January 24, 2011 / 6:03 AM / in 7 years

Analysis: Republicans face juggling act in spending cuts

WASHINGTON (Reuters) - Republicans in Congress will be under pressure from all sides as they try to live up to their campaign promise to slash domestic spending in the coming months.

As Republicans who oversee spending in the House of Representatives prepare to cut domestic spending by roughly 22 percent, conservative newcomers are already pressing for more dramatic cuts in a debate that could play out on the House floor.

Democrats, meanwhile, are eager to point out that the proposed cuts could cost thousands of jobs at a time when unemployment is still hovering near 10 percent.

And lawmakers from both parties will be scrambling to protect favored programs or minimize the impact on their home districts.

“I don’t care how much people say, ‘We’re not earmarkers and we’re not porkers,’ the bottom line is they were elected to represent their local areas and their local economies,” said Ethan Siegal, an analyst with The Washington Exchange who tracks Congress for investors.

Earmarks are funds allocated for legislators’ pet projects,

usually benefiting their home districts, that are often included in broader legislation so they do not get specific review. “Pork” refers to initiatives designed to bring money into a representative’s district.

The debate over spending is expected to consume much of the oxygen in Congress as lawmakers seek to narrow a budget deficit that has hovered around 9 percent of gross domestic product in recent years, well above the 4 percent level that economists consider sustainable.

Republicans won control of the House in November after promising to roll back domestic spending to 2008 levels, which would trim about $100 billion from President Barack Obama’s last budget proposal and $84 billion from current levels.

They will get a chance to put those cuts in place when current funding expires on March 4, but Republican leaders have recently suggested that the actual cuts will be closer to $60 billion because the fiscal year will be nearly halfway through.


Democrats are eager to illustrate the impact of the cuts. They say a return to 2008 levels would mean laying off 48,000 preschool teachers, cut college tuition aid under the Pell Grant program by at least $1,330 per award, and reduce the Securities and Exchange Commission’s budget by 18 percent at a time when the agency is shouldering increased responsibility to police financial markets.

Transportation, public housing, environmental enforcement, and foreign aid would be among the hardest hit if spending was rolled back across the board to 2008 levels.

The cuts won’t fall evenly across the government, an Appropriations Committee aide said, as staffers are currently working their way through the budget to figure out where the cuts should fall.

Some programs likely to take a steep hit include subsidies for the Amtrak passenger rail system, the National Endowment for the Arts and the Corporation for Public Broadcasting, the aide said.

A Reuters/Ipsos poll released on January 12 found broad support for cutting foreign aid and tax collection. Roughly half of those surveyed supported cuts to enforcement of financial and environmental regulations, while only 24 percent supported cuts to education.

Members of the party’s conservative wing, which counts 74 of the chamber’s 87 freshman Republicans among its members, are pressing for even deeper cuts after unveiling a plan to reduce domestic spending by 58 percent in 10 years.

“Despite the added challenge of being four months into the current fiscal year, we must still keep our $100 billion pledge to the American people,” says a letter by the conservative Republican Study Committee, which is being circulated for signatures on Capitol Hill.

House Republican Leader Eric Cantor has said that conservatives will get a chance to offer many of their spending cuts when the Appropriations Committee’s bill comes up for a vote.

That could lead to a rollicking floor fight, as Appropriations Committee members with decades of budget experience try to fend off the more dramatic cuts offered by more ideologically motivated newcomers. Democrats could try to put Republicans on the spot by forcing votes on popular programs like Medicare.

Whatever passes the House will probably get watered down significantly before it becomes law, as lawmakers will have to find common ground with a Democratic-controlled Senate.

“I have a hard time seeing the senate and Obama going along with any meaningful cuts,” said Chris Krueger, an analyst with MF Global who predicts that Congress will ultimately opt to continue funding the government at current levels through the end of the fiscal year in October.

Editing by Cynthia Osterman

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