Yesterday the Coalition on Human Needs sent a sign-on letter to Congress, requesting that lawmakers focus on addressing human needs issues in the wake of the natural disasters, rather than focus on cutting both entitlement spending and taxes. The letter was endorsed by approximately 750 groups; at least one from every state.

In a boost to Budget Chairman Jim Nussle's plans to enact substantial budget cuts to offset the cost for recovery from Hurricane Katrina, House Speaker Hastert announced yesterday the approval of a package of cuts modeled after Nussle's plan. "In order to maintain our commitment to deficit reduction, we are proposing to move a mid-session Budget Amendment for the first time in almost 30 years (1977)," Hastert said in a written release. The release also detailed the following proposals for offsetting Katrina costs:

• An "additional across the board cut of '06 discretionary spending." Permanently eliminate and "deauthorize" programs that House appropriators have zeroed out.
• Increase total minimum reconciled mandatory savings from $34.7 billion to $50 billion. "In addition to the $50 billion, we will offset dollar-for-dollar the new mandatory spending included in reconciliation/entitlement reform that is required to address the disasters."
• "We will bring forward packages of additional rescissions to further help offset reconstruction costs. Congress must develop, with the President, a budget for reconstruction and a plan to pay for it."

What is truly befuddling about this statement is Haster's claim of a committment to deficit reduction. It has been under his leadership that the Congress has enacted reckless and short sighted tax and budget policies that have driven the federal government back iinto the red in the first place. And Hastert does not have a committment to deficit reduction - he has a committment to cutting programs and services and reducing the size of government. If the Speaker was serious about deficit reduction, he would be talking about either tax rollbacks or increases in addition to budget cuts.

During a Senate Finance Committee hearing this afternoon at which Secretary of the Treasury John Snow was testifying on the president's tax incentive proposals for rebuilding the Gulf Coast, Chairman Charles Grassley (R-IA) vocalized his anger at the White House for what he perceives to be a covert effort to derail legislation to temporarily extend Medicaid to hurricane victims. “Unfortunately, the White House is working against me behind the scenes, and I resent that considering how much I’ve delivered for the White House” in recent years, Grassley said. Sens. Grassley and Max Baucus (D-MT), the ranking member on the Finance Committee, have been trying to win approval from a number of conservative Senators for legislation that would extend Medicaid coverage to all low-income victims of Hurricane Katrina and guarantee that the federal government would pay for 100 percent of the costs. The legislation is supported by the National Governors Association, Majority Leader Biill Frist (R-TN) and Minority Leader Harry Reid (D-NV), the American Medical Association, and dozens of other groups. The White House has proposed instead to grant a waiver to individual states who are currently providing health care coverage for victims. This proposal has been heavily criticized, particularly by the Center on Budget and Policy Priorities for excluding many low-income vicitims from receiving benefits and for not assuring states that 100 percent of the cost would be covered by the federal government. Grassley has previously threatened to withhold support or delay the tax reconciliation bill his committee must write this fall if Senators do not support his Medicaid bill. Unfortunately, it seems these threats have had little impact.

As House Budget Chairman Jim Nussle (R-IA) continues to push for an amendment to the budget resolution passed in April to institute an across the board cut to discretionary spending by 2 percent, many Republican members of the Senate have expressed reservations or outright disdain for such a plan, threatening its survival. While not ruling out any avenue for finding budget cuts to offset the cost of Hurricane Katrina relief and reconstruction spending, a number of key Senate Republicans criticized Nussle's proposal. Senate Budget Committee Chairman Judd Gregg's (R-NH) preference is to use the reconcilation process already in place to look for larger cuts to entitlement programs. Senate Majority Leader Bill Frist (R-TN) called Nussle's proposal a "nonstarter," ruling out re-opening the budget resolution. And Defense Appropriations Subcommittee Chairman Ted Stevens (R-AK) stated he opposes the proposal and believes a substantial majority of the Senate would also oppose it. Discretionary spending makes up only 26 percent of the total federal budget and Stevens believes it should not have to shoulder a disproportionate share of the cuts. Unfortunately, Congress has yet to realize the damage done by cutting investments in America to pay for Katrina costs will not only make communities and families around the country less secure, it will actually do very little to offset the cost of Katrina. It's time Congress realizes it needs to revisit the massive tax cuts for the wealthy if it wants to truly keep Katrina spending deficit neutral.