(Reuters) – Republicans in the House of Representatives on Monday will fire their first shots of the next deficit-reduction battle, advancing legislation to cut nearly $380 billion largely from social programs while protecting defense spending.
The cuts to food stamps, child tax credits and Medicaid healthcare for the poor, among others, are certain to stall in the Democratic-controlled U.S. Senate. But they stake out Republicans’ negotiating stance on replacing $1.2 trillion in automatic, across-the-board spending cuts that are due to take effect in January.
The “Sequester Replacement Act” authored by influential House Budget Committee Chairman Paul Ryan and expected to be approved by the panel on Monday, also will underscore the deep differences between Republican and Democratic spending priorities as campaigns for November’s elections gain momentum.
Already, House Democrats are pouncing on the effort as hurting the poor, claiming that $35.8 billion in food stamp reductions over 10 years will cut off 1.8 million people from the nutrition assistance program.
“Democrats will continue to draw a strong contrast between the lopsided Republican plan to protect tax breaks for powerful special interests at the expense of the rest of America, and the Democratic plan that takes a balanced approach to deficit reduction,” said Chris Van Hollen, the top House Budget Committee Democrat.
The automatic spending cuts, of which $600 billion would come from defense through 2022 – were part of last summer’s eleventh-hour deal to avert an historic debt default and raise the federal borrowing cap. Congress agreed to $900 billion in immediate cuts, but a bipartisan “supercommittee” failed in its task to find $1.5 trillion in additional cuts over a decade.
As a result, the automatic cuts will launch in January 2013 in what many lawmakers call a “meat axe” approach to deficit reduction. Democrats and the Obama administration agree with Republicans on the need avoid this in favor of more thoughtful measures. But they differ on how to do it.
Under the Republican plan, defense spending would actually be $8 billion higher than levels agreed last August, rising to $554 billion in 2013. The Republicans also want to exempt veterans’ health care and other benefits from automatic cuts.
The Republicans would make the rest of the required $1.2 trillion in required cuts through further cuts to discretionary spending at a later date, presumably after November’s elections.
Daniel Werfel, controller for the White House budget office, told Ryan’s committee recently that President Barack Obama would only consider signing a replacement measure that offers “balance,” meaning spending cuts combined with new revenues such as those proposed in Obama’s February budget plan.
But the tax increases for the wealthy proposed by Obama, along with some spending increases, make that budget a non-starter for House Republicans.
“Unfortunately, it does become about the campaign,” said Marlin Stutzman, a freshman Republican congressman on the House Budget and Agriculture committees. “The Republican Party is going to go to the American people and say, ‘We are already showing that we’re willing to tighten Washington’s belt. The Democrats are not.'”
BIGGER SAVINGS ESTIMATE
Ryan prescribed the plan to divert military spending cuts to domestic spending in his controversial budget plan passed by the House in March. He directed six House committees to come up with $18.35 billion in savings for 2013 and $261 billion through 2022.
The Congressional Budget Office has since estimated these savings to be lower initially — $17.6 billion next year — but higher over the decade, at $379.7 billion.
In addition to the food stamp savings, the six committees have proposed to eliminate social services grants to states and kill tax credits associated with Obama’s healthcare overhaul law. Child tax credit refunds would be denied to those who cannot produce a valid Social Security number – a move targeting immigrants without U.S. work permits. And government employees would have to contribute more to their pensions.
The Ryan bill also takes aim at financial reforms, eliminating the government’s powers to shut down large financial institutions, as well as cutting funding for the new Consumer Financial Protection Bureau. A tort reform plan to end frivolous lawsuits included in the measure would lead to lower health care costs, according the CBO.
Representative Tom Cole, a Republican on the Budget and Appropriations committees, said he is willing to consider some defense reductions, but the automatic cuts in January would put a “disproportionate” burden on the military, requiring some cuts to be shifted to domestic programs.
“There can be no sacred cows with a debt this massive,” he added.
(Editing by Richard Cowan and Cynthia Osterman)
