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Budget Bill Cuts Federal Deficits by Nearly $40 Billion

posted on December 23, 2005

Hello, I'm Mark Pearson. Government reports this week presented a mixed review of the U.S. economy. **Gross Domestic Product, the broadest measure of economic activity, grew by an annual rate of 4.1 percent over the past three months. That's it's fastest pace of growth in the past year-and-a-half. **Inflation appears to be in check, though. According to the Commerce Department, wholesale inflation, fell nearly one-percent in November -- it's largest decline in the past 2 1/2 months. **But, sales of new homes last month plummeted by more than 11 percent -- their largest decline in nearly 12 years. There are other rough spots in the economic road as well. With the federal budget deficit predicted to exceed $300 billion this year, lawmakers are swimming in a sea of red ink. And just before adjourning for the holidays, Congress approved a deficit reduction package with far-reaching implications for rural America.

Budget Bill Cuts Federal Deficits by Nearly $40 Billion

By the narrowest of margins, a vote of 51 to 50, the senate passed legislation to reduce federal spending by nearly $40 billion dollars over the next five years.

With five Republicans crossing party lines to join Democrats in voting against the measure, Vice President Dick Cheney rushed home from an overseas mission to cast his seventh tie-breaking vote, so the Republicans could claim victory.

Senator Judd Gregg, Chairman of Budget Committee (R) New Hampshire:

"This year is the only chance that Congress is going to go forward  the only opportunity in the last eight years  to actually step forward and do something about deficit spending on the entitlement side."

Senator Harry Reid, Minority Leader (D) Nevada: "There are many proud Americans, Mr. President, who are people with disabilities and low income. They need our help. This legislation cuts the ability to help them."

The legislation imposes the first restraints in nearly a decade in federal benefit programs such as Medicaid, Medicare and student loans.

For agriculture, the budget proposal will cut $2.7 billion from agriculture conservation, research and rural development programs. But USDA Secretary Mike Johanns praised the deal which spares cuts in crop subsidies, but doesn't extend the commodity programs past 2007.

The measure also extends for two years, a $1 (B) billion dollar payment program for dairy farmers if milk prices drop. The program, called Milk Income Loss Contract, or MILC, had expired.

The budget legislation is expected to face a contentious revote in the House in 2006.


Tags: debt deficit government news