Republican leaders reached tentative agreement on deficit reduction plan

WASHINGTON -- Republican congressional leaders agreed to trim deficits by $41.6 billion and sought to unlock the Arctic National Wildlife Refuge for oil drilling Sunday in a frenzied year-end bid to enact the core of a conservative agenda.

"We're going to move the nation's business" through Congress, vowed Senate Majority Leader Bill Frist.

But Senate Democratic Leader Harry Reid accused the GOP of breaking Senate rules to suit their purposes, and threatened to slow action to a crawl. "The arrogance of power of the Republicans ... is beyond my ability to comprehend," he said.

Medicare, the student loan program and Medicaid, which provides health care for the poor, would all be tapped for savings under the emerging five-year deficit-cutting plan.

House Republican leaders said they would call for a vote swiftly, but lawmakers haggled over the details for hours. In one last-minute change, the leadership agreed to continue an expiring aid program for dairy farmers at a cost one official put at $14 million.

Passage of the bill would clear the way for a Senate vote as early as today.

GOP leaders hoped the ANWR drilling legislation would be close behind. But it faced a rockier course -- a threatened filibuster in the Senate that can only be broken with a 60-vote majority.

Oil provision criticized

Democratic critics attacked the bill's chief advocate, Sen. Ted Stevens of Alaska, for adding the oil provision to legislation providing $453 billion for the Pentagon. They also accused him of offering enticements to skeptical senators in the form of funds for hurricane relief and other programs.

"Isn't that what the game really is here?" said Rep. David Obey, D-Wis. He said Stevens was "trying to make Gulf Coast states an offer they can't refuse."

"That's not the point," replied the Alaska Republican, who said expanding domestic production of oil is a matter of national security.

Conservatives hailed the deficit-cutting measure as the first attempt in a decade to rein in the cost of federal benefit programs, which customarily expand from year to year based on the eligible population.

Preliminary figures put the savings from Medicare at $8.3 billion over the next five years, and planned spending on Medicaid was estimated to fall by nearly $5 billion.

The largest single savings in Medicare would reduce anticipated federal funding for the private HMOs established under 2003 Medicare legislation designed to give the program a free-market flavor.

Payments for home health-care services would be curbed, as well.

According to a preliminary draft of the agreement, wealthier beneficiaries would be required to pay higher premiums under Part B, which covers doctor services.

Officials said the changes to Medicaid include an attempt to make it harder for the elderly to transfer their assets to children or others in order to qualify for federal nursing home benefits.

The largest savings from the student loan program would involve establishment of a fixed interest rate on loans.

Another provision of the legislation would raise the per-employee premium that companies pay into the federal Pension Benefit Guaranty Corp.

Pending release of final details, it was not clear how much of the savings were from changes in the programs, as opposed to raising funds by auctioning off access to a portion of the radio spectrum.

And there were provisions that pointed the way to higher spending in the future.

In one case, lawmakers bowed to the wishes of doctors and agreed to restore a scheduled 4.6 percent cut in physician payments under Medicare. The cost was $7.3 billion, and a decision to erase a similarly scheduled cut for 2007 will require additional spending a year from now.

Stevens and other supporters of opening ANWR to oil drilling have been trying for more than a decade to pass legislation, and President Bush has made it an element of his energy policy, as well.

Environmentalists, backed by most Democrats, have waged an equally determined battle to block it.

After gaining seats in 2004, Republicans resolved to make the most of their opportunity.

The decision to add the oil legislation to the defense bill was designed to make it harder for lawmakers to oppose the measure. So, too, the decision to add $29 billion in new federal aid for the victims of Hurricane Katrina and other storms that hit the United States earlier this year.

The legislation also includes $2 billion in additional funds for the low-income home heating assistance program -- of particular concern in northeastern states represented by moderate Republicans and Democrats ordinarily unsympathetic to ANWR oil drilling.

While much of the attention focused on deficit reduction and ANWR, the fate of two other major bills remained unclear.

Republicans held back a second defense bill, hoping to add legislation that would place limits on the donations that independent political organizations can accept.

Democrats circulated a two-page list of provisions they said are jeopardized by the gambit. One would continue reimbursement private individuals and groups who purchase body armor for members of the armed forces in Iraq and Afghanistan.

Also pending was a spending bill for the Departments of Labor and Health and Human Services. Democrats and moderate Republicans in the Senate said it shortchanges a wide swath of social programs, and Senate GOP leaders postponed votes last week for fear of defeat.