House Democrats on Wednesday proposed dipping into last year’s economic stimulus to pay for part of a new round of education spending - the first time leaders in that chamber have proposed using what they’d dubbed sacrosanct funds.
The cuts to the Recovery Act, which range from defense to the high-profile automobile “cash for clunkers” program, add up to only about $1.6 billion, but symbolically they represent a shift for Democrats, who for the last 16 months had turned back every effort to redirect money away from the $862 billion stimulus.
Democrats said they are putting money into things that have become more urgent than they originally foresaw, and said that’s different from Republican proposals to slash the stimulus spending to reduce the deficit. But the GOP said the need to reprogram money shows the stimulus has been a failure.
“What they once hailed as a targeted, timely and temporary stimulus package vital to the health of our economy, Democrats are now acknowledging that it’s just another Washington slush fund,” said Rep. Tom Price of Georgia, chairman of the conservative Republican Study Committee.
The redirected money would now be used to fund student aid for low-income college students and sent to states to preserve teachers’ jobs. Democrats want to attach the funds to the emergency war-spending bill the military says must be passed by this weekend to keep operations running.
The proposal comes on the same day that the Congressional Budget Office released its long-term budget outlook that found President Obama’s health care overhaul did not significantly alter the future budget picture.
Republicans had warned the bill would balloon the deficit, while Democrats said it would reduce federal spending on health care. CBO concluded it could slightly reduce the deficit, but said overall it doesn’t do much to change long-term federal health spending enough to head off a looming fiscal crisis.
He said that given the fiscal challenge, the government will need to increase taxes by 25 percent, cut total spending by 25 percent, or do some combination of the two, just to keep at today’s already high debt level.
Debt and spending have become dominant political issues, particularly as the unemployment rate remains near 10 percent.
Democratic leaders and Mr. Obama want to continue boosting spending, arguing it produces jobs, but Republicans and some conservative-leaning Democrats have balked and demanded new spending be offset by cuts elsewhere.
That’s where the Recovery Act reductions come in. Appropriations Committee Chairman David R. Obey proposed trimming from nine different categories of stimulus spending, as well as a billions more from non-Recovery Act programs.
Of that savings, $10 billion would go to preserve teachers’ jobs, nearly $5 billion would go to grants for low-income college students and $701 million would go to boost border security.
The fact there there is $44 million left in the “cash for clunkers” account is likely to anger some lawmakers and consumers, especially after the program was so popular it ran out of money in August and had to receive an emergency $2 billion injection of funds.
Late last year, the National Highway Traffic Safety Administration sent a final report to Congress saying it had to come up with a cutoff date for when it would stop taking applications so it didn’t go over the total amount of funds available.
NHTSA said it paid out $2.853 billion in claims, and had figured its administrative costs at $100 million, but it left the remaining money as a cushion.
Last week, Senate Democrats also proposed dipping into Recovery Act money to pay for part of a bill to extend tax breaks and other parts of the stimulus.
Senate Democrats said the move showed how far they were reaching to try to win Republican support. But the overture failed, as Republicans, joined by one Democrat, successfully filibustered the measure.
Still, the proposal is coming back to haunt Democrats.
On Wednesday, Sen George V. Voinovich, an Ohio Republican who often votes with Democrats to spend money to help the unemployed, said he asked them to use the stimulus cuts to pay for yet another extension of unemployment benefits. Democratic leaders refused.
“That just reduces the stimulus to the American economy,” said Majority Whip Richard J. Durbin, Illinois Democrat.
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