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Friday, April 29, 2005 - Page updated at 12:00 a.m.

GOP agrees on budget for 2006

Los Angeles Times

WASHINGTON — Republican leaders in Congress announced agreement yesterday on a 2006 budget that calls for new belt-tightening in major domestic programs, even as it allows $106 billion more in tax cuts and leaves a $382 billion deficit.

The agreement also paves the way for adoption this year of legislation to allow oil drilling in Alaska's Arctic National Wildlife Refuge, a top White House priority.

The House approved the plan 214-211, with Washington state's three Republicans voting for it and six Democrats opposing it. A Senate vote was expected later last night.

The compromise calls for $40 billion in savings in Medicaid, farm programs and other fast-growing entitlement programs over five years.

Those savings fall short of the $69 billion that President Bush initially sought. Still, the budget agreement marks the first time since 1997 that Congress has taken even a modest step toward slowing the growth of government entitlements.

The budget — a compromise between earlier House and Senate versions — is a victory for Republican leaders who hoped to avoid repeating the embarrassment they suffered last year, when the chambers could not agree on a budget.

"Is this a perfect budget? Of course not," said House Budget Committee Chairman Jim Nussle, R-Iowa. "Having a plan is better than not having a plan."

The budget resolution is a nonbinding blueprint that does not require Bush's signature. But it sets spending ceilings and revenue targets for tax and appropriations bills drafted this year.

It also sets in motion a procedure that will allow the tax and spending cuts mandated by the budget to be considered in a special bill that is immune from Senate filibusters. The Alaska oil-drilling initiative is expected to be included in that measure, enabling it to circumvent the filibusters that have blocked that signature piece of Bush's energy policy in past years.

Negotiations over final terms of the budget were tricky because the House, where conservatives have been restive over the growth of government spending, insisted on tighter restrictions on domestic spending than the Senate wanted.

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A point of particular controversy was Medicaid, the federal-state health care program for the poor. The House version of the budget called for slowing the growth of the program by $20 billion over five years. In the Senate, Republican Gordon Smith of Oregon led an effort to spare the program from cuts.

Smith and others threatened to vote against the whole budget if it went too far in squeezing Medicaid. He accepted terms of the final compromise, which calls for $10 billion in Medicaid savings through 2010 but requires none of those savings to be made in 2006. Negotiators also agreed to establish a task force to report by Sept. 1 on ways to slow Medicaid growth.

That disappointed conservative House Republicans, but they acceded to avoid another budget stalemate.

"While we would have liked to have a budget calling for less government and greater savings, this is a good start," said Rep. Jeb Hensarling, R-Texas.

But the $10 billion in Medicaid savings was too much for many Democrats and liberal groups.

"It is unconscionable to balance the budget on the backs of our most vulnerable Americans, and that is exactly what the White House and congressional Republicans have decided to do," said Sen. Hillary Rodham Clinton, D-N.Y.

The spending cuts were particularly galling to Democrats, because they were proposed in tandem with additional tax cuts.

One likely option is to extend a set of tax cuts due to expire this year, including the federal deduction for state sales taxes.

Many legislators also are looking for ways to provide relief for middle-income taxpayers who increasingly are being hit by the alternative minimum tax, a levy originally designed to apply only to the wealthy.

The House vote was provided by The Associated Press.

Copyright © 2005 The Seattle Times Company

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