House panels turn budget axe to automatic cuts

WASHINGTON Thu Apr 12, 2012 7:58pm EDT

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WASHINGTON (Reuters) - Republicans in six House of Representatives committees next week will dust off their past proposals for reducing the deficit as they try to replace some of the automatic spending cuts set to take place in January.

Under a directive in the House-passed budget plan from Congressman Paul Ryan, the panels have just two weeks to come up with $18.45 billion in savings for fiscal 2013 and a net $261 billion over 10 years.

Expected targets for cuts include food stamps, farm subsidies and crop insurance, federal employee pensions and health care. A repeal of President Barack Obama's health reform law would prevent new coverage expenses from occurring from 2014.

The proposed cuts, like the Ryan budget that prescribes them, have little chance of passage in the Democratic-controlled Senate. But they will live on as campaign talking-points for both parties as November elections approach.

They also could complicate the annual passage of spending bills needed to keep the government running - raising the risk of a shutdown just weeks before the election.

Republicans believe that by making concrete proposals now, they will have an advantage in post-election negotiations over alternatives to some $98 billion in across-the-board spending cuts scheduled for January. The cuts were part of last year's deal to end Congress' debt limit standoff.

"It certainly puts their marker out on where they think the policy should be going," said Dan Holler, an analyst at the conservative Heritage Foundation in Washington. "They're trying to set the tone, show the American people that they're serious and really be prepared, come 2013, to make the necessary choices."

Importantly, Republicans want to shield military and security spending from these cuts by shifting them to domestic programs. And fiscal conservatives want to demonstrate to voters even deeper spending cuts.

Senior Republican aides expressed confidence that the $18.45 billion in cuts can be identified and passed by April 27 from the House Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform and Ways and Means committees. Congress returns from a two-week break on Monday.

"House Republicans have offered a credible plan to protect our national security. Now it is time for the Democrats who run Washington to do the same," said Michael Steel, a spokesman for House Speaker John Boehner.

FOOD SAVINGS

The House Agriculture Committee has been told to make the biggest contribution - $8.2 billion for fiscal 2013 and $33.2 billion over 10 years. The Ryan budget documents suggested that $30 billion of this could come from farm subsidies and federal crop insurance programs - steps that would be deeply unpopular in farm states.

House Agriculture Committee chairman Frank Lucas said the panel will meet its specified targets but is still determining sources of the savings.

"I think the key phrase is, they are suggestions," said Lucas, an Oklahoma Republican during a radio interview early this month. "The positive thing is we have flexibility in how to make recommendations."

Democrats say the cuts are far larger than advertised - $180 billion over 10 years when the math includes a proposal to convert food stamps to a block grant and to limit its spending.

The deadline to identify budget-cut targets "will only muddy the waters and is a waste of time," said Collin Peterson of Minnesota, the committee's Democratic leader.

The House and Senate Agriculture committee plan to begin work on a five-year, $480 billion farm bill in the next couple of weeks. Peterson said the job will be tougher because of the dissension created by having to vote on budget cuts before writing farm and food policy for coming years.

The Oversight and Government Reform Committee has been ordered to find $2.2 billion in savings next year. It will likely reprise its past proposals to require larger pension contributions from federal employees and a plan to shrink the federal workforce by attrition and maintain a pay freeze.

An aide to the Energy and Commerce Committee said previous legislation would be a starting point to meet its target for $3.75 billion in savings next year. This includes tens of billions of dollars saved through medical liability reforms and repeal of certain funding streams for the 2010 Affordable Care Act.

Representative Chris Van Hollen, the top Democrat on the House Budget Committee, said he expected to see "old standbys and favorites" in the Republican cuts. He added that the exercise was needed to appease Tea Party members and other fiscal conservatives in the House Republican caucus.

It will help show voters the differences between Republican and Democratic budget priorities, he said. Obama has proposed increasing near-term spending on education and infrastructure, while shrinking deficits through higher taxes on the wealthy.

"We'll watch this play out, recognizing that this is a dead end. But in the process it will once again reveal that their priorities are very out of touch with American people," Van Hollen told Reuters. "It's unfortunate that they appear willing to cut nutrition support for kids but refuse to eliminate tax breaks for corporate jets or big oil."

However, he cautioned that passage of the cuts could encourage House Republicans to "dig in" on negotiations over appropriations bills this summer, raising the risk of a shutdown standoff.

Democrats say that the Ryan budget's prescriptions will go below and "violate" a fiscal 2013 discretionary spending level of $1.047 trillion agreed to in the August debt limit deal. Republicans insist that this level was a cap, and they were not prevented from spending less.

(Additional reporting By David Morgan, Charles Abbott and Roberta Rampton; Editing by Marilyn W. Thompson and Lisa Shumaker)

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