Senate kills competing spending cut bills
WASHINGTON (Reuters) - The U.S. Senate defeated a pair of spending-cut bills on Wednesday -- a Republican plan for nearly $60 billion in reductions and a far smaller Democratic alternative -- increasing pressure on both sides to cut a bipartisan deal.
The two votes were staged by congressional leaders as a way of demonstrating that both parties now need to compromise on spending and deficit-reduction for the rest of this fiscal year, which ends on September 30.
"Our goal is to fund the government the rest of this year and in outyears. This isn't just the next few weeks (of funding). We're going to try to get a universal deal," Senate Majority Leader Harry Reid told reporters after the votes.
But with public opinion polls ambivalent over the call for deep spending cuts, the next steps were unclear.
A Reuters/Ipsos poll indicated on Wednesday that 51 percent of Americans want to see defense spending cut, with much weaker support for cutting government retirement and health programs. Only 45 percent thought the Republican proposals to deeply cut domestic, non-defense programs was "essential" to balancing the budget.
Republicans emboldened by congressional election wins last year and President Barack Obama's Democrats are at loggerheads over how to reduce the budget deficit, due to hit a record $1.65 trillion this year.
Spurred on by Tea Party fiscal conservatives, Republicans want steep spending cuts for this year, but Obama has warned that too much belt tightening will hurt economic recovery.
Negotiators face a March 18 deadline, when current funding for government programs expires. Lacking the time to work out a bipartisan spending deal for the remainder of the year, Congress is expected to pass a sixth stop-gap funding bill to avert a government shutdown.
The House could unveil its newest temporary spending bill as soon as Friday and pass it early next week, a source said.
On a mostly partisan vote of 56-44, the Democratic-controlled Senate rejected the House Republicans' measure, which also would have stopped Obama's healthcare reform law from being implemented.
Then the Democratic alternative to trim $4.7 billion from current spending fared even worse when it was defeated by a vote of 58-42.
Senator Charles Schumer called the Republicans' plan a "scorched earth spending proposal that counts among the casualties such critical priorities as border security, cancer research and food safety inspectors."
But the two Senate votes, Schumer predicted, will be a "breakthrough" as they make clear that "both parties' opening bids ... are non-starters" and "we can finally get serious about sitting down and narrowing the huge gap that exists."
As evidence, shortly before the Senate votes, Obama huddled with Senate Democratic leaders to discuss next steps in the spending battle.
Washington's intense interest in the budget is prompted by successive years of record deficits that are to be topped by an estimated $1.65 trillion in red ink just for this fiscal year, which ends September 30. That deficit would be equal to 10.9 percent of the U.S. economy.
This has led to fears of an eventual meltdown of the world's largest economy as total debt, now at $14.2 trillion, is piling up to a level that economists warn is unsustainable.
Tackling the growth of government spending comes at the same time the Obama administration is trying to steer the U.S. economy onto a path of sound economic growth after a deep recession that began in late 2007.
Democrats warn that cutting domestic spending too deeply too soon will jeopardize the recovery and kill jobs.
But conservatives, led by Tea Party activists, are insisting on accelerating spending cuts.
Republican Senator Rand Paul, a Tea Party favorite, said the two spending-cut options killed by the Senate were "inadequate and do not significantly alter ... our course."
He has called for spending cuts near $500 billion, urged the shuttering of entire Cabinet offices such as the Education Department and sought to send the federal Medicare healthcare program for the elderly "back to the states."
While Paul cannot get enough support for such quick, drastic cuts, his position underscores the tough talks ahead.
But there also have been signs in recent days that Democrats and Republicans might be able to find common ground.
On Wednesday, both the liberal Schumer and the conservative Paul spoke of cutting U.S. defense spending, now hovering at $700 billion a year, or about one-fifth of the entire budget.
Schumer, in a speech to the liberal think tank Center for American Progress, said that besides looking at defense cuts, lawmakers also could target programs with powerful constituencies -- farm subsidies and the Medicare and Medicaid programs -- along with hundreds of billions of dollars in duplicative programs being identified.
While Republicans seem open to all of those ideas, so far they have bridled at hints of tax increases that Schumer said would be necessary for a winning budget compromise.
(Additional reporting by Thomas Ferraro)
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