House votes to prevent mandatory spending cuts

The move would eliminate the need for a "sequestration" of funds in mandatory programs, such as Medicare, veterans benefits, agriculture and student loans.

Thanks to previously enacted legislation, including last year's tax cut, the federal government faces a shortfall for fiscal 2002 of more than $125 billion under so-called pay-go rules, which require offsets for spending over prescribed limits.

Under budget rules, the failure to offset that spending triggers an automatic sequestration, or cut. However, because much of mandatory spending is exempted from such sequestration, most of the $125 billion would not be eliminated. The Congressional Budget Office indicates that as much as $60 billion would get the axe, while the Office of Management and Budget, which manages sequestration, claims only $31 billion would be targeted.

However, Congress has never allowed sequestration of such popular mandatory spending since pay-go rules were revised in 1990, and the Senate is likely to take up and pass the bill waiving the pay-go rules before it exits for the year.

Democrats complained Thursday that even though pay-go rules technically expired at the end of fiscal 2002, the bill still would extend the sequestration waiver through 2006. This is because pay-go has a five-year window that applies to legislation enacted before 2002, including the 2001 tax cut.

Bill Ghent and Pamela Barnett contributed to this report.