Senate turns to spending-cut plan, oil drilling

WASHINGTON — The Senate is digging into a budget plan that would bundle mostly modest Medicare and Medicaid spending cuts with a controversial plan to open an Alaskan wilderness area to oil drilling.

Republicans are seeking to burnish their budget-cutting credentials but face unanimous opposition from Democrats who contend it is part of an overall budget plan that will actually increase the deficit once a companion $70 billion tax cut bill is passed.

"When I went to Roosevelt grade school in Bismarck, North Dakota, if you reduced spending by $39 and you reduced your income by $70, you were deeper in the hole," said top Senate Budget Committee Democrat Kent Conrad. "You've added to the deficit. You haven't reduced it."

The bill is estimated to trim just $39 billion from budget deficits totaling $1.6 trillion over five years — just 2 percent. For the budget plan's first year, which began Oct. 1, the cuts total $6 billion.

Still, Republicans say the debate marks an important pivot point for their party, which stormed Washington 11 years ago with promises to balance the budget. Now, the return of intractable deficits and surging spending has caused many conservatives to despair that the GOP has lost its way on spending.

The long-planned budget measure would make the first cuts to so-called mandatory programs since 1997. These account for 55 percent of the budget and include programs such as Medicare, Medicaid, farm subsidies, and student loan subsidies.

"This bill takes fiscally responsible steps to reduce the deficit, reduce spending that is on autopilot, and strengthen our economy," said Budget Committee Chairman Judd Gregg, R-N.H. "It is the first deficit reduction package in almost a decade, and probably the most important legislation to be considered this year."

The bill reflects the influence of moderates providing swing votes in the chamber and on key committees such as the finance panel, which drafted provisions curbing the growth in Medicaid and Medicare, the federal health care programs for the poor and the elderly.

As a result, the Senate's Medicare and Medicaid cuts largely won't touch beneficiaries of the programs, instead tapping drug companies, pharmacies and insurance subsidies for much of the savings. And the Agriculture Committee dropped plans to cut food stamps.

It's a different story in the House, where the companion bill — slated for a floor vote next week — features new co-payments for Medicaid beneficiaries and would let states reduce coverage.