WASHINGTON (Reuters) - Republicans in the House of Representatives fired their first shots of the next deficit-reduction battle on Monday, advancing legislation to cut nearly $380 billion largely from social programs while protecting defense spending.
The cuts to food stamps, child tax credits and Medicaid healthcare for the poor, among others, are certain to stall in the Democratic-controlled U.S. Senate. But they stake out Republicans’ negotiating stance on replacing $1.2 trillion in automatic, across-the-board spending cuts that are due to take effect in January.
The “Sequester Replacement Act” authored by influential House Budget Committee Chairman Paul Ryan and expected to be taken up later this week by the full House, underscores the deep differences between Republican and Democratic spending priorities as campaigns for November’s elections gain momentum.
House Democrats pounced on the effort as hurting the poor, claiming that $35.8 billion in food stamp reductions over 10 years will cut off 1.8 million people from the nutrition assistance program.
“It continues the lopsided approach of the full Republican budget, protecting special interest tax breaks at the expense of vital safety net programs,” said Chris Van Hollen, the top House Budget Committee Democrat.
Leading Republicans said the new round of social safety net spending cuts were needed to advance deficit-reduction goals while protecting national security.
At Monday’s Budget Committee work session, Democrats made failed to amend the measure to restore social services cuts and instead eliminate tax breaks for oil producers.
The automatic spending cuts, of which $600 billion would come from defense through 2022 - were part of last summer’s 11th-hour deal to avert a historic U.S. debt default and raise the federal borrowing cap. Congress agreed to $900 billion in immediate cuts, but a bipartisan “supercommittee” failed in its task to find $1.5 trillion in additional cuts over a decade.
As a result, the automatic cuts will launch in January 2013 in what many lawmakers call a “meat ax” approach to deficit reduction. Democrats and the Obama administration agree with Republicans on the need to avoid this in favor of more thoughtful measures. But they differ on how to do it.
Under a separate defense appropriations bill that tracks with the Ryan budget plan, fiscal 2013 military spending would rise to $519.2 billion in fiscal 2013 — $1.1 billion higher than last year and $3.1 billion more than requested by President Barack Obama.
The Republicans would make the rest of the required $1.2 trillion in required cuts through further cuts to discretionary spending at a later date, presumably after November’s elections. Some cuts could be made to agricultural subsidies as part of a broader farm bill now being negotiated.
Obama and his Democrats have proposed what they call a “balanced” approach that includes spending cuts and new revenues. But their reliance on higher taxes on the wealthy and for oil companies are a non-starter for Republicans.
“Unfortunately, it does become about the campaign,” said Marlin Stutzman, a freshman Republican congressman on the House Budget and Agriculture committees. “The Republican Party is going to go to the American people and say, ‘We are already showing that we’re willing to tighten Washington’s belt. The Democrats are not.’”
Ryan prescribed the plan to divert military spending cuts to domestic spending in his controversial budget plan, directing six House committees to come up with $18.35 billion in savings for 2013 and $261 billion through 2022.
The Congressional Budget Office has since estimated these savings to be lower initially — $17.6 billion next year — but higher over the decade, at $379.7 billion.
In addition to the food stamp savings, the six committees have proposed to eliminate social services grants to states and kill tax credits associated with Obama’s healthcare overhaul law. Child tax credit refunds would be denied to those who cannot produce a valid Social Security number - a move targeting immigrants without U.S. work permits. And government employees would have to contribute more to their pensions.
The Ryan bill also takes aim at financial reforms, eliminating the government’s powers to shut down large financial institutions, as well as cutting funding for the new Consumer Financial Protection Bureau. A tort reform plan to end frivolous lawsuits included in the measure would lead to lower health care costs, according the CBO.
Editing by Richard Cowan and Cynthia Osterman; editing by M.D. Golan