Budget blueprint draws battle lines

Resolution mixes deep spending cuts with tax reductions

Author: David Goldstein

Published: May 2, 2005

Some student loans could be in jeopardy. Farm programs might face problems. Medicaid, which provides health care for poor families, has a target on its back.

But future price increases in gasoline could be tempered by oil from the Arctic National Wildlife Refuge.

That was the picture painted by Congress on Thursday night when it approved a nonbinding budget resolution for the next five years. The measure provides a blueprint for overall spending limits, which congressional committees now will use to set actual appropriations.

Robert Bixby, executive director of the Concord Coalition, a nonpartisan fiscal watchdog group, said the budget offers deficit hawks the enticing prospect of $35 billion in spending cuts over the next five years.

?On the other hand, it authorizes more than $100 billion for tax cuts, so while you're trying to cut, you're still making the problem worse,? he said.

The Congressional Budget Office said the budget actually would increase the deficit over the next five years by $168 billion.

The budget passed both houses on party-line votes.

Republican congressional leaders said it showed their intent to lower the deficit, which hit a record $412 billion last year and which they project would be reduced by half by 2010.

Despite the spending cuts, the overall budget still contains $2.56 trillion in spending for the next fiscal year and $14 trillion over the next five years.

Still, House Majority Leader Tom DeLay of Texas said that it was the Republicans' ?toughest? budget since 1997, marking ?a decade of promoting fiscal responsibility without raising a dime in taxes.?

Sen. Kent Conrad, a North Dakota Democrat, said the Republicans ?failed the credibility test, and they have absolutely failed the test of fiscal responsibility.?

Here is a rundown on how the budget treats key areas:

? Health care: As much as $10 billion of the $35 billion in spending cuts over the next five years could come from Medicaid. In Missouri, that could mean a double blow because new eligibility requirements under Gov. Matt Blunt already would drop about 100,000 people from the program.

? Farm programs: The agriculture committees in both houses need to find $3 billion in savings over the next five years, and there's speculation that the food stamp program could take a hit. Mark Maslyn, public policy director for the American Farm Bureau, said he hoped that whatever cuts occurred would be spread across all programs, from subsidies to commodities to nutrition.

? Student loans: The budget resolution calls for education cuts of $13 billion to $14 billion by 2010. ?Whether you're talking about lenders or borrowers, they're both going to have to take a few lumps,? said Travis Reindl of the American Association of State Colleges and Universities.

? Alaskan oil: Congress' goal is to cut $2.4 billion over five years in energy and natural resource spending. The Congressional Budget Office estimates that opening up the Alaskan wildlife refuge to drilling would generate $2.5 billion in federal revenue by auctioning off the oil rights.

? Tax cuts: The budget allows for $106 billion in tax cuts, including two-year extensions on the cuts in capital gains and dividends. Both are slated to expire in 2008.

More than half the benefits from those cuts would go to the wealthiest Americans, according to the Tax Policy Center of the Urban Institute and Brookings Institution.