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GOP budget proposals have analysts skeptical

WASHINGTON — Proposals by key Republicans to sharply cut popular spending programs in a plan to cut taxes and balance the budget are politically unrealistic and probably won't happen, analysts say.

As Republicans prepare to push their proposals through the House and Senate this week, it's clear lawmakers feel uneasy about federal deficits that are rocketing toward record levels. Even so, budget watchers see little evidence that GOP lawmakers will really reduce benefits for veterans, students and farmers — and perhaps Medicare and Medicaid recipients — as the House budget proposes.

They also consider it unlikely that toward the end of this decade, Congress will be willing to limit annual spending increases to the 2 percent or less for the military and many domestic federal agencies that the Senate's fiscal framework envisions.

"As a political reality, Congress just isn't there yet," said Robert Bixby, executive director of the Concord Coalition, a bipartisan group that advocates a balanced budget.

"His own party isn't there yet," Bixby said, referring to Budget Committee Chairman Jim Nussle, R-Iowa, architect of the House proposal.

Nussle is proposing savings he says would eliminate annual deficits by 2010. The plan by Senate Budget Committee Chairman Don Nickles, R-Okla., sees surpluses by 2013. Congress will eventually have to pass a compromise version.

If anything, members of both parties in recent years have shown a taste to increase spending, showering billions lately on farmers and Medicare providers.

This year, both parties are talking about providing new Medicare prescription drug benefits that President Bush says should cost $400 billion over 10 years. Republicans hope to pass Bush's economic package of tax cuts costing $726 billion over a decade, an amount expected to shrink but that will still increase deficits.

"The question is, 'Do Republicans and Congress in general have the will to show the spending restraint the budgets would require?' It's fair to say they haven't shown that recently," said Andy LaPerriere, who monitors the federal budget for the ISI Group, an economic research firm.

Both budget chairmen say getting their proposed savings to become law won't be easy. Congress' budget sets overall limits for revenue and spending, with later bills making actual changes and deciding the details.

"I understand we're having to change the culture," Nussle told reporters of Congress' reluctance to cut popular initiatives. "But it is time to do so, otherwise we're digging a hole that it may be hard to get out of."

The budget outlines by Nussle and Nickels are responses to a tidal wave of deficits that forecasters say will surely break the $290 billion record set in 1992. Bush and the two chairman all predict shortfalls exceeding $300 billion next year.

But even those figures omit the possible costs of war with Iraq, and some private forecasters say they understate other spending too. On Friday, the investment bank Goldman Sachs said it believed the 2004 deficit will hit $425 billion.

With Democrats almost uniformly against the Republican blueprints, GOP leaders will need the votes of nearly all their members to prevail. But even before his committee approved his budget last week, Nussle had to reduce some of his proposed savings.

To help pay for deficit reduction, a new $400 billion Medicare prescription drug plan and a $1.4 trillion tax cut, he originally proposed $470 billion in savings over a decade from programs like Medicare, Medicaid, student loans and farm aid.

But Republicans complained they did not want Democrats to accuse them of cutting such programs, so Nussle eliminated all but about $97 billion of those cuts. In exchange, his budget now provides just $28 billion for prescription drugs over the next decade, which can grow if lawmakers find other budget savings to pay for it.

Nussle also has been criticized for his plan to limit spending for all annually approved domestic programs — everything but automatically paid benefits such as Social Security — to a 0.4 percent increase over last year to $375 billion. That is $12 billion less than Bush has proposed and a fraction of recent increases.

Eleven moderate House Republicans pledged on Friday to oppose Nussle's plan unless its $1.4 trillion, 10-year tax cut is reduced and extra spending added for schools, health care, veterans and the environment.

In the Senate, Nickles' proposed tax cuts also have hit opposition from GOP moderates. His plans to tighten spending don't intensify until deep into this decade, when future budgets can override them, and some analysts say they won't happen.