House spending bill trimmed, Senate OKs war funds

[May 28, 2010]  WASHINGTON (AP) -- Facing a rebellion by Democrats worried about budget deficits, House leaders are tossing aside billions of dollars in aid to states and health insurance subsidies for laid-off workers as they look for ways to scale back a catchall spending bill.

In the Senate, a war funding measure nearing $60 billion passed with broad bipartisan support Thursday night. The main beneficiary of the bill, part of congressional action ahead of the Memorial Day recess, was President Barack Obama's plan to send 30,000 additional troops to Afghanistan.

Democrats will miss their self-imposed deadline of passing a jobless benefits measure before Memorial Day, even if the House passes its version of the bill Friday. The Senate doesn't plan to hold any more votes until senators return June 7.

The steps taken by House leaders could reduce the deficit impact of the bill to as little as $30 billion or so in hopes of winning over fiscally conservative "Blue Dog" Democrats unhappy about adding to the deficit as the national debt closes in on $13 trillion. A version circulated last week would have added $134 billion to the deficit.

One Blue Dog, Rep. Henry Cuellar, D-Texas, said Thursday that he would probably vote for a slimmed-down bill.

"The bigness issue and the deficit issue has been addressed," Cuellar said.

To attract the votes needed to extend unemployment benefits and renew more than 50 popular tax breaks that expired last year, House leaders planned to drop $24 billion in aid to states and allow health insurance subsidies for laid-off workers to expire. Another likely cut was the $22 billion needed to delay the scheduled 21 percent cut in Medicare reimbursements to doctors until 2012.

Across the Capitol, a dozen Senate Republicans, including GOP leader Mitch McConnell of Kentucky, joined Democrats in a 67-28 vote to pass the war-funding bill. Two anti-war Democrats, Sens. Ron Wyden of Oregon and Russ Feingold of Wisconsin, opposed it.

The war-funding bill includes $5 billion to replenish disaster aid accounts and money for Haitian earthquake relief and aid to U.S. allies in the fight against terror.

The war-funding measure has been kept relatively clean of add-ons that could draw GOP opposition -- to the frustration of liberal Democrats such as Sen. Tom Harkin of Iowa, the top Senate sponsor of a $23 billion plan to help school districts avoid teacher layoffs as local revenues remain weak. Facing certain defeat, Harkin declined to offer the plan to the war-funding bill.

Thousands of people are set to begin losing jobless benefits when an extension of unemployment insurance expires next week.

Democratic leaders cut the package of spending proposals and tax cuts Wednesday by about $50 billion to $143 billion. Thursday's moves could eliminate $50 billion and more from the measure.

It's a tough vote for lawmakers who want to help constituents hit hard by the recession but are wary of being labeled big spenders. The economy is starting to pick up, but unemployment is still high as the nation continues to struggle from the loss of more than 8 million jobs. At the same time, angst over deficit spending is growing as November's midterm congressional elections near.

The cost of the bill would be partially offset by tax increases on investment fund managers, oil companies and some international businesses. The tax increases total about $57 billion over the next decade. Changes giving underfunded pensions more time to improve their finances would raise $2 billion.

[Associated Press; By STEPHEN OHLEMACHER and ANDREW TAYLOR]

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