House approves $3.6T Republican deficit-cutting plan

WASHINGTON -- A divided House approved a $3.6 trillion Republican budget on Thursday recasting Medicare and imposing sweeping cuts in domestic programs, capping a battle that gave both political parties a campaign-season stage to spotlight their warring deficit-cutting priorities.

But the partisan divisions over the measure, which is dead on arrival in the Democratic-led Senate, also underscores how tough it will be for lawmakers to achieve the cooperation needed to contend with a tsunami of tax and spending decisions that will engulf Congress right after this fall's elections.

"This is very easy," Robert Bixby, executive director of the Concord Coalition, a bipartisan group that advocates debt reduction, said of House passage of a budget that will go no further in Congress. "When you get to the budget bomb at the end of the year, it's for real. You're going to actually have to pass something."

The fiscal plan the House passed Thursday by a near party-line 228-191 vote would reshape and squeeze savings out of Medicare and Medicaid, the federal health insurance programs for the elderly and poor. It would force deep cuts in a wide range of spending, including rail projects, research and Pell Grants for low-income college students.

It would block President Barack Obama's plans to raise taxes on couples earning above $250,000 a year. Instead, it would collapse the current six income tax rates into just two, with a top rate of 25 percent -- well below the current 35 percent ceiling -- while erasing tax deductions and other breaks that the GOP plan failed to specify.

Overall, the GOP budget would cut spending $5.3 trillion more deeply over the next decade than Obama would -- out of more than $40 trillion that would be spent. It would cut taxes by $2 trillion more than the president's plan. That leaves Republicans seeking a hefty $3.3 trillion in deeper deficit reduction than Obama.

The measure immediately became grist for the presidential campaign.

"House Republicans today banded together to shower millionaires and billionaires with a massive tax cut paid for by ending Medicare as we know it and making extremely deep cuts to critical programs needed to create jobs and strengthen the middle class," White House press secretary Jay Carney said in a written statement.

At nearly the same time, GOP presidential front-runner Mitt Romney issued a statement of his own.

"The House budget and my own plan share the same path forward: pro-growth tax cuts, getting federal spending under control and strengthening entitlement programs for future generations," Romney said.

With such stark differences over what to do about huge federal budget shortfalls, it was easy to predict that the two parties would disagree vehemently over the House plan.

Little consequence

It was also easy for the two sides to remain divided because there is little practical consequence if Congress' budget is ignored or, like this year, if a final version is never approved. That's because the budget is a nonbinding blueprint that legislators are supposed to follow as they work on spending and revenue bills later in the year, but don't really have to.

Come January, though, a series of potentially cataclysmic fiscal events will occur almost simultaneously that lawmakers and the new president will have to confront and agree to do something about, one way or another.

Tax cuts first approved under President George W. Bush will expire, imposing tax increases on virtually every working American. Billions of dollars in spending cuts to defense and domestic programs, triggered by the failure of Congress' debt-cutting super committee, will start taking effect unless legislators block them.

Right around that time, the government should hit its debt limit and need renewed borrowing authority to avoid a federal default. A new limit will be required from lawmakers who fought right to the brink in a similar battle last summer.

Congressional gridlock on spending bills, always a likelihood, may be threatening a federal shutdown. And a payroll tax cut, extra unemployment benefits and a host of temporary tax breaks for businesses will all be about to expire.

"You've got a budget just about to blow up. There's never been anything like this," Bixby said of the intersecting decisions that will have to be made.

Work on those problems could well start in a postelection session of Congress. Whether either party has more leverage than it does in today's stalemated Washington will depend on how the congressional and presidential elections are decided.

In one indication of the pressures that will face lawmakers seeking middle ground, a coalition of both parties' moderates offered a compromise budget this week that combined tax increases with spending cuts in an attempt to curb federal deficits. It lost resoundingly on Wednesday, garnering only 38 votes.

That measure's two leading sponsors, Reps. Steve LaTourette, R-Ohio, and Jim Cooper, D-Tenn., said in separate interviews that 100 or more lawmakers had told them they would support the bipartisan proposal or were leaning toward doing so.

But then came a flood of lobbying. Conservative groups like the anti-tax Americans for Tax Reform and the Club for Growth pushed Republicans to oppose the bipartisan plan, while the AFL-CIO, the National Committee to Preserve Social Security and Medicare, and other groups brought pressure from the left.

"A vote for Cooper-LaTourette is a vote for deep cuts in Social Security benefits, cuts in Medicare benefits and Medicaid" and tax breaks for the wealthy and for U.S. firms shipping jobs abroad, said a letter the AFL-CIO sent lawmakers.

"People are afraid of campaign money drying up, they're afraid of being attacked by ads on TV, they're afraid of losing goodwill, especially if they see you're not going to win," said Cooper, explaining the clout opposition groups had with lawmakers facing re-election this fall.

LaTourette said that after the bipartisan plan failed, he telephoned Erskine Bowles to apologize "for damaging his hard work." Bowles, a former White House chief of staff to President Bill Clinton, was a leader of Obama's bipartisan deficit-reduction commission along with former Wyoming GOP Sen. Alan Simpson. LaTourette and Cooper used the commission's debt-reduction plan as a model.

"I wasn't surprised that both the right and the left came at us," LaTourette said. "I was surprised at the ferocity of the attacks."