Bush to Propose Billions in Cuts

Farm subsidies and food stamps are among the targets in the 2006 budget plan, to be sent to Congress on Monday. Opposition is building.

By Joel Havemann and Mary Curtius

Los Angeles Times

February 6, 2005

WASHINGTON — President Bush will propose a 2006 budget Monday that, despite record spending of about $2.5 trillion, will call for billions of dollars in cuts that will touch people on food stamps and farmers on price supports, children under Medicaid and adults in public housing.

Even before the budget is officially sent to Congress on Monday, resistance to Bush's proposals was welling up Saturday from interest groups that benefit from federal aid and from the members of Congress who represent them.

Powerful agricultural interests were among the first to label Bush's proposed budget cuts as unfair and shortsighted. Farmers receive about $15 billion annually in federal farm program payments to help produce major commodities, including corn, cotton, rice and wheat.

California farmers could end up bearing a disproportionate share of the burden if the cuts in crop subsidies were enacted, said economist Daniel Sumner. "Rice and cotton are very important to this state," said Sumner, who is director of the Agricultural Issues Center at UC Davis.

The cuts are being proposed as the president is striving to keep a campaign promise to rein in government spending and halve the federal deficit in five years. The deficit has soared since the Sept. 11 terrorist attacks and the subsequent war on terrorism — and as revenue has fallen as the economy has slowed and tax cuts have taken effect.

In addition to the cuts proposed in the 2006 budget, Bush is expected to ask Congress to approve in principle many billions of dollars in additional, unspecified cuts.

Bush has seemed to challenge congressional Republicans and Democrats to make the tough choices necessary to achieve the deficit reductions that members on both sides of the aisle have called for recently.

"I welcome the bipartisan calls to control the spending appetite of the federal government," he said Saturday in his weekly radio address. "On Monday, my administration will submit a budget that holds the growth of discretionary spending below inflation."

Deficit hawks outside the government welcomed Bush's tone but warned that members of Congress would fight to maintain spending for programs popular with their voters.

"It's going to be a tight budget," said Robert Bixby, executive director of the Concord Coalition, a budget watchdog group that lobbies for smaller deficits. "That doesn't mean it's going to be a realistic budget."

Bush's budget will cut "where the money is," Bixby said Saturday, "but it's also where the resistance is."

The lower-income Americans who benefit from food stamps and Medicaid do not typically provide the Republican Party with many votes or campaign contributions.

The proposed budget will give states less flexibility to include working poor families with children as beneficiaries, sources said.

Senate Agriculture Committee Chairman Saxby Chambliss (R-Ga.) said he was willing to trim farm subsidies if other programs suffered proportionately.

"But if they try to single out the farm bill," Chambliss told reporters on Capitol Hill last week, "then we are going to have one heck of a fight."

The administration will propose a 5% across-the-board cut in price supports for crops and a reduction from $360,000 to $250,000 in the annual cap on subsidies that farmers can receive.

Under the current system, some farmers evade the limit by dividing farms into several separate corporate entities, a practice that the budget also will seek to eliminate.

A Senate Agriculture Committee aide, saying evasion of the cap was extremely rare, argued that farmers needed the safety net of federal aid for the years when they could not sell their crops for the cost of producing them.

In a letter Thursday to Agriculture Secretary Mike Johanns, a coalition of more than 100 organizations led by the American Farm Bureau Federation, said that Congress, in the 2002 bill that authorized farm subsidies for seven more years, had already cut subsidies by $4 billion a year by imposing the $360,000 cap.

"A budget that requires further cuts or structural weakening in these important programs will put at risk the promising environmental benefits of the bill and the nutritional health of some of the poorest populations in our country," the letter said.

In California, 1.5 metric tons of rice is grown a year, second only to Arkansas, said Tim Johnson, chief executive of the California Rice Commission, which has about 1,500 farmer members. Approximately 600,000 acres of farmland in the state were planted in rice in 2004.

"It's not just farmers that benefit — rice plays an important role in the economy of California," Johnson said. "We are an important export crop — about 40% of what's produced in the state is exported to Japan, Korea, Taiwan and other countries."

Daren Coppock, chief executive of the National Assn. of Wheat Growers, said the budget must not be balanced on the backs of farmers. Referring to the $360,000 maximum payment, he said: "If they change it now, that's not terribly helpful to those who made purchasing decisions over a seven-year planning period.

"The other thing to remember: The president always proposes, but Congress writes it and puts it into law," Coppock said. "There is a lot of work to be done and a lot of people to be heard from before this gets finished."

Rumors of the proposed farm subsidy cuts had been widely circulating in Washington for days before officials at the Department of Agriculture confirmed them in a background briefing to reporters. But the food stamp cut, expected to be about $1 billion in a $32-billion program, received less notice.

States must provide food stamps to people on cash welfare. But this is a much smaller population since Congress overhauled welfare in 1976.

A larger number of people now receive federal job-related aid, such as child care for working women with small children. The budget, sources said, gives states less flexibility to provide food stamps to these working poor people.

The nation's governors can be expected to lead the opposition to this proposal, just as they fought a 2003 proposal to cut their federal Medicaid support in return for greater flexibility in administering the program.

Administration officials made public Friday their proposal for increasing access to health insurance, and critics said they expected the budget itself to make another try at giving more flexibility and fewer dollars.

As announced Friday, the administration said it could save $60 billion in Medicaid over 10 years without service cuts. About $40 billion would come from changes in the way Washington pays the states for Medicaid services. The administration says states are gaming the Medicaid program by unfairly inflating costs.

Amid the welter of spending cuts, a few domestic programs were singled out for increases. Among them: community health clinics and aid to schools in low-income neighborhoods — although those schools are slated for a smaller increase than Bush proposed last year.

The budget also will seek $3 billion for the Millennium Challenge Account, the president's signature effort to help poor countries boost their economic growth. That is $500 million more than was sought for 2005 — but $2 billion less than was promised last year for 2006.

And the budget would expand Pell grants, which help the lowest-income students attend college, at the expense of the Perkins loan program for low- and middle-income college students. The $6-billion loan program would be eliminated.

Eighteen housing and community development programs would be consolidated and cut by about 40% to a total of $3.7 billion.

The budget also proposes eliminating federal subsidies for Amtrak, the national passenger rail carrier. Subsidies totaled $1.2 billion this year.


Times staff writer David Colker contributed to this report.