending over five years, including Medicaid, agriculture programs and other domestic programs. It also would cut taxes by more than $100 billion, though less than half would fall under special anti-filibuster protections.

The Senate budget, however, calls for only about $17 billion in mandatory spending reductions over five years. The Medicaid provision, which passed 52-48 Thursday, eliminated a $14 billion reduction in Medicaid spending that had been in the proposed Senate budget. The amendment drew the support of all 44 Senate Democrats, its one independent and seven Republicans.

But in a unexpected development, the Senate late Thursday voted 55-45 to expand the size of its proposed budget's tax cuts from $70 billion to $134 billion over five years. That's bigger than what House Republicans and Bush have sought. The additional cuts took aim at a 1993 increase on the tax that retirees pay on their Social Security benefits. The vote came during a confusing swirl of activity in the Senate floor and prompted little debate.

Sen. Norm Coleman, R-Minn., described that increase as largely symbolic, designed mainly to indicate opposition to the tax on Social Security. Sen. Lindsey Graham, R-S.C., said he expected House and Senate negotiators to cut the number back to the $70 billion the Senate initially sought.

Twelve Republicans voted against the House budget. Earlier in the week, the Senate defeated by a tie vote a proposal that would have made it more difficult to extend existing tax cuts another five years. That, together with the Medicaid vote Thursday in the Senate, illustrated how carefully budget politics are balanced and the misgivings some Republicans have about cutting spending and taxes at the same time.

The close vote on final passage in both chambers revealed the misgivings that some Republicans have to cutting spending and taxes at the same time.

"A lot of us have trouble looking just at a ledger while ignoring some of the most sensitive needs of the poor," said Sen. Gordon Smith, R-Ore., who led the effort to do away with the Medicaid reduction. Other Republicans voting to remove the Medicaid reductions were Lincoln Chafee of Rhode Island, Susan Collins and Olympia Snowe of Maine, Arlen Specter of Pennsylvania, Mike DeWine of Ohio and Norm Coleman of Minnesota.

But Smith said that if House and Senate negotiators reinstate the Medicaid cuts in their final agreement, he'd be hard pressed to vote against the budget.

"I'm on the horns of a dilemma," he said. "We have to have a budget. I'm going to vote for the budget or else we have chaos in Congress. But I also hope the conferees will respect the manifest will of the United States Senate."

The Medicaid proposal calls for the creation of a 23-member bipartisan commission. It would have to hold hearings and issue a report within one year.

The Senate budget also protects from filibuster any legislation to open the Arctic National Wildlife Refuge in Alaska to oil drilling. The House budget doesn't contain similar language, but House leaders said they didn't expect that to be a sticking point.

The Senate on Thursday also restored $2 billion in community development block grant money, which mayors nationwide had been pressuring Congress to keep, and about $800 million in spending over five years for homeland and border security.

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(c) 2005, Knight Ridder/Tribune Information Services.

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