Finding $2.4 trillion in spending cuts is not easy, but Congress's search is beginning to show some signs of promise. In particular, three programs long protected by big, bipartisan majorities in the past now appear vulnerable.
1. Ethanol subsidies
The once-formidable corn-based ethanol lobby took hits in both the House and Senate on Thursday – a shift that opens the door to critics challenging taxpayer subsidies for other energy sources, such as oil and wind.
On Thursday, the Senate voted 73 to 27 on a bipartisan measure to eliminate $6 billion in annual tax subsidies for ethanol producers. Thirty-three Republicans joined 38 Democrats and 2 Independents in support of the measure. Opposition came from 13 Democrats and 14 Republicans, mainly in Midwest corn states.
“Today’s vote was a major victory for taxpayers and a positive step toward a serious deficit reduction agreement, which is our only hope of averting a debt crisis,” said Sen. Tom Coburn (R) of Oklahoma, a cosponsor of the measure with Sen. Dianne Feinstein (D) of California.
“An overwhelming bipartisan majority of senators embraced pro-growth tax reform while rejecting the parochial politics that so often paralyze the Senate. The best way to reduce our crushing $14.3 trillion debt is by reducing wasteful spending a billion dollars at a time,” he added.
Though the bill to which the amendment is attached has little chance of becoming law, the vote marked a path forward for Senator Coburn and other deficit hawks.
In a related move, the House voted 283 to 178 on an amendment to ban the US Department of Agriculture from funding ethanol infrastructure, including blender pumps and storage facilities. In response, freshman Rep. Kristie Noem (R) of South Dakota introduced a bill that includes one of the provisions from the Senate bill but seeks to soften the impact. The bill would end a 45-cent-per-gallon ethanol excise tax credit on July 1, but would use the savings to fund ethanol-delivery infrastructure as well as pay down the deficit.
“I am as concerned about our deficit as any other member of Congress, but we cannot hang the ethanol industry out to dry with such a drastic policy change, so quickly with so little debate,” she said in a statement after the vote.
As Democrats dig in to defend Social Security and Medicare, focus in bipartisan negotiations is shifting to finding savings in Medicaid, the $400-billion-a-year federal program to support health care for the poor and disabled, as well as long-term care for seniors.
Republicans and many of the nation’s governors are pushing for changes that will ease requirements on the states, which disburse the funds. GOP lawmakers also see proposed Medicaid cuts as a way to find big savings for deficit reduction.
In a speech at the Heritage Foundation on Wednesday, Sen. Orrin Hatch (R) of Utah, the top Republican on the Finance Committee, proposed giving states more flexibility to decide who qualifies for assistance, much as welfare reform in 1996 began with experimentation at the state level. Senator Hatch would end a mandate that requires states to maintain current Medicaid eligibility – some 68 million Americans – until 2014.
"The bottom line is that those who are the biggest advocates for Medicaid, and most criticize conservatives for seeking to reform the program, are happy to consign America’s poorest and sickest patients to a health-care gulag," said Hatch, who supports converting Medicaid to a block grant program.
Democrats are preparing to defend certain aspects of the Medicaid program, but they have signaled a willingness to consider compromises on others. “It’s very important to us that home subsidies and health care for those with disabilities not be disrupted," says Rep. Robert Andrews (D) of New Jersey, a spokesman for the Democratic caucus. But he suggests that there might be "other creative ways to provide help to low-income people.”
3. Farm subsidies
Within an agriculture appropriations bill passed by the House this week, two attempts to cut farm subsidies failed. But in a signal of where bipartisan negotiators could turn, both got bipartisan support.
Rep. Jeff Flake (R) of Arizona won support from 84 Republicans and 102 Democrats for a measure to cut direct payments to farmers with adjusted gross incomes of more than $250,000. The measure failed 186 to 228.
Rep. Earl Blumenauer (D) of Oregon won 40 Republican 114 Democratic votes for a related amendment to cut payments to farmers with adjusted gross incomes over $125,000. The measure failed 154 to 262.
Meanwhile, the House did vote to end a $147 million annual payment to Brazilian cotton growers. Congress had agreed to pay Brazilian cotton growers because it wanted to continue to subsidize US cotton growers. So when the World Trade Organization decreed that Congress's $3 billion subsidy to US cotton growers was illegal – and Brazil challenged the subsidy – Congress's solution was to give Brazil money, too.
The strong bipartisan support for the amendment by Rep. Ron Kind (D) of Wisconsin to end the $147 million payment to Brazil, which passed 223 to 197, could indicate an openness toward revisiting the US subsidy, as well.
“Even by congressional standards, this funding doesn’t pass the laugh test,” said Congressman Flake, a cosponsor of the measure, in a statement. “The solution to extravagant subsidies to US cotton growers shouldn’t be US subsidies to Brazilian cotton growers. Eliminating this funding is a good first step in forcing Congress to pass much-needed reforms of our cotton subsidy programs.”