October 4, 2005: Headlines: Congress: Appropriations: budget: OMB Watch: Operation Offset opposed by Republican leadership

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Operation Offset opposed by Republican leadership

Operation Offset opposed by Republican leadership

Operation Offset has done more to fracture the Republican Party than to rally members behind a coherent set of proposals. GOP leaders and the White House rejected the major pieces of the proposal (delaying the Medicare prescription benefit and reopening the highway bill) and called the overall proposal unrealistic. Congressional leadership and moderate Republicans saw it as a harsh criticism of government spending enacted and trumpeted by Republicans. Others feared it would divide the caucus, postponing or eliminating consensus among Republicans and showing increased disarray in the party amid a flurry of criticism of the federal government's response to Hurricane Katrina.

Operation Offset opposed by Republican leadership

Scrambling to Offset Katrina Costs, Republicans Continue Dangerous Fiscal Policy

After five years of ill-conceived and reckless tax and budget policies that have led the federal government to be deeply in debt, weak, and vulnerable, Republican congressional leaders and the White House are now talking about fiscal responsibility in the aftermath of Hurricanes Katrina and Rita. While nearly all the current proposals emerging from Congress and the administration are cloaked in the rhetoric of balancing the budget, this serves simply to hide their one-sided emphasis on shrinking the role of government through cutting spending rather than increasing revenue. This strategy will only exacerbate long-term problems and worsen the bleak fiscal outlook and economic concerns facing the country.

The calls for offsets to Katrina-related spending began on Sept. 19, when Rep. Mike Pence (R-IN), Chairman of the far-right House Republican Study Committee (RSC), sent a letter cosigned by 21 House Republicans to President Bush urging him to further cut non-defense discretionary spending. This was quickly followed by a letter from Reps. Jeb Hensarling (R-TX) and Jeff Flake (R-AZ), both members of the RSC, to House Speaker Dennis Hastert (R-IL) and former Majority Leader Tom Delay (R-TX), in which they suggest that the 2006 implementation of the Medicare prescription drug benefit be delayed by one year, in order to contain costs related to Hurricane Katrina. Many other members of Congress advocated for the re-opening of the recently passed highway transportation bill that contained over 6,000 lawmaker "pet projects" to find offsets.

Unfortunately, these proposals were just the tip of the iceberg and at a Sept. 21 press conference, the Republican Study Committee unveiled in a 24-page scheme -- "Operation Offset" -- a historical laundry list of nearly every budget cut Republicans have proposed, imagined or yearned for over the years. The document outlined over $500 billion in cuts to a vast swath of government programs over the next five years, including significant cuts to NASA, Amtrak subsidies, the Corporation for Public Broadcasting, the Peace Corps, foreign aid, the Earned Income Tax Credit, the national park system, community health centers, agricultural subsidies, and many, many more areas. An analysis of the proposed cuts by the Center for Budget and Policy Priorities found that nearly half would come from programs serving low-income and vulnerable populations.

Operation Offset has done more to fracture the Republican Party than to rally members behind a coherent set of proposals. GOP leaders and the White House rejected the major pieces of the proposal (delaying the Medicare prescription benefit and reopening the highway bill) and called the overall proposal unrealistic. Congressional leadership and moderate Republicans saw it as a harsh criticism of government spending enacted and trumpeted by Republicans. Others feared it would divide the caucus, postponing or eliminating consensus among Republicans and showing increased disarray in the party amid a flurry of criticism of the federal government's response to Hurricane Katrina.

Yet, while seen as politically unrealistic as a package and not supported (and even reviled) by the Republican leadership, the RSC proposal has succeeded in fundamentally transforming the conversation in Congress about Katrina-related relief and reconstruction efforts. The discussion is now firmly centered around where and by how much Congress can shrink government by cutting other parts of the budget. The Bush administration took notice as well, scheduling a meeting between OMB Director Josh Bolten and Pence, Hersarling, and Flake, just one day after the proposal was released. Many believe the meeting was a blatant and somewhat desperate attempt to ease concerns about eroding support for the president among conservative Republicans in Congress and map out a course for realistic cuts to other parts of the budget.

So while the GOP has been divided about what programs to cut and by how much, they are in agreement that budget cuts, and not a rollback of the tax cuts (or even tax increases), is the first priority in attempts to offset the cost of Katrina-related spending. Over the last two weeks, Republicans have worked to bridge the gap between opposing sides of the conference and are now considering a number of different methods to cut the budget.

Some have suggested Congress should cut back on spending in the Fiscal year 2006 (FY06) appropriations bills yet to be finished. Still others sought to restrict spending for a number of months only with the enactment last week of a very unusual continuing resolution that continues funding the federal government past the end of the fiscal year.

But many members are skeptical of Congress' ability to scale back FY06 appropriations bills and the savings from the continuing resolution will be minimal compared to the reconstruction costs. To create more substantial savings, House Budget Committee Chairman Jim Nussle drew up a plan to trim non-defense discretionary spending across the board in FY06 by 2 percent and to wring additional savings out of entitlement programs through the reconciliation process.

This proposal was well received by most House Republicans, and the GOP is now counting on the fast-tracked reconciliation spending bill to provide even more cuts than were originally planned. In seeking to push the reconciliation cuts above the $35 billion outlined in the budget resolution, acting House Majority Leader Roy Blunt (R-MO) has pressured committee chairs to view their respective targets for spending cuts in reconciliation as minimums, not maximums.

Yet another roadblock may exist, as increases in reconciliation budget cuts may not be as well received in the Senate, where the budget resolution passed by only two votes in May and where many senators, Republicans and Democrats alike, have been wary of the planned $35 billion in cuts, which comes mostly from Medicaid, food stamps, and other low-income support programs. While Senate Majority Leader Bill Frist (R-TN) and Budget Committee Chairman Judd Gregg (R-NH) are working with other senators and committee chairs to consider all options, the focus thus far in the Senate has also been solely on budget cuts.

The policies currently being promulgated by the GOP are not only reckless and shortsighted, but also run contrary to the will of the American people. In a number of recent polls, Americans have overwhelmingly rejected cuts to other parts of the budget as a way to pay for additional Katrina-related spending. Instead, most Americans strongly support canceling the planned tax cuts for those earning over $200,000 annually. If there are to be cutbacks on spending, the public supports shifting funds from spending in Iraq. The current GOP leadership is dangerously out of touch with the priorities of Americans across the country and their refusal to revisit the massive and extremely expensive tax cuts -- the easiest and most logical way to pay for Katrina-related spending -- is politically greedy and morally suspect.

Republicans in Congress have been slow to realize this, however, as they are continuing with plans to cut an additional $70 billion in taxes later this month in another reconciliation bill.





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