February 02, 2006|Richard Simon and Joel Havemann |
Times Staff Writers WASHINGTON — The House on Wednesday approved and sent to the White House a far-reaching bill that will trim the growth of federal benefit programs by more than $39 billion in the next five years -- Congress' first major budget-cutting exercise in almost a decade.
The measure, which is expected to cost California at least $1.7 billion in federal assistance, squeaked through the Republican-led House by two votes -- 216 to 214 -- and without a single Democrat in favor. The Senate had passed the legislation shortly before Christmas, also with no Democratic support, when Vice President Dick Cheney broke a 50-50 tie.
President Bush issued a statement praising the House vote and added, "I look forward to signing this bill into law." The 2007 budget he will submit to Congress on Monday, Bush said, "will continue to build on the spending restraint we have achieved."
Among its many provisions, the bill will charge higher interest rates on student loans, reduce federal aid to force absent parents to pay child support and impose stricter work requirements on welfare recipients.
As the state with the largest population, California will absorb a large share of the cuts. The state's Legislative Analyst's Office estimates that California will lose $1.7 billion in federal aid and have to spend $1.4 billion of its own money under the bill's provisions. The state Finance Department foresees $2.4 billion in lost federal aid.
"This will blow a multibillion-dollar hole in the state budget, making a bad situation worse," Assembly Speaker Fabian Nunez (D-Los Angeles) said Wednesday after the bill was passed. "It's another slap in the face from Washington to California's poor and middle-class families. And worse, it jeopardizes many of the matching funds we were hoping for to fund healthcare and education programs."
Noting that every California GOP House member -- with the exception of the absent Rep. Gary G. Miller (R-Diamond Bar) -- had voted for the bill, Nunez added: "It's amazing to me that the Republicans in our congressional delegation continue to put party politics ahead of getting more resources for California."
Asked about his support for the measure despite the concerns of his home state's government, Rep. Ed Royce (R-Fullerton) said that tougher fiscal times were ahead if Congress failed to rein in spending.
Rep. Ken Calvert (R-Corona) said in a statement: "Entitlement programs are projected to double in 10 years, and if we fail to properly curb this growth, today's youth will face an even greater problem down the road. By slowing the rate of growth today, we reduce the chance of being faced with deep program cuts or large tax increases in the future."
Republican leaders have portrayed the bill as a crucial part of their drive to reduce the federal budget deficit. Rep. Mike Pence (R-Ind.), a leader of House conservatives, called the measure "an important first step toward restoring public confidence in the fiscal integrity of our national government."
Yet measured against the budget as a whole, the spending cuts seem mild. Heritage Foundation budget expert Brian M. Riedl said the cuts would reduce total growth in federal benefit programs over the next five years from 39% to 38%. And even as the House was passing the spending-cut bill, the Senate was debating a $56-billion tax cut that the House had already passed -- a combination that would add $16 billion to federal deficits.
Democrats condemned budget cuts that focused on programs to benefit the poor even as Republicans planned more tax cuts that disproportionately benefit the wealthy.
"This isn't about small government," said House Minority Leader Nancy Pelosi (D-San Francisco). "This is about small-minded, petty government that does not meet the needs of the American people."
The bill includes provisions besides budget cuts.
It would immediately raise the current $100,000 account limit on federal bank deposit insurance for individual retirement accounts to $250,000. The measure gives the Federal Deposit Insurance Corp. discretion to increase the $100,000 insurance ceiling on regular deposit accounts to reflect inflation, starting five years from now.
And upon Bush's signature, the legislation will reauthorize and revamp the welfare reform law that Congress enacted in 1996 but that expired in 2002. Since then, Congress has extended the program, Temporary Assistance to Needy Families, with a series of short-term reauthorizations.
States will face reductions in federal welfare grants if they cannot meet strict new requirements for moving their welfare recipients into jobs or activities such as job training. The state Finance Department estimated that California would lose $1.5 billion in federal welfare grants -- and predicted that Gov. Arnold Schwarzenegger and other outraged governors would force Congress to rewrite these provisions.
