GOP Budget Cuts Just Pass House

Narrow Win For Bill That Cuts $50B For Poor, Students And Farmers

(CBS/AP)  The biggest concession came Thursday evening with inclusion of language to permit food stamp recipients making the transition from welfare to work to continue to be able to receive non-cash benefits for child care, transportation and housing without losing their nutrition benefits.

The bill drew unanimous opposition from Democrats, who objected to both cuts in programs for the poor and the fact that the deficit-reduction bill would increase the deficit when combined with a tax bill slated for a vote later that would extend tax cuts on capital gains and dividend income due to expire at the end of 2008.

The overall bill would cut the deficit through a combination of new revenues from auctioning television airwaves to wireless companies and myriad cuts to entitlement programs like Medicaid.

The earlier concession to moderates involved leaving co-payments for the poorest Medicaid beneficiaries at $3 instead of raising them to $5. A provision denying Medicaid nursing home benefits to people with home equity of $500,000 or more was modified by raising the equity standard to $750,000 or more.

Those changes came on top of concessions last week when Republican leaders, to appease moderates in their party, dropped provisions to open ANWR to oil drilling and to allow states to lift a moratorium on oil drilling off the Atlantic and Pacific coasts.

Despite the changes, the core of the five year, $50 billion deficit-reduction bill remains intact. The liberal-leaning Center on Budget and Policy Priorities estimated that the last minute changes only eased the cuts aimed at the poor by 2 percent from the original version.

On Medicaid, the bill would generate almost $12 billion in savings through new cost-sharing burdens on beneficiaries and by letting states scale back coverage. It also would tighten rules designed to limit the ability of elderly people to shed assets to qualify for nursing home care. The bill also reduces pharmacy profit margins and encourages pharmacies to issue generic drugs.

On student loans, provisions to increase interest rates and fees paid by student and parent borrowers would contribute up to $14.3 billion in savings.

The deficit-reduction bill is the first effort in eight years to take on the automatic growth of mandatory programs like Medicaid, which make up about 55 percent of the budget. By comparison, the annual appropriations bills fund about one-third of the budget.