Senate approves billions in spending cuts

By Richard Cowan

WASHINGTON (Reuters) – The U.S. Senate on Thursday approved
around $36 billion in net spending cuts over five years in a
first step toward slowing the explosive growth of popular
programs that help the poor and the elderly as well as
students, farmers and others.

The partisan 52-47 vote came as Democrats mostly boycotted
the initiative and argued that even more onerous cuts on the
poor being advanced by the House of Representatives would end
up in the final version of legislation.

Republicans touted the spending-cut bill, the first of its
kind since 1997, as an “aggressive proposal” to bring mandatory
programs under control. Even so, the estimated $36 billion in
savings would be dwarfed by the $13.8 trillion the government
is expected to spend over the next five years under a
Republican budget plan approved in April.

“Today, the Senate took an important step forward in
cutting the deficit. I commend Senate leadership and the other
senators who supported this spending-reduction legislation,”
President George W. Bush said in a statement.

“Congress needs to send me a spending-reduction package
this year to keep us on track to cutting the deficit in half by
2009,” he said.

Democrats ridiculed the effort, saying the Republican-named
“Deficit Reduction Act of 2005″ would, in the words of Sen.
Frank Lautenberg of New Jersey, be more aptly called the “Moral
Disaster of Monumental Proportion Reconciliation Act.”

Democrats say the bill would actually achieve no
deficit-reduction if Republicans also succeed with plans to
pass additional tax cuts for the wealthy and others.

With a $70 billion price tag, the tax bill would add $34
billion to U.S. deficits after counting the spending cuts.

GRAB-BAG OF CUTS

Besides saving about $10 billion over five years by
restructuring some Medicare and Medicaid health programs for
the elderly and poor, the Senate plan is a grab-bag of spending
reductions, including nearly $1.3 billion over five years on
farm subsidies and $5.4 billion in higher premiums companies
would pay to a federally backed pension fund.

Also as part of the bill, big oil won a victory with narrow
approval of a controversial plan to allow oil drilling in
Alaska’s Arctic National Wildlife Refuge (ANWR).

Gulf Coast states, devastated by Hurricane Katrina last
summer, would get nearly $3 billion in new funds to help
restore coastal areas and aid schools.

The bill also provides an $11.4 billion blueprint for
funding Amtrak operations and capital needs. The plan includes
proposals to competitively bid some routes and reform business
practices of Amtrak, the federally subsidized railroad.

While the Bush administration supports the spending-cut
goals of the Senate and House, it has warned senators that it
could veto the bill. It objected to a provision that deletes a
Medicare fund the White House believes ensures that private
health-care plans take part in the federal health care program.

Across Capitol Hill, the House Budget Committee, on a
nearly party-line 21-17 vote, approved a Republican plan to cut
a net $54 billion from mandatory programs over five years.

The proposal includes $844 million in food stamp cuts for
the poor by tightening some eligibility requirements and
cutting programs related to child support and child welfare.