CQ TODAY - BUDGET
Sept. 12, 2005 - 8:34 p.m.
Budget Reconciliation Plans Get Another Month From Senate Leadership
By Steven T. Dennis and Joseph Schatz, CQ Staff
Plans to cut mandatory spending will be delayed for about a month as Congress copes with the aftermath of Hurricane Katrina, Senate Republican leaders said Monday.

Despite the extended time line, Democrats and some moderate Republicans are likely to continue fighting against budget cuts, which are expected to target programs such as Medicaid and food stamps. For now, the Republican leadership shows no signs of scrapping its plans.

With a new deadline of Oct. 26 for the Senate Budget Committee to report on legislation to cut spending using the fast-track budget reconciliation process, Republicans sought to gain time to shore up shaky support for the $34.7 billion package of cuts. The House is also expected to adopt a similar schedule. Authorizing committees would have until Oct. 19 to report their proposals to the Budget Committee.

A $70 billion tax reconciliation package would follow in early November, according to a top Senate aide.

In announcing the new reconciliation schedule, Republican Judd Gregg of New Hampshire, Senate Budget Committee chairman, also predicted that Congress would consider another $50 billion emergency spending package for Katrina relief in three or four weeks.

Congress cleared and President Bush signed a $51.8 billion supplemental relief package (PL 109-62) on Sept. 8, after clearing an initial $10.5 billion package of hurricane relief (PL 109-61) on Sept. 2.

On the Senate floor Monday, Gregg vigorously defended the need for reconciliation. He said cutting $10 billion over five years from the $1.3 trillion federal-state Medicaid program can be accomplished while providing more people with more services. "Governors have told us with more flexibility, they can cover more people, and do it at a lower cost. That's just called good management," he said.
Move Forward or Stall
Changing the dates has won the blessing of the Senate parliamentarian. There had been earlier concern that moving the dates that were set in the fiscal 2006 budget agreement (H Con Res 95) would strip reconciliation of its filibuster-proof fast-track rules.

Under the resolution, authorizing panels had been charged with submitting recommendations to the Budget panels by Sept. 16, and tax writers were supposed to complete their packages by Sept. 23.

Despite the apparent determination to move forward, some predicted that the temporary delay would become permanent. "There's going to be no real pronouncement," predicted one GOP lawmaker, but "over time it's going to be clearer and clearer to people it's not going to happen."

Two GOP members on the Finance Committee, Olympia J. Snowe of Maine and Gordon H. Smith of Oregon, have asked leaders to cancel proposed entitlement cuts in the wake of the disaster.
Medicaid Forecast
Without the votes of Snowe and Smith, Republican Charles E. Grassley of Iowa, Senate Finance Committee chairman, likely would be unable to garner the votes necessary to support the cuts. Grassley released a statement last week saying that he intends to ensure Medicaid can handle Katrina-related strains.

Grassley also criticized Democratic leaders' demands that GOP leaders cancel plans for the $70 billion tax cut package. Grassley wants to use that bill to extend the major tax provisions enacted in the 2001 (PL 107-16) and 2003 tax laws (PL 108-27) that expire before 2010 - including the tax break on capital gains and stock dividends.

"Is now the time for the Democratic leadership to tell the financial markets to expect double the tax rate on dividends and raise capital gain tax rates by 33 percent?" he said.

Yet Thomas Kahn, Democratic staff director of the House Budget Committee, said this is exactly the wrong time to cut programs such as unemployment insurance, Medicaid and student loans.

"There seems to be a growing recognition even among Republicans that cutting programs for people at the bottom while cutting taxes for the people at the top, and adding $35 billion to the deficit at a time of national crisis, is an indication of misplaced priorities," Kahn said.