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GOP leaders attempt to salvage budget cuts

House members reject $602b spending bill for health, education

WASHINGTON -- After suffering a defeat on a bill to slash education and healthcare programs this year, Republican leaders tweaked a broader budget plan for the rest of the decade that faces opposition from party moderates because of cuts across an array of programs for the poor, students, and farmers.

GOP leaders recessed the House for five hours as they hunted for votes to salvage what President Bush made his top budget priority last February: trimming entitlement programs like Medicaid and farm subsidies that grow automatically with inflation and population increases.

In the other chamber, the Senate early this morning passed a $60 billion bill that would extend expiring tax cuts and prevent roughly 14 million families from paying higher taxes through the alternative minimum tax.

Much of the bill, passed 64-33, preserves tax cuts that are set to expire unless lawmakers keep them alive. ''I call this bill the 'Tax Increase Prevention Act,' " said Senator Rick Santorum, a Republican from Pennsylvania.

Senate GOP leaders pledged that when the bill returns to the Senate for final approval, it will also extend the life of reduced tax rates for capital gains and dividends, scheduled to end when the calendar flips to 2009.

The bill, however, drew a threat of a presidential veto for raising taxes on oil companies. The largest oil companies would be hit with about $4.3 billion in taxes through a change in accounting methods.

In the House, Speaker Dennis Hastert ordered the chamber back into session shortly after 8 p.m. with the idea of getting a vote sometime after midnight on the five-year deficit- reduction plan. The outcome remained in doubt, particularly after the defeat of the one-year spending bill for the Education, Labor, and Health and Human Services departments.

Both bills are part of a campaign by Republican leaders to burnish their party's budget-cutting credentials as they try to reduce a deficit swelled by spending on the Iraq war and Hurricane Katrina. In both cases, GOP moderates balked.

The 224-to-209 vote against a $602 billion spending bill for health, education, and labor programs disrupted plans by the Republican leaders to finish work on 11 spending bills that would pay for government operations and freeze many agency budgets through next September.

Democrats were unanimous in opposing that one-year appropriations bill. ''It betrays our nation's values and its future," said House minority whip Steny Hoyer, Democrat of Maryland. ''It is neither compassionate, conservative nor wise."

A companion deficit-reduction bill that would slice $50 billion from the deficit through the end of the decade, also faces unanimous opposition from Democrats, as well as from many moderate Republicans who are unhappy with cuts to Medicaid, food stamps, and college loan subsidies.

It would cut from so-called mandatory programs whose budgets increase automatically every year. The proposed savings are modest considering the $14 trillion the government is set to spend during the five-year period.

Republicans say the measure is a first step to restoring fiscal discipline by curbing rapidly growing benefit programs whose budgets spiral upward each year unless reined in by Congress.

GOP leaders sent the House into recess after the embarrassing defeat of the spending bill. The 22 GOP defections on that vote cast doubt on whether Hastert, Republican of Illinois, would bring the broader deficit-reduction bill to the floor later in the day.

''There's a message in this," Senator Dianne Feinstein, Democrat of California, said of the House vote, ''and that's that the people of America are only going to accept so many cuts in healthcare, in Medicaid, in Medicare, in transportation, and other vital areas."

Earlier Thursday, House GOP leaders eased their planned five-year cuts to health and nutrition programs for the poor, trying to win votes from reluctant moderates for the contentious deficit-reduction bill.

More concessions were made yesterday evening. Representative James Walsh, Republican of New York, for example, won language permitting food stamp recipients making the transition to work to continue to be able to receive non-cash benefits for child care, transportation, and housing without losing their nutrition benefits.

That overall bill would cut the deficit through a combination of new revenues from auctioning television airwaves to wireless companies and myriad cuts to such entitlement programs as Medicaid.

The earlier concession to moderates involved leaving copayments for the poorest Medicaid beneficiaries at $3 instead of raising them to $5 and dropping a provision that would have denied free school lunches to about 40,000 children whose parents would lose their food stamps.

Despite the changes, the core of the five year, $50 billion deficit-reduction bill remains intact. The most recent changes only chipped away at more than $800 million in cuts realized through cutting 300,000 working families from the food stamp program.

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