Congress seeks to sort out fiscal issues

The House begins its budget reconciliation process this week while the Senate takes up its final fiscal 2006 appropriation bill, as Republican leaders try to begin closing out the most important fiscal issues before adjourning for the year.

House and Senate appropriators are attempting to finalize a schedule for completing all 11 spending bills before Nov. 18, when the current continuing resolution expires. Negotiations on the Agriculture funding bill might wrap up this week; it would be the fourth to be signed into law.

But the Defense budget, carrying $50 billion in additional funds for troops in Iraq and Afghanistan, has not yet been enacted. And appropriators will also have a third hurricane supplemental to contend with, as well as funding to combat a potentially deadly avian flu outbreak. The White House could submit funding requests for those items as early as this week.

Also this week, the House Resources Committee plans to mark up budget reconciliation language that would allow states to opt out of a federal ban on offshore oil production and would authorize oil and gas drilling in the Arctic National Wildlife Refuge. Both provisions are opposed by most environmental groups.

On the reconciliation front, Republicans want to extend tax breaks on capital gains and dividends, at a cost of $70 billion. That means they are under pressure to cut spending by nearly that much to not seriously aggravate the deficit.

The House's entitlement spending cut bill calls for finding $50 billion in savings over five years, to be formalized in a budget amendment on the floor as well as by the individual authorizing committees this week. The budget amendment will also call for across-the-board cuts to fiscal 2006 discretionary spending and rescissions of unspent funds from prior years, which could save billions later in the appropriations process.

Meanwhile, the Senate continues to hunt for votes to pass its $35 billion spending cut package. The Finance Committee acts Tuesday on its $10 billion Medicare and Medicaid savings plan, although early indications are that Finance Committee Chairman Charles Grassley, R-Iowa, might not have the votes to approve the measure. Nonetheless the Budget Committee works Wednesday on putting together the various pieces in one package, which would reach the floor as early as next week.

While the Senate action takes place in committee, a massive $604 billion Labor-HHS spending measure will be on the floor. Containing $145 billion in discretionary spending, the bill is the largest domestic appropriations bill and second only to Defense overall.

Appropriators sidestepped a major battle with conservatives and the White House when Senate Labor-HHS Appropriations Subcommittee Chairman Arlen Specter, R-Pa., agreed Friday not to offer his stem-cell research measure as an amendment. In exchange for Specter's decision, Majority Leader Bill Frist, R-Tenn., pledged to bring the issue up separately early next year.

The House Resources reconciliation language would allow states to opt out of offshore bans that cover all but portions of the Gulf of Mexico and Alaskan coasts, while the production moratorium, which currently is extended annually through spending measures, would be codified. A separate presidential moratorium expires in 2012.

The plan also includes a 125-mile non-production buffer off Florida's west coast and a 100-mile buffer off the remainder of the state's coast and off a portion of Alabama's coast.

The ANWR drilling language is more detailed than a version approved last week by the Senate Energy and Natural Resources Committee and probably would have to be pared to ensure that it would not be subject to a budget point of order on the Senate floor.

In the Senate, Energy and Natural Resources Committee Chairman Pete Domenici, R-N.M., is still trying to reach a deal with enough coastal-state senators to overcome parliamentary hurdles that kept offshore production language from being included in energy legislation passed by Congress and signed by President Bush earlier this year.