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House OKs Republican replacement for automatic cuts
WASHINGTON (Reuters) - The House of Representatives on Thursday approved a Republican plan to halt automatic spending cuts and protect military budgets next year by cutting social safety net programs and rolling back some financial reforms.
The Sequester Replacement Act sets up a new budget battle with Democrats in coming months as Congress gets serious about dealing with the across-the-board cuts due to hit in January.
Passed on a mostly party-line vote of 218-199, the Republican plan would partially offset $97.6 billion in automatic cuts in fiscal 2013 and shrink deficits by $242.8 billion over 10 years, according to the Congressional Budget Office.
Sixteen Republicans joined Democrats in opposing the measure, which is set to bog down in the U.S. Senate, where Democrats have control. Senate Majority Leader Harry Reid has vowed not to consider replacing the cuts until Republicans show willingness to mix some new revenues with spending cuts.
President Barack Obama also has threatened to veto the House measure, saying the Republican cuts would cost jobs and hurt seniors, veterans and children.
The automatic cuts - about $1.2 trillion over 10 years - were set in motion as part of last year's debt limit deal, after a congressional panel failed to specify further deficit-reduction measures.
In the Republican alternative, the largest cuts would come from food stamps, Medicaid healthcare for the poor, social services block grants that fund various programs including Meals on Wheels for the elderly, as well as a provision to deny illegal immigrants a $1,000 per child tax credit.
"We're controlling runaway, unchecked spending," said House Budget Committee Paul Ryan, who devised the effort as part of his controversial budget plan. "We have a spending-driven debt crisis on the horizon."
The Republican plan also takes money away from financial regulatory reforms passed in 2010, eliminating the Federal Deposit Insurance Corp's powers to bail out the largest financial firms and cutting funding for the Consumer Financial Protection Bureau, a new regulatory agency despised by many Republicans.
DUCKING THE "MEAT AXE"
Both parties agree on the need to stop the automatic cuts, which many lawmakers describe as a "meat axe" that would inflict indiscriminate pain across the government, especially on the military, which would absorb half of the cuts.
As the House debated the measure, top U.S. military officials told a Senate panel that if unchecked, the automatic cuts would force the Army to cut another 100,000 troops, slash the equivalent of the Navy's entire shipbuilding budget, and leave the U.S. Marines without adequate resources to respond to even a single crisis.
But Democrats and Republicans are deeply divided over where to shift the cuts, reflecting their partisan budget priorities that will reverberate through the run-up to the November 6 elections.
Democrats would prefer to raise taxes on millionaires and large oil companies and cut farm subsidies to forestall the cuts, known as a "sequester".
"There's a fundamental question here. If you're so concerned about those cuts to defense, why is it you won't close one special interest tax loophole to help pay for them?" Democratic Congressman Chris Van Hollen asked Republicans.
Although Senate Democrats are not expected to move similar legislation in the near term, Republicans in the U.S. Senate may make a move as early as next week.
Senator John Kyl said he and fellow Republicans may try to attach a Senate replacement plan to a military spending bill expected to be considered by the chamber next week.
Kyl told an event at the conservative Heritage Foundation in Washington that his plan would extend a salary freeze on federal workers though 2014 and allow the government to replace only two of every three employees who leave.
SPENDING BILL APPROVED
In a separate budget skirmish on Thursday, the House ignored the discretionary spending cap of $1.047 trillion agreed to in last year's debt limit deal, approving the first of several spending bills intended to fall in line with a spending target $19 billion lower at $1.028 trillion.
The move raises the likelihood that Congress will face another government shutdown battle just weeks before the November election unless the House and Senate can resolve a $19 billion difference over spending levels for the fiscal year starting on October 1.
The bill approved on Thursday by a 247-163 vote sets fiscal 2013 spending for the Justice Department, commerce agencies and NASA and other science-related agencies at $51.1 billion, $1.6 billion below the year-ago level.
The measure has drawn a White House veto threat over the lower House spending levels and because funding cuts would hurt various programs, including air traffic control.
(Additional reporting by Andrea Shalal-Esa; Editing by Eric Walsh)
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