House approves $39.7 bln spending cuts By Richard Cowan
Mon Dec 19,11:26 AM ET
WASHINGTON (Reuters) - The House of Representatives on Monday narrowly voted to cut $39.7 billion from federal spending over five years, including health care and other social welfare, as part of a conservative push to contain these growing programs.
By a vote of 212-206, the House, at the end of a rare overnight session, approved the spending cuts, which were opposed by Democrats.
"We have a plan to reform the government and achieve savings," said House Budget Committee Chairman Jim Nussle, an Iowa Republican.
In separate legislation, the House also approved a 1 percent reduction in spending this fiscal year for all federal programs, except for the Veterans Administration, to save an additional $8 billion.
The five-year budget bill, which was trimmed from the nearly $50 billion in savings approved by the House last month, is expected to be debated by the Senate this week.
Democrats criticized spending cuts to student loans, child care and other programs. Rep. John Spratt (news, bio, voting record) of South Carolina, the senior Budget Committee Democrat, complained that Republicans were negotiating last-minute deals to help medical equipment manufacturers and suppliers, while maintaining reductions in some programs for the poor.
Rep. Chet Edwards (news, bio, voting record), a Texas Democrat, said, "This bill under the Republican leadership makes Scrooge look like a philanthropist."
A large chunk of the spending cuts, about $11.2 billion over five years, would come from Medicare and Medicaid, the health-care programs for the elderly and poor.
The Center on Budget and Policy Priorities, a liberal-leaning economic analysis group, said the bill would raise co-payments for many Medicaid beneficiaries, "as well as the premiums they can be charged to enroll in Medicaid in the first place."
Additional savings would come in student loan programs, which Massachusetts Sen. Edward Kennedy (news, bio, voting record), a Democrat, called "the biggest cuts to student aid programs ever."
The spending-cut bill also would make a significant change to U.S. trade policy.
If enacted, it would repeal a trade law known as the "Byrd amendment" that allows the government to distribute some duties it collects on foreign goods to U.S. companies involved in trade disputes with foreign competitors.
Under a compromise, the law, which has been declared illegal by the World Trade Organization, would be repealed after a two-year grace period.
American companies have collected more than $1 billion since 2000 under this law.
Throughout this year, the Republican-led Congress has been pushing some form of spending reductions, which they said were necessary in light of huge U.S. budget deficits and unexpected hurricane clean-up and rebuilding costs.
The $39.7 billion in savings would be dwarfed, however, by an estimated $14 trillion the government is expected to spend over the next five years under a Republican budget plan approved last April.
Democrats argued that the spending cuts were falling disproportionately on the poor as Republicans also were pushing through Congress tax cuts for the wealthiest Americans.
Some of those Democrats have acknowledged the need to control the growth of these federal programs, a problem that will only get worse as baby-boomers retire and enroll in federal programs such as Medicare. But they argued that long-term reforms, not stop-gap spending cuts, were necessary.
House Republicans abandoned earlier attempts to cut food stamps by about $700 million. The program helps the poor buy groceries.
The government would gain $3.6 billion in revenues over five years by raising premiums companies would pay to the Pension Benefit Guarantee Corp.