**Conservatives Offer \$1 Trillion Offsets Plan, but GOP Leadership
Won't Bite**

By Steven T. Dennis and Liriel Higa, CQ Staff

September 22, 2005

Conservative House Republicans proposed a nearly \$1 trillion package of
budget offsets Wednesday to pay for hurricane costs that would slice or
delay many initiatives sought by President Bush.

The proposals ranged from paring foreign aid accounts to abandoning
plans to explore the moon and Mars. The group also took aim at the
Medicare prescription drug program.

House and Senate GOP leaders displayed little enthusiasm for the
proposals and it remained unclear whether a new hurricane gathering
strength and heading for the Texas coast will boost or weaken the
position of fiscal conservatives.

Hurricane Rita appeared aimed at the home state of House Majority Leader
Tom DeLay, who had come under fire from conservatives after suggesting
last week that GOP belt-tightening efforts had left little to cut from
federal spending. DeLay shifted course a bit Sept. 20, saying that
Republicans were working hard to find offsets, but declined to endorse
any specific cuts.

On Wednesday afternoon, DeLay left Washington to return to his Texas
district - which covers southeast Houston and nearby suburbs - so he
could help coordinate preparations, his spokesman Kevin Madden said.

"We've been in constant and direct contact with state, local and federal
officials ensuring that all of the emergency preparations are taken care
of and up to par," Madden said.

He added that it is too early to know how soon Congress may act to help
potential Rita victims. "We don't know where it's going to hit and what
the ultimate effect is going to be," Madden said.

There is no imminent need for an additional supplemental to address any
potential damage that Hurricane Rita may cause. About \$45 billion
remains in the Federal Emergency Management Agency's disaster relief
fund from the \$60 billion provided for the agency in the two Hurricane
Katrina emergency spending bills passed Sept. 2 and Sept. 8.

Those funds can be directed to aid victims of Hurricane Rita, said John
Scofield, spokesman for House Appropriations Chairman Jerry Lewis,
R-Calif.

Rep. Gene Green, D-Texas, whose Houston-area district lies in Rita's
predicted path, said he expects additional legislation will be necessary
to broaden Katrina aid and tax cuts to victims of Rita if the damage is
widespread.

Fears that Rita could cause even more damage to Gulf Coast oil and
natural gas wells and refineries raised the potential for additional
spending and sent oil prices rising Wednesday while the stock market and
U.S. dollar fell.

Looking for Offsets

While some lawmakers talked about the likelihood of more hurricane
spending, the conservative Republican Study Committee (RSC) unveiled
"Operation Offset," a package of proposed spending cuts and revenue
raisers to pay for relief and recovery operations.

RSC said its suggestions would raise \$102 billion in one year, \$370
billion over five years and \$929 billion over 10 years.

Many of the proposals were recycled from ones that House conservatives
had suggested well before Katrina. Among the proposals were delaying the
Medicaid drug benefit by a year, cuts to transportation earmarks in the
highway bill, cancellation of NASA's moon and Mars initiative and
increased reductions in entitlement programs to \$100 billion from the
\$35 billion over five years required under the fiscal 2006 budget
resolution.

Delaying the Medicare drug benefit was dismissed by the GOP leadership
and the administration Sept. 20, and the existing mandate to find \$35
billion in savings from entitlement programs such as Medicaid and food
stamps will be difficult enough to meet, given opposition from moderate
Republicans and Democrats.

Flanked by supporters holding hand-painted "Victims over pork" and
"Rescue Taxpayers from a flood . . . of red ink" signs, RSC Chairman
Mike Pence, R-Ind., said not all 110 members of the group agreed with
all of the cuts. However, he said RSC members were united in their
belief that there are significant savings to be found.

Pence said he would oppose future aid bills unless they included
offsets. "We must, I emphasize must, insist that future investments and
recovery and reconstruction be offset by equal or greater cuts to
government spending," he said.

Nonetheless, despite growing GOP uneasiness about the cost of the
hurricane recovery, support for such offsets has not been widespread in
Congress.

In a news conference, House Speaker J. Dennis Hastert, R-Ill., was
noncommittal. House leaders "are willing to look at offsets if there are
viable offsets," Hastert said.

On the Senate side, Finance Chairman Charles E. Grassley, R-Iowa, said
Wednesday that while his panel would be willing to look at offsets in
the future, "we're going to take care of people in need first."

In a statement Wednesday, Lewis, who plans to hold hearings on Katrina
funding oversight next week, said his door was open to members seeking
cuts.

"My preference is to consider any proposal in a thoughtful, deliberate
manner rather than reading about \[it\] in the newspaper," he said.

Criticizing Priorities

Left-leaning interest groups ripped the offset package for slicing
programs for the poor and the elderly.

"It is not a package of shared sacrifice," said Sharon Parrott, a senior
analyst at the left-leaning Center for Budget and Policy Priorities. "It
asks those with the fewest resources and the greatest need to bear the
greatest burden."

New fears of another catastrophic hurricane, meanwhile, come a day after
DeLay suggested that the total cost of Katrina relief could end up being
much less than the \$200 billion figure floated by some lawmakers, as
spending has slowed to less than \$500 million a day. That slice of good
news could be washed away, however, as Rita continues on its path.

Judd Gregg, R-N.H., chairman of the Senate Budget Committee, who has
been frustrated by the lack of desire among his colleagues for cuts,
said Wednesday that more money would be allocated if Rita hits Texas
hard. "Congress is always ready to spend more money," he said.

Gregg said he was uncertain if higher costs from Rita would spur his
colleagues to seriously consider budget offsets.

*Joseph J. Schatz contributed to this report.*