Proposed spending cuts need Bush's backing to survive

Plan to offset costs of Katrina recovery includes cuts in defense and homeland security spending.

House Budget Chairman Jim Nussle, R-Iowa, rolled out his proposal Wednesday to partially offset the costs of Hurricane Katrina relief and other emergency spending, urging a 2 percent across-the-board cut in fiscal 2006 discretionary spending and an additional 10 percent reduction in entitlement savings under the reconciliation process.

He said President Bush's speech Tuesday, in which he reiterated his call for budget cuts, "was really the afterburner we needed."

For any significant savings to be enacted, he said it "would take the president's leadership and his direct involvement," especially in negotiations with the Senate.

Trimming all discretionary accounts, which total $843 billion under the fiscal 2006 budget resolution, by 2 percent would save $16 billion, while growing the $34.7 billion reconciliation target by 10 percent would add another $3.5 billion for a total of about $20 billion. Nussle would include defense and homeland security spending in his plan, but that approach likely would be opposed by other House Republicans and the White House, although it would not touch off-budget spending for the global war on terror. Nussle also would exempt Medicare from entitlement savings, and Social Security is exempt by law from the budget process.

Nussle said within the next several weeks he wants to mark up a formal budget amendment incorporating the changes, still subject to negotiation, into the fiscal 2006 budget resolution. But even it House GOP leaders sign off on the plan, the Senate may not agree.

"It's a non-starter," said Senate GOP leadership aide who added that the Senate is likely to add savings to its reconciliation bill instead. In that chamber, GOP moderates can determine budget policy results, and in April they successfully shaved the reconciliation target by nearly $6 billion to its current total after a last-minute revolt.

Nussle also is urging the White House to submit a detailed Gulf Coast reconstruction plan and to send up its fiscal 2007 budget in November, rather than February. Lawmakers generally do not complete work on the budget until at least April. But with mid-term elections next November, not to mention Nussle's own Iowa gubernatorial bid, he said Republicans should not wait that long to "give confidence to ourselves, to the marketplace and to our constituents" that Congress has a handle on the budget.

When stacked up against a potential $100 billion-plus pricetag for Hurricane Katrina, and more than $200 billion for military and rebuilding operations in Iraq and Afghanistan, Nussle's proposed savings would cover only a fraction of the burgeoning deficit, he acknowledged. And given the White House and GOP leaders' desire to enact as much as $70 billion in tax cuts under a separate reconciliation bill, the deficit would still grow even if Nussle's plan is adopted.

"This is a down payment; this is not really making much of a dent," Nussle said.

But Senate Finance Chairman Grassley was wary of Nussle's plans. "I can probably do more than I have already, but I do not know if I can get the votes or not," he said. Grassley said the plans he is developing would not affect beneficiaries and that if Nussle's plan goes that face, "it is going to be very difficult." Grassley demurred on offering details of his plan. "I want to be sure I have the votes; otherwise, all the interest and advocacy groups will pounce on you," he told Iowa reporters. Meanwhile, Democrats urged today that reconciliation be scrapped altogether. "In light of the large deficits already projected, and the enormous obligations imposed by these disasters, we should not add to the deficit or reduce the resources needed to fund the federal response to the worst natural disaster in our history, "House Minority Leader Pelosi and House Budget ranking member John Spratt, D-S.C., wrote to Hastert and Nussle.