Wednesday, January 26, 2011

House Calls for Deep Spending Cuts

By JANET HOOK and SIOBHAN HUGHES

WASHINGTON—The Republican-controlled House, hours before the State of the Union address, passed a resolution Tuesday calling for more drastic and immediate cuts in domestic spending than envisioned by President Barack Obama in the speech.

[SPEND_ALT] Bloomberg News

Paul Ryan has become the GOP's leading spokesman on fiscal issues.

The resolution, approved on a 256-165 vote, calls for House Budget Committee Chairman Paul Ryan (R., Wis.) to dramatically lower the ceiling on government spending in the remaining seven months of the current budget year.

Seventeen Democrats voted for the measure. No Republicans opposed it.

The vote was largely symbolic, as the House had already passed a rule giving Mr. Ryan that authority. But Republicans wanted to bring the issue to a vote to draw a contrast with Mr. Obama on their spending plans.

The president was expected to propose freezing discretionary, nonsecurity spending at current levels for five years. That would save about $26 billion over five years, according to the White House budget proposal for the current fiscal year, which ends Sept. 30.

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The Republican resolution calls for rolling back spending on domestic, nonsecurity-related programs to 2008 levels or lower. That could cut spending by as much as $100 billion from Mr. Obama's request for the current fiscal year.

Both proposals would leave Social Security and Medicare unaffected.

"Business as usual has to come to an end," said Mr. Ryan, who has emerged as the GOP's leading spokesman on fiscal issues. "The days of getting spending under control are just beginning."

Democrats argued that spending reductions sought by the GOP could damage the still-struggling economy.

"Deep, immediate cuts…would hurt the economy when it's in a very fragile state and risk throwing more Americans out of work," said Rep. Chris Van Hollen (D., Md.).

Mr. Ryan is likely to set the 2011 spending ceiling by the end of this week, after the Congressional Budget Office issues its annual report Wednesday estimating the current size and trajectory of government spending and the deficit.

Republicans' decisions about where specifically to cut spending to meet their overall target will be made in the coming weeks, as the House Appropriations Committee drafts legislation to extend a government-wide spending bill that expires March 4.

The legislation needs to be approved by the Senate. The spending cuts are unlikely to be as deep in the Democratic-controlled Senate.

House Majority Leader Eric Cantor (R., Va.) said Tuesday that the bill would be on the House floor the week of Feb. 13. House Appropriations Chairman Harold Rogers (R., Ky.) warned that the cuts would require more than painless trims of waste and fraud.

"The cuts that are coming will not be easy to make. They will not represent low-hanging fruit," said Mr. Rogers.

"It will not be easy, it will not be quick, and it will not be without pain," he said.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

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