Committee chairs in limbo on budget reconciliation

Committee chairmen in the House and Senate are weighing changes to plansfor tax and  entitlement cuts as they await word from the GOP leadership on how to proceed with budget reconciliation against a backdrop of the devastation of Hurricane Katrina and the massive unplanned costs for relief and recovery.

The original deadline of this Friday will be pushed back, but the committees do not yet know how long they will have to complete their work or if they need to scrap any parts of the plans that they refined over the August recess.

[At press time, Senate Majority Leader Bill Frist (R-Tenn.) and Senate Budget Committee Chairman Judd Gregg (R-N.H.) issued a statement that their discussions with the Senate parliamentarian had produced a favorable result. By Oct. 26, the Budget Committee will report two reconciliation bills — one for taxes and one for spending —that will not be subject to filibuster on the Senate floor. The deadline for authorizing committee chairs to forward their reconciliation packages to Gregg was not included in the statement.]

The framework for the reconciliation packages desired by the committee chairs largely had taken shape as the recess wound down but before Katrina diverted Congress’s attention and created a potential political problem for the GOP: how to draft legislation to cut taxes and decrease spending on programs such as Medicaid, food stamps and welfare in the face of a natural disaster.

The fiscal year 2006 budget resolution requires Congress to cut taxes by $70 billion and reduce entitlement spending by $35 billion over five years. The extension of the reconciliation deadline is expected to be for several weeks, at least.

Democrats have even been joined by some Republicans in calling on the GOP leadership to set aside spending cuts in budget reconciliation this year. Reducing the scale of the final reconciliation numbers of the tax cuts and entitlement cuts remains an alternative to giving up on the process or passing the bills at their original levels.

House Budget Committee Chairman Jim Nussle (R-Iowa) this week is expected to lay out changes in the leadership’s timeline and instructions to the chairs of the authorizing committees responsible for drafting pieces of the reconciliation bills. The House leadership has broad discretion in implementing budget reconciliation that extends to the timing and substance of the final tax- and entitlement-cut bills.

The House and Senate are looking to move within the same timeframe, but uncertainty about how to proceed continues to threaten reconciliation in the upper chamber.

The Senate GOP leadership has been working with the parliamentarian to devise a way to postpone action on budget reconciliation. A mechanism must be identified that will allow the Senate to postpone action on reconciliation without the bills’ losing their protection against filibuster.

An announcement that was expected Friday never materialized, and published reports last week offered up contradictory predictions made by Senate aides about how the parliamentarian would rule and what the leadership would do. Senate aides anticipated, however, that a final decision was imminent and would be revealed early this week. At press time, no announcement had been made.

The stakes are enormous for the Republicans, who need to follow through with reconciliation as a key component of their fiscal agenda but need to avoid the perception that they are cutting programs for low-income people at a time when the federal government has come under fire for disregarding the suffering of poor people in the hurricane-hit Gulf Coast states.

The Bush administration and three key congressional committees already have taken steps to ameliorate that impression as part of the federal contribution to Katrina relief.

The Department of Health and Human Services last week relaxed the requirements for receiving Medicaid and Temporary Assistance for Needy Families for victims of Katrina. The House Energy and Commerce, House Ways and Means and Senate Finance committees have vowed to facilitate further access to such benefits and to determine how to fund them.