Negotiations on budget-cutting bill to end this week

House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., have instructed the Budget committees to wrap up negotiations on the massive budget reconciliation bill Thursday and be prepared to go to conference Friday.

The timetable virtually guarantees the reconciliation package will not contain controversial provisions that would allow exploratory drilling for oil and natural gas in the Arctic National Wildlife Refuge.

Even before the leaders issued their instructions, House and Senate Republicans were beginning to look for an alternate vehicle for the ANWR language because a compromise was proving difficult and the stalemate was threatening to ruin chances for passage of the overall bill this week.

House Energy and Commerce Chairman Joe Barton, R-Texas, said ANWR continued to be the "900-pound gorilla" on reconciliation. Senate Energy and Natural Resources Chairman Pete Domenici, R-N.M., was even more direct, saying before the leaders' instructions that ANWR drilling would not be part of reconciliation because of sufficient opposition in the House.

"It's obvious it can't go on reconciliation," but other options are available, he said.

One option gaining steam is including ANWR in the must-pass fiscal 2006 Defense appropriations bill, which GOP leaders are reserving as the last legislative vehicle of the session, daring members to vote against funds for troops.

But a new stumbling block to getting out of town emerged as Sen. Tom Coburn, R-Okla., a freshman conservative who has tried to take on the powerful Appropriations Committee, announced he will object to tacking unrelated items onto the Defense bill.

"It's wrong for members of Congress to use our troops as political cover for new spending," Coburn said in a statement. "If senators want to pass additional funds related to hurricane relief or the avian flu, for example, those measures should be amendable and not attached to must-pass bills that cannot be amended."

House-Senate negotiations appear to be focusing on hurricane relief in the $25 billion range and a bird-flu package of nearly $3.5 billion.

But Senate Appropriations Chairman Thad Cochran, R-Miss., who hails from Hurricane Katrina-battered Mississippi, is pushing for increased hurricane aid, and there are suggestions that including ANWR -- expected to produce at least $2.5 billion in revenues -- in the Defense bill might yield additional Katrina-related offsets.

Already, House GOP leaders are planning to attach a 1 percent across-the-board cut to produce $8 billion in offsets.

Coburn could slow the process down. But powerful senators like Cochran have a stake in the bill, as does Senate Defense Appropriations Subcommittee Chairman Ted Stevens, R-Alaska, who is used to protracted legislative fights and has made ANWR his signature battle this year.

Barton met Wednesday with Finance Chairman Charles Grassley, R-Iowa, and Ways and Means Chairman William Thomas, R-Calif., about Medicare and Medicaid cuts. Grassley said no final decisions will be made until both chambers officially appoint conferees, which might happen as early as Thursday.

"We could make a lot of decisions very quickly," Grassley noted, adding that it was more likely that differences over other issues were slowing down action and preventing a deal than disputes over Medicare and Medicaid.

One of the biggest healthcare-related issues facing negotiators is how to handle a proposed increase in Medicare fees to physicians that lawmakers have long promised. Without congressional action, those fees are set to be slashed by 4.4 percent next year, and physicians have insisted that the fees be upped.

Thomas, though, is resisting boosting the fee unless physicians go along with a plan to report information about the quality of their care under a plan that would compensate Medicare doctors based on their performance.

Negotiators are said to be considering a variety of options for staving off the cuts, with a one-year increase that would hold payment rates at their current levels looking the most likely, according to lobbyists.

Darren Goode contributed to this report.