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Congress Is Warned of Veto if Insurance Funding Is Cut
By Robert Pear, The New York Time
November 2, 2005
The Bush administration threatened Tuesday to veto a huge budget bill if Congress withdrew $10 billion set aside for health insurance companies participating in the Medicare program.
The veto threat came as the Senate began work on the omnibus bill, intended to cut $39 billion from federal benefit programs over the next five years. Democrats said the savings would be dwarfed by tax cuts that Republicans planned to pass in coming months.
Democrats said the net effect of the Republican plan for spending and tax cuts would increase the budget deficit and the federal debt, which reflects the accumulated total of all federal borrowing.
Republicans said the tax cuts would stimulate the economy and thus generate additional revenue.
The Senate budget plan would open an Alaskan wilderness area to oil drilling, reduce the growth of Medicare and Medicaid, trim farm programs across the board, charge new fees for certain immigrant visas and increase the premiums paid by corporations to the troubled Pension Benefit Guaranty Corporation.
The House is scheduled to vote next week on a spending plan expected to squeeze $50 billion from federal benefit programs over the next five years.
The White House said it "strongly supports" the overall Senate budget bill, drafted by Republicans. But it strenuously objected to a provision that would eliminate the so-called $10 billion stabilization fund, earmarked for managed care plans, as an incentive for them to participate in Medicare from 2007 to 2013.
Critics call the $10 billion a "slush fund," but the White House said the money would induce managed care plans to enter rural areas, thus expanding choices for some Medicare beneficiaries.
The veto threat came in an official statement of administration policy.
"If a final bill is presented to the president that limits the choices of seniors, takes away their prescription drug coverage or cuts the stabilization fund to increase Medicare spending," the White House said, "the president's senior advisers will recommend that he veto the bill."
Senate Republicans would use some of the savings to provide a small increase in Medicare payments to doctors, instead of the 4.3 percent cut that would otherwise occur. Neither President Bush nor House Republican leaders have offered any specific plan to forestall the cut, scheduled to take effect on Jan. 1. Doctors say the cut will deter them from taking new Medicare patients.
Senator Judd Gregg, the New Hampshire Republican who is chairman of the Senate Budget Committee, said the budget bill was the most ambitious effort to rein in federal spending since 1997.
"We produced a budget this year, for the first time in eight years, to control the rate of growth of entitlement spending," Mr. Gregg said, referring to the programs that pay benefits to anyone who meets certain eligibility criteria.
But Senator Kent Conrad of North Dakota, the senior Democrat on the Budget Committee, said it was a sham to portray the legislation as a deficit reduction measure.
"The first chapter of this book cuts spending by $39 billion over the next five years," Mr. Conrad said. "But that is only part of the package. The next chapter will have tax cuts of $70 billion. Chapter 3 is to increase the debt limit. This budget package will increase the debt of the United States."
Under the budget blueprint approved by Congress this year, the federal debt - bonds and notes held by the public - would increase 31 percent, to $6.15 trillion in 2010, from $4.7 trillion in 2005.
Representative Roy Blunt of Missouri, the House Republican whip and acting majority leader, dismissed the idea that the tax cuts would increase the deficit. "A strong, growing economy produces more revenue," he said.
Mr. Blunt and Senator Charles E. Grassley, Republican of Iowa, chairman of the Senate Finance Committee, said they intended to move tax cuts through Congress this year, after lawmakers finished work on the spending bill.
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