House passes cuts to Medicaid, student loans

$39 billion deficit reduction bill pass on party-line vote

For Immediate Release:

February 2, 2006

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By AP

WASHINGTON (AP) -- The budget-cutting bill awaiting President Bush's signature may only make a small dent in the nation's huge deficit, but he is expected to propose more cuts in his 2007 plan, including farm subsidies, Medicaid and Medicare.

The House on Wednesday sent Bush a major bill cutting benefit programs like Medicaid and student loan subsidies. The president is ready to sign the bill and move on to next year's budget cycle.

On February 6, he is releasing his 2007 budget plan, which is likely to call for new cuts to benefits programs like farm subsidies, Medicaid, food stamps and Medicare. Many lawmakers and budget experts are skeptical, though, of the chances for another budget-cut bill during an election year.

The House passed the bill 216-214 on Wednesday, mostly along party lines. It was Congress' first attempt in eight years to slow the growth of benefit programs like Medicaid and student loan subsidies.

Republicans hailed the five-year, $39 billion budget-cutting bill as an important first step to restoring discipline on spending.

"Once again, House Republicans are on record as defending budget discipline," said Acting Majority Leader Roy Blunt, R-Mo. "We have achieved $39 billion in savings, while streamlining government."

Democrats attacked the measure as an assault on college students and Medicaid patients and said powerful Washington lobbyists had too much influence on it.

"As the Republican budget ax fell on the poor and students, powerful special interests were cutting special deals in the conference committee," said Minority Whip Steny Hoyer, D-Maryland.

The bill blends modest cuts to planned spending on Medicaid, Medicare and student loan subsidies with a renewal of the 1996 welfare reform bill and $10 billion in new revenues from auctioning television airwaves to wireless companies. Dairy farmers with smaller herds won a $1 billion extension of a subsidy program that pays them if milk prices drop. Physicians were spared a 4 percent cut in Medicare fees, but radiologists and home health care providers participating in the program would face cuts in their scheduled payments.

The $39 billion in cuts are generally small compared with deficits expected to total $1.3 trillion or more through 2010. Still, the bill set off a brawl between Democrats and Republicans and whipped up opposition from interest groups like AARP.

The House passed a nearly identical bill December 19, but the chamber held an unusual revote because Senate Democrats forced technical changes that the House needed to accept before the bill could be sent to Bush's desk.

Republicans said the measure cemented the GOP's status as the party of smaller, more efficient government. But Democrats said the measure, when combined with an upcoming bill cutting taxes by about $70 billion, would lead to an increase in the deficit.

As if on cue, the Senate kicked off debate on a tax cut bill that would revive some expired tax breaks and safeguard millions more families from paying the alternative minimum tax. The House version of that bill would extend tax cuts for capital gains and dividends.

The powerful AARP seniors lobby, student groups, radiologists, pediatricians and others have mounted a month-long campaign against the bill, making some lawmakers uncomfortable with their earlier votes in December.

"Over the intervening month, people that I know and respect have gone through the details of this legislation ... and they've said, 'This is really a disaster,"' said Rep. Rob Simmons, D-Connecticut, who switched his vote from "aye" to "nay." Simmons was one of 13 Republicans to oppose the bill, joining 200 Democrats and liberal Independent Bernard Sanders of Vermont.

AARP is opposed to a provision tightening Medicaid nursing home care rules regarding people who shed assets to qualify for such care.

Pediatricians say provisions allowing states to eliminate some guaranteed Medicaid child health care services and charge new and increased co-payments would end up hurting children by driving tens of thousands of beneficiaries out of the program.

Student groups charged the bill harmed college student through $11.9 billion in cuts to the student loan program, including higher fees on student and higher interest rates on parent loans. But Republicans countered that the lions share of the savings came from lender subsidies and that much of the savings was channeled into a grant program for low-income college students studying math, science or specialty languages.