Congress approves $2.6 trillion budget

Congress yesterday passed a $2.6 trillion budget resolution for fiscal 2006 after the House reached a deal with Senate negotiators to shave $10 billion from Medicaid.

The budget virtually freezes domestic spending at $391 billion, with $33 billion going to homeland security, and will hold military spending to $420 billion. It reduces future increases in automatic spending by nearly $35 billion over five years, including the $10 billion reduction in Medicaid that would come over that last four years.

In exchange for the Medicaid cuts, negotiators agreed to create a bipartisan commission, with members appointed by President Bush, to find ways to eliminate fraud and abuse in the state reimbursement component of Medicaid.

The House voted 214-211 early in the evening, with the Senate passing it 52-47 a few hours later.

Republicans said the budget showed significant spending restraint. “This will be the first budget to cut or freeze nondefense discretionary spending since Ronald Reagan,” said Rep. Jim Nussle, Iowa Republican and House Budget Committee chairman.

President Bush praised the House vote. “This is a responsible budget that reins in spending to limits not seen in years,” he said.

Most House Democrats opposed the budget and complained they had only three hours to review the proposal before it came to the floor for a vote.

“This budget is an assault on our values,” said House Minority Leader Nancy Pelosi, California Democrat, adding that it would “pass mountains of debt onto our children and grandchildren.”

“My great concern is the explosion of debt that goes up $600 billion a year, what seems to me to be a reckless way to proceed,” said Sen. Kent Conrad of North Dakota, the ranking Democrat on the budget committee.

The budget includes up to $106 billion in tax cuts over five years, and offers a path to approve drilling for oil in the Arctic National Wildlife Refuge. Final action on ANWR drilling will come later this year, when the two chambers produce a budget reconciliation measure.

Senate Republican leaders originally wanted to save $14 billion to $15 billion from Medicaid over the next five years, but centrist Republicans joined all Senate Democrats in a 52-48 vote in February to eliminate those savings. Instead, they proposed the commission.

The commission is expected to offer its initial report to Congress in early September and then spend another 13 months compiling a list of comprehensive recommended reforms. That compromise won the support of centrist Republicans, including Sen. Gordon H. Smith of Oregon.

“It was made clear to me that a minimum of $10 billion [in Medicaid savings] was necessary to get a budget,” he said. “I would have preferred $5 billion, but it is important to remember that the budget is just a number.”

Mr. Smith said Medicaid savings could be adjusted in future years as appropriations committees work to contain spending within the budget’s recommendations.