House passes, sends Bush $39 bln spending cuts

By Richard Cowan

WASHINGTON (Reuters) – Republicans in the House of
Representatives narrowly won passage on Wednesday of a
controversial bill to trim about $39 billion from domestic
spending over five years, capping a yearlong push to cut health
care for the poor and elderly and other programs.

By a partisan vote of 216-214, the House approved the bill,
sending it to President Bush for signing into law.

Bush said in a statement he was eager to sign the measure
and that he would propose further “spending restraint” in the
fiscal 2007 budget he will unveil on Monday.

The bill, approved in the Senate in December after Vice
President Dick Cheney cast a rare tiebreaking vote, was
approved by the House late last year. A small change made by
the Senate forced another House vote.

The spending cuts are a high priority of conservative
Republicans who want to continue cutting taxes amid huge budget
deficits, which could top $400 billion this year.

“Today we can begin the process of controlling out-of-
control government spending,” said Rep. Jeb Hensarling of
Texas, a conservative Republican.

Referring to $70 billion in proposed Republican tax cuts,
Rep. Steny Hoyer, a Maryland Democrat, said, “You don’t have to
be much beyond sixth grade to know that’s going to add to your
deficits” when offset by only $39 billion in spending cuts.

The Senate on Wednesday began debating a $70 billion
tax-cut measure that would extend alternative minimum tax
relief through 2006, ensuring that millions of middle-class
families will not end up paying the tax that originally was
intended for the very wealthy.

Besides the debate over whether the “Deficit Reduction Act”
would actually live up to its name, lawmakers argued over how
the spending cuts were being carried out.

Republicans said the reductions would begin to rein in
“entitlement” programs that will account for a growing part of
federal spending as the baby-boom generation qualifies for
government health benefits.

“These programs need our reform,” said House Budget
Committee Chairman Jim Nussle, an Iowa Republican, who said the
spending cuts would force improvements.

Democrats blasted provisions to save about $8 billion over
10 years by cutting federal enforcement of child-support
payments and saving billions by allowing college student loan
costs to rise.

MEDICAID CUTS

The nonpartisan Congressional Budget Office said this week
that cuts to Medicaid spending would affect 13 million poor
people, 20 percent of the program’s participants. Many of those
would be children, the CBO said.

The savings would include higher out-of-pocket costs for
prescription drugs and other medical care for the poor.

Lonny Lefever, 53, who lives in the small town of Rosewood
in western Ohio, is a Medicaid participant diagnosed as
HIV-positive in 1995.

Lefever told Reuters in a telephone interview that higher
co-payments on the $1,800 in life-saving prescription drugs he
takes each month would erode his only source of income, Social
Security disability payments.

Asked how he would cope with higher out-of-pocket costs,
Lefever said: “I’ll be honest with you. My thought would be to
get it (money for prescription drugs) any way I could. But I
don’t want to go to jail.” He added: “I would just hope I’d
last until we got some other responsible government in position
to change these laws. It’s scary.”

Besides slowing the growth in many domestic programs, the
legislation has a wide impact on U.S. policies.

It would change some banking regulations and increase the
premiums companies would pay to the federal pension insurer,
the Pension Benefit Guarantee Corporation.

It also would end a U.S. trade law, declared illegal by the
World Trade Organization, that let the government distribute
duties it collects on foreign goods to American companies.

The bill also sets February 17, 2009, as the deadline when
television stations must switch to airing only new digital
broadcasts. It provides up to $1.5 billion to help some
consumers buy converter boxes so existing televisions do not go
dark after the transition.