Senator eyes unspent Iraq funds for hurricane reconstruction

In a rebuke of the Bush administration from a senior Republican, Senate Appropriations Chairman Thad Cochran, R-Miss., is proposing to use unspent Iraq reconstruction funds to help pay for Gulf Coast hurricane relief.

Cochran would also target for offsets the White House's signature Millennium Challenge Account democracy-building initiative, which also has unspent balances and has struggled to gain a constituency in Congress over its three-year existence.

Administration officials briefed on Cochran's proposals immediately rejected them, and some House members are skeptical. "I would strongly oppose that," said House Foreign Operations Appropriations Subcommittee Chairman Jim Kolbe, R-Ariz., who is retiring next year and is an author of the law establishing the Millennium Challenge program.

But Cochran, a Mississippi Republican, is clearly tapping a vein of public discontent over the White House asking for billions of dollars to rebuild Iraq and other foreign assistance without offsets, while his and others' constituents remain homeless.

Democrats have seized on the issue for months. "Why should the cost of rebuilding Biloxi be offset, but not the cost of rebuilding Baghdad?" House Budget ranking member John Spratt, D-S.C., wrote to colleagues last month.

Cochran is proposing a $35.5 billion aid package for Katrina evacuees to help rebuild homes, schools, roads, levees, fisheries and military facilities in affected Gulf Coast states and other areas that have suffered natural disasters. He argues that these are legitimate, emergency needs that should not require offsets.

But aides in both chambers said Cochran recognizes the reality that the House will not accept a Katrina relief package that adds to the federal deficit.

Cochran and his allies, including Mississippi GOP Gov. Haley Barbour, have apparently convinced the House to accept the scope of his legislation, if not all of the specifics, and House Appropriations Chairman Jerry Lewis, R-Calif., will likely have adjustments of his own.

Cochran's package would include $17.1 billion requested by the White House, to be reallocated from within $62.3 billion originally appropriated, mostly for the Federal Emergency Management Agency.

Cochran would add another $18.4 billion, including $11.5 billion to assist homeowners who did not have flood insurance; $3.9 billion in agricultural aid, including Gulf Coast fisheries and Midwest drought relief; $1.5 billion to help rebuild levees in New Orleans, and another $1.5 billion for education, child care and other social services.

Of the additional funds, about $6 billion would be culled from additional FEMA funds, of which $37 billion was unspent as of last week. The Iraq Relief and Reconstruction Fund could yield $3 billion-plus, while another $3.6 billion remains within the Millennium Challenge Fund and other international accounts like embassy construction, according to staff estimates.

A House leadership aide, while not promising a rubber stamp on Cochran's bill -- which would be attached to the fiscal 2006 Defense measure next week -- said it would be acceptable "as long as we understand what it is for, and how it's offset."

Dipping into foreign-aid programs would not yield enough to offset the entire cost of his package, and Cochran's aides are still running numbers on various proposals. His office declined to comment on specifics.

Additional offsets for hurricane recovery could come in the form of across-the-board cuts to fiscal 2006 appropriations attached to the Defense bill, and lawmakers are working on a deficit-reduction reconciliation bill that could find as much as $45 billion in savings over five years.

Despite overtures to some House Democrats, a House-Senate dispute remains over Arctic drilling provisions, which if removed would shave total savings to $42.5 billion. Additional spending on low-income heating subsidies could drive that down further.

Preliminary estimates show about $18.5 billion would come from programs within the Senate Finance Committee's jurisdiction, including $7.5 billion from Medicare, $6 billion from Medicaid and $5 billion from other sources, possibly human resources programs.

Another $16 billion would come from increased pension premiums paid by employers and student loan programs within the jurisdiction of the House Education and the Workforce Committee and its Senate counterpart. The Agriculture Committee would have to find $3 billion, in savings, down from $3.7 billion in the House bill. Pressure is building to drop proposed food stamp cuts.