CongressDaily reported this morning that House GOP leaders have decided to drop plans for now to include across-the-board cuts to FY 2006 discretionary spending as part of an amendment to the budget resolution which was passed last April. Although across-the-board cuts have been dropped, the amendment is still expected to call for $50 billion in entitlement cuts, which is an increase from the $35 billion designated in the original FY06 budget blueprint. This amendment could be on the floor as early as Thursday. The cuts were dropped partly because of the belief that committing so soon to them would hamper negotiations with the Senate on FY06 spending bills, said GOP Conference Chairwoman Deborah Pryce of Ohio. The Senate does not have plans to consider a similar budget amendment, and members are currently focused on the reconciliation process, which begins today. Senate Republicans are looking for additional budget cuts, but the Finance Committee, last night, was unable to coalesce around a plan to cut at least $10 billion from the Medicare and Medicaid programs. The deadline for the committee to finish work on the package is quickly approaching, and because Finance Committee rules require 48 hours' notice before a markup can take place, Grassley has convened a meeting this morning in the hopes of reaching an agreement. The Budget Committee is supposed to mark up a reconciliation bill incorporating bills from all committees by Oct. 26. If they do not do so, it could open the door to procedural hang-ups, and according to Finance Committee ranking member Max Bauuus (D-MT), "presumably any senator could offer a motion to recommit." Also on Monday, Senate Finance Committee Chair Charles Grassley (R-IA) acknowledged that the committee might not be able to produce enough revenue-raising offsets to extend all tax cuts expiring this year under the budget reconciliation process. He did insist, however, that Congress would be able to pass a tax cut reconciliation package this fall, saying, "We can do the $70 billion without any problem."

It seems the most "fiscal conservatives" in the House, the extremely right-wing Republican Study Committee, has gained the upper hand in their push for increased budget cuts in reconciliation. This week House GOP lawmakers will begin taking steps to cut as much as $50 billion from the FY 2006 budget. These cuts will effect areas such as health care programs for the poor, food stamps, and farm supports, and may also include across-the-board cuts in other programs. A month ago, when the RSC first called for stepped-up budget cuts in the wake of Hurricane Katrina, House leaders tried to terminate their efforts behind closed doors. However, now House leaders are embracing this call for extensive budget cuts. With the leadership in turmoil because of Majority Leader Tom Delay's (R-TX) indictment, leaders, according to the Washington Post, "had no choice but to firm up support with their conservative base... according to lawmakers and leadership aides." Part of what is driving the Republican Study Commitee, which is headed by Rep. Mike Pence (R-IN), is a concern regarding spending in the wake of Hurricane Katrina, which is projected to possibly exceed $200 billion. This group has, on occasion, criticized the administration and their Congressional colleagues for participating in what they call run-away spending. Since Bush came to office, federal spending has increased by approximately one-third, from $1.86 trillion to $2.47 trillion, and deficits have risen. What does not add up is that this same group supports the tax cut measure slated for passage in reconciliation, which amounts to $70 billion in un-offset federal spending. They also support the extension of Bush's 2001 and 2003 tax cut provisions, which would cost over $1 trillion in lost revenue over a decade. It seems that the $200 billion cost of Katrina - a one-time expenditure that will not add to the deficit for more than one year, is nothing but an excuse for these members to gain some traction for their real goal: shrinking the size of government significantly by defunding public programs which serve to help millions of people every year. It is a push for cold-hearted disinvestment in our country during a time when so many people -- both Katrina victims and others -- are in need. And it is masked in the cloak of "fiscal responsiblity." In reality, it would be difficult for the RSC's definition of fiscal responsibility to be any less responsible, both in regards in to the well-being of citizens and in regards to future deficit projections.

The Congressional Budget Office released a report titled Long-Term Economic Effects of Chronically Large Federal Deficits yesterday. The report discusses how deficits affect national saving, financial markets, and capital inflows. The report points out that while temporary deficits (such as those brought about by unanticipated spending for events such as Hurricane Katrina) can serve to support economic activity, large federal deficits (such as those created by chronic tax cutting) serve to reduce future living standards by "slowing the accumulation of national wealth as they lower national saving.... by shifting resources into public and private consumption through increases in federal spending cuts in federal taxes." The report also notes that policies which increase the deficit but also "provide incentives for people to work, acquire more skills and education, undertake research and development, invest, innovate, or use resources more efficiently may do less harm to future living standards than policies that increase the deficit without providing such incentives."

After Hurricane Katrina, President Bush waived wage protections established under the Davis-Bacon Act that require federal contractors to pay area prevailing wages. While some have speculated on the legality of this decision, it has flat out angered a substantial number of House members from the President's own party, who sent a letter to him in late September expressing their outrage. This week, Rep. LaTourette (R-OH) - the member who spearheaded the effort to rally 36 other Republicans against the waiver - announced on the House floor he would be seeking legislative action to reinstate Davis-Bacon requirements. "I don't know exactly what we have in mind yet, but I think the week of the 17th [of October] there may be some activity," LaTourette said. Democrats in the House have already taking action to attempt to reverse Bush's decision. Rep. George Miller (D-CA) has introduced a bill, H.R. 3763, that will require the re-application of Davis-Bacon wage requirements to the areas affect by Hurricane Katrina. It is widely agreed the bill would pass it voted upon, but the House GOP leadership has continued to block any such vote. Make Your Voice Heard The Campaign for America's Future has launched a letter writing campaign to raise support for reinstating Davis-Bacon requirements.