Republicans may scale back tax cuts or abandon many of the spending cuts they had hoped would fund them due to an open revolt from moderate House and Senate Republicans.

Both chambers are scheduled this week to vote on the adoption of the budget resolutions which are the blueprints that would establish the size of any tax cut and limits on federal spending for 2004 and beyond. Last year, these resolutions failed to be adopted, eventually causing a delay which forced most FY03 spending bills to be passed this January.

It is unclear whether either body can pass the plans that were approved last week by their respective budget committees. Moderates of both parties have been bolstered because of concern surrounding the prospects of war and its unknown costs.

Both resolutions fund nearly all of the $1.6 trillion in tax cuts proposed while giving special treatment to the economic growth plan to help it pass through the Senate. Lawmakers expressed concern in both Houses about the deficit - both resolutions call for a balanced budget in 2010 in the House plan and 2013 in the Senate plan. This is different from the President's plan which does not address the issue of deficits.

Neither plan discusses funding for any upcoming war.

House leaders have been trying to get the votes needed to pass their resolution. But simulataneously, they have been trying to come up with an alternative plan which might re-write parts of the the resolution - particularly the Medicare cuts. One plan may be to allow the House plan to be defeated on a procedural vote and then order the Senate version to the House floor as a substitute. That way, House Republicans won't be forced to take politically sensitive votes on key potential cuts.

Senator Zell Miller (D-Georgia) has offered legislation that would lower the threshold of a filibuster on successful cloture votes.

Currently 41 Senators can block just about any piece of legislation or nomination moving on the Senate floor. Last week, Senator Miller introduced legislation that would keep the 60-vote requirement intact on the first cloture vote. But on the second cloture vote, it would decrease to 57 votes and on the third vote, only 54 votes would be needed to break a filibuster. If a fourth vote is called a simply majority, or 51 votes, is all that would be needed.

Senators Tom Harkin (D-Iowa) and Joe Lieberman (D-Connecticut) made a similar effort in 1995, but were defeated soundly. The filibuster is the most potent weapon Senate Democrats currently have in their arsenal.

While the Senate was completing their spending resolution, a bipartisan group of senators released a letter yesterday saying they would accept a tax cut no smaller and no larger than $350 billion over 10 years.

The letter signed by Sens. George Voinovich (R-Ohio), Olympia Snowe (R-Maine), Max Baucus (D-Montana) and John Breaux (D-Louisiana). At least three other Republicans have voiced concern about a tax cut the size Bush wants or even one worth $350 billion. Those Senators include Sens. John McCain (Arizona), Lincoln Chafee (Rhode Island) and Susan Collins (Maine).

Today 11 moderate U.S. House members also got into the mix by issuing their own letter objecting to spending cuts and large tax cuts. They are looking for a plan that limits spending and tax reductions to those which are most needed.

The move in the House will make it more difficult to move the President's plan.

The U.S. House of Representatives voted yesterday to limit the monetary damages that courts can award in medical malpractice cases.

The measure, approved 229-196 would cap punitive awards in malpractice suites at $250,000. It would apply to suits filed against doctors, hospitals, health maintenance organizations and maufacturers of drugs and medical devices.

This was a top goal of doctors, hospitals, many businesses and the Bush administration. The prognosis in the Senate is unclear as many Democrats oppose the bill and those in favor of it would need a 60 vote super-majority to overcome a potential filibuster.

Those supporting the measure believe the rising costs of malpractice insurance has caused some hospitals to close and many doctors to shut down their practices. Those who oppose the measure believe it would benefit powerful health care groups while penalizing citizens who may have been harmed by wrongful medical actions.

Representative Jim Moran (D-Virginia) just announced that he would step down from his Democratic leadership position as a regional party whip. This follows the outcry from some controversial comments the Congressman made earlier this week.

The House and Senate Budget Committees have both completed two very different budget resolutions. Both were passed on partisan votes and neither contains any provision for paying for a war with Iraq.

Yesterday, the Senate Budget Committee approved approved its fiscal 2004 draft resolution on a 12-11 party-line vote. The Senate budget is more generous than the House in the near term for discretionary spending, allocating $784 billion for fiscal 2004. It would balance the budget by 2013, but bases them on unrealistic assumptions about spending levels, including for defense.

The Senate Budget Committee markup went through smoothly without the addition of any Democratic amendments of substance, except for one added by Seantor Robert Byrd (D-West Virginia). Byrd's amendment would allow for an increase emergency spending for homeland defense programs to win approval by a simple majority vote in the Senate instead of being subject to a point of order requiring 60 votes to override. Senator Judd Gregg (R-New Hampshire) voted with the Democrats as the committee adopted the amendment, 12-11,

The House plan calls for a 1% across-the-board cut in non-defense, non-homeland security spending, would provide $775 billion. The House plan also calls for several committees to produce bills that would cut billions from mandatory programs which is causing tremendous dismay to key House Republicans.

House Budget Chairman Jim Nussle said, that in devising the plan, he came under pressure from fiscal conservatives that showed a push toward regaining a balanced budget. He was forced to re-write this 10-year budget plan after some members of the delegation were concerned that the budget appeared to call for politically damaging cuts to Medicare and Medicaid. Under a manager's amendment, The Ways and Means Committee is instructed to combine its cuts in entitlement programs, such as Medicare, with a $400 billion prescription drug benefit as it produces a budget reconciliation bill this summer. The Energy and Commerce Committee would also play a role in drafting the prescription drug measure.

The Senate is scheduled to take up the budget on March 17th. It will face an amendment backed by several moderate Republicans to limit tax cuts to $350 billion over 10 years.

Peyser Associates has obtained very reliable information on the contents of the highway and transit program reauthorization bill which the Department of Transportation has submitted to the Office of Management and Budget for review. While the information we have obtained is subject to change by OMB, we believe the bill the Administration ultimately submits to Congress will be either identical or very close to what we share with you here on the analysis side.

Final numbers on the differing budget packages in the Senate and the House are far from concrete, with work expected through Thursday, but as they take shape some differences are emerging. Both the House and the Senate Budget Committees would move $726 billion (out of a total of $1.31-$1.35 trillion worth of tax cuts) of President Bush's new tax cut packages into reconciliation instructions, which would prevent filibusters from affecting them in the Senate. The cuts not included in the instructions could still be subject to filibuster. The House version cuts mandatory spending programs by $470 billion over 10 years, while the Senate version aims to reach a balanced budget by 2013, the final year mentioned in the plan.

The moderate movement in the Senate to reduce the overall package by half appears to have lost a little momentum as "sticker shock" from the overall deficit projection last week, coupled with the costs of a possible war with Iraq have begun to weigh heavily in some lawmaker's minds. The administration hasn't currently projected the costs of a war, and with such a large figure still unknown, several Senators have backed away from a tax cut package of any size until the numbers are disclosed.

There's sure to be plenty of resistance on both sides of the Capitol to the spending cuts and projected deficits contained within both budget blueprints, but we'll be sure to keep our friends and clients updated as progress is made throughout the week.

House Transportation and Infrastructure Committee Chairman Don Young (R-Alaska) has raised the gax tax likely to be included in the upcoming surface transporation bill up to 30.4¢ per gallon, a 12¢ increase over the current gas tax over the next six years. This is a significant increase over the 8¢ over six years increase floated last week. In addition, Young is considering a freight container fee, an idea dropped in 2002. Both ideas would generate opposition, both from the administration (which opposes any gas tax increase) and from the shipping industry (which opposes the freight container fee). With the Federal Highway Trust Fund receipts significantly lower because of the recession, any new bill will seek to increase the amount of money coming into the fund.

Senator John Breaux (D-Louisiana) said today that he believes that he has the support in principle of four Republican senators for a letter drafted by members of the bipartisan Centrist Coalition that proposes scaling back President Bush's tax cut plan. The centrists have put forth a plan that will propose a tax cut of $350 billion which is significantly less than the $726 billion tax package that President Bush has proposed.

Senator Breaux has said that he believed that the letter would likely be supported by Republicans Olympia Snow of Maine, George Voinovich of Ohio, John McCain of Arizona and Lincoln Chafee of Rhode Island.

If these four Republicans are on-board, the centrist compromise would have at least 52 votes which is enough to win a floor vote to cut the size of the President's package. A letter will be transmitted to GOP leaders after the Senate Budget Committee completes work on a budget resolution.

A group of moderates and deficit hawks from both sides of the aisle are attempting to reduce the scale of the administration's proposed tax cut package. The House and Senate markup sessions are expected to be completed by Thursday evening of this week, so the centrist Senators will have to reach consensus on a final number for their budget goal before the resolution heads for the floor. They're currently aiming around the $350 billion mark, almost half of the 726 billion dollar cut the administration is seeking, which would bring the total tax cut up to $1.6 trillion. Despite the new CBO numbers out late last week, the real question about a stimulus package of any size now seems to be "how much?"

Congressional Budget Office analysts are projecting that President Bush's budget will produce a $1.82 trillion shortfall over 10 years. These numbers indicate that there will be continual federal deficits over the upcoming decade. More details available here.

The Department of Labor is reporting that the numbers of workers on U.S. payrolls plunged in February at the sharpest rate since November of 2001. Payroll jobs outside the farm sector declined by more than 300,000 last month. Before the report came out, many had predicted that the number of jobs might actually increase by a few thousand.

The jobless rate climbed one-tenth of percentage point from January's 5.7% to 5.8% this month, with an equal distribution across most industries. Losses in the retail sector were especially deep.

The Labor Department believes that special features such as huge winter storms on the East Coast may have impacted the numbers. The report comes at a time when Americans are concerned about the health of the economy and the looming threat of war.

The Republican leadership has indicated that they are cool to the House Transportation and Infrastucture Committee vote endorsing a plan to increase mass transit and highway spending next year, which likely would be funded by a hike in the gas tax. All but one member supported the vote.

The FY 2004 spending request presented by Chairman Don Young (R-Alaska), requested $50 billion in spending for highways and mass transit programs. This amount would exceed President Bush's proposal of $36.5 billion for FY 2004.

With gas prices looming in the $2 dollar per gallon range, Republican leadership called it "political insanity" to consider increasing the gas tax.

Representative Young told the Budget Committee that the plan is in the best interest of the nation. His proposal stems from Transportation Department estimates that it will take $53 billion to maintain current conditions of road and transit systems. Transportation has indicated that the figure is actually closer to $75 billion if improvements are made.

House Republican leaders pulled a military benefits bill from the House floor yesterday after fellow Republicans expressed objections to a number of tax breaks that the House Ways and Means Committee had inserted.

Originally, the bill was designed to offer tax breaks to military personnel, including reservists called to active duty. However, as is custom, over a period of time the tax bill became more and more loaded with special interest perks.

House Ways and Means Committee Chairman, Bill Thomas (R-California) had told members they could use the tax bill as a vehicle to add other tax provisions that had failed in previous efforts. Members responded with several targeted tax breaks, including a repeal of the excise tax on fishing tackle boxes, and elimination of taxes on foreignors who bet on U.S. horse races. Another amendment ensured that foreign bow and arrow producers would have to pay the same taxes as their domestic competitors. The tax breaks totaled nearly $500 million. Many of these issues had been languishing on Capitol Hill for years, causing some members to complain that the bill was becoming a "Christmas Tree" loaded with special provisions. As the media spotlight increased, many members began to criticize the package, resulting in its demise.

The House leadership has sent the bill back to the Ways and Means Committee with instructions to fashion a bill that can pass the House floor.

On March 6, the House Transportation & Infrastructure Committee Subcommittee on Railroads heard from a panel of witnesses who drove home the point that more Federal investment in rail infrastructure -- both freight and passenger -- is needed. The stated purpose of the hearing, called by subcommittee Chairman Jack Quinn (R-New York), was to review the implementation of the rail programs which were included in TEA-21. It was not a hearing to consider new rail investment programs.

Testifiers included the following: Joseph Boardman, Commissioner of the New York State DOT, Leo McCann, Chairman of the rail-labor division of the AFL-CIO, Richard Timmons, President of the American Short Line Regional Rail Association, Ed Emmitt, President and CEO of the National Industrial Transportation League and Ed Hamberger, President of the Association of American Railroads. This hearing followed the Railroads and Aviation joint subcommittee hearing last week on intermodal transportation.

Chairman Quinn started the hearing by acknowledging that rail infrastructure programs from TEA-21 have not been very effective and that reform would be necessary. Rep. Lipinski (D-Illinios) added that slow freight trains resulting from poor infrastructure leads to economic losses. Ranking member Corrine Brown (D-Florida) also expressed concern over the lack of federal funding of rail infrastructure.

Joseph Boardman provided the committee with a comprehensive power-point presentation on travel congestion in the Northeast. Boardman predicted that truck travel will increase exponentially over the next 20 years, further exacerbating traffic congestion. In the Northeast, there is a truck-rail imbalance, which increases the costs of conducting business in the region, said Boardman. The New York DOT Commissioner said the Northeast economy depends on a reliable rail infrastructure system and stressed how rail corridors will remove the heavy burden placed on highways.

Leo McCann, who represents rail labor, expressed concern that freight rail infrastructure improvements have been deferred because of profit concerns. McCann said maintenance on rail infrastructure could no longer be delayed and requested that the federal government play a more prominent role in providing financial assistance. McCann also briefly mentioned Amtrak and urged Congress to fully fund Amtrak at the levels they requested. Jack Quinn added, "Congress had always given Amtrak enough money to fail". However, Quinn also said the fact that the Administration has suggested a funding level of $900 million for Amtrak in fiscal '04 (60% more than they requested for fiscal 2003) was a hopeful sign.

Ed Hamberger echoed the sentiments of his fellow panelists and added that government should create more tax incentives for freight railroads to invest in infrastructure. Hamberger rejected the notion that a rail trust fund was necessary. Ed Emmitt even proposed repealing the 4.3 cents per gallon that freight rail operators already pay on fuel, claiming that the tax does not benefit rail, unlike other modes of transportation.

In summary. the panelists were in agreement that the federal government must devote greater resources to enhancing rail infrastructure.

We've got the new TEA-3 questionnaire posted on the analysis portion of the website. Project funding proposals need to be submitted by April 2, so if you have any questions feel free to contact us.

The vote to force cloture on the Miguel Estrada nomination failed today. In order to end debate, Senate Majority Leader Bill Frist (R-Tennessee) needed to collect 60 votes, but only 55 senators supported the resolution, with 44 opposing it. Frist promised to continue to ask for cloture votes on the topic in order to keep pressure on Democrats, but for now it's back to business as usual in the Senate.

The Senate Committee on Appropriations on March 4 followed the lead of the House of Representatives and re-aligned its subcommittees. Like the House, they established a new Subcommittee on Homeland Security, abolished the Subcommittee on Treasury-Postal and moved most of its repsonsibility to the Subcommittee on Transportation (now Transportation-Treasury).

Chairing the new Homeland Security panel will be Sen. Thad Cochran (R-Mississippi). The Ranking Minority Member will be Sen. Robert C. Byrd (D-WV). On the list of Chairs and Ranking Members, the only other changes from the previous composition is Sen. Robert Bennett (R-Utah) as Chairman of the Agriculture Subcommittee and Sen. Byron Dorgan (D-North Dakota) as Ranking Minority Member on the Interior Subcommittee.

Please see the list below for the composition of all the subcommittees of the Senate Committee on Appropriations.

Agriculture (8-7)

• Republican Members: Senators Bennett (Chairman), Cochran, Specter, Bond, McConnell, Burns, Craig, and Brownback
• Democratic Members: Senators Kohl (Ranking), Harkin, Dorgan, Feinstein, Durbin, Johnson, Landrieu

Commerce/Justice/State (7-6)

• Republican Members: Senators Gregg (Chairman), Stevens, Domenici, McConnell, Hutchison, Campbell, and Brownback
• Democratic Members: Senators Hollings (Ranking), Inouye, Mikulski, Leahy, Kohl, Murray

Defense (10-9)

• Republican Members: Senators Stevens (chair), Cochran, Specter, Domenici, Bond, McConnell, Shelby, Gregg, Hutchison, and Burns
• Democratic Members: Senators Inouye (Ranking), Hollings, Byrd, Leahy, Harkin, Dorgan, Durbin, Reid, and Feinstein

District of Columbia (3-2)

• Republican Members: Senators DeWine (Chairman), Hutchison, and Brownback
• Democratic Members: Senators Landrieu (Ranking) and Durbin

Energy and Water (7-6)

• Republican Members: Senators Domenici (Chairman), Cochran, McConnell, Bennett, Burns, Craig, and Bond
• Democratic Members: Senators Reid (Ranking), Byrd, Hollings, Murray, Dorgan, and Feinstein

Foreign Operations (8-7)

• Republican Members: Senators McConnell (Chairman), Specter, Gregg, Shelby, Bennett, Campbell, Bond, and DeWine
• Democratic Members: Senators Leahy (Ranking), Inouye, Harkin, Mikulski, Durbin, Johnson, and Landrieu

Homeland Security (9-8)

• Republican Members: Senators Cochran (Chairman), Stevens, Specter, Domenici, McConnell, Shelby, Gregg, Campbell, and Craig
• Democratic Members: Senators Byrd (Ranking), Inouye, Hollings, Leahy, Harkin, Mikulski, Kohl, and Murray

Interior (8-7)

• Republican Members: Senators Burns (Chair), Stevens, Cochran, Domenici, Bennett, Gregg, Campbell, and Brownback
• Democratic Members: Senators Dorgan (Ranking), Byrd, Leahy, Hollings, Reid, Feinstein, and Mikulski

Labor/HHS/Education (8-7)

• Republican Members: Senators Specter (Chairman), Cochran, Gregg, Hutchison, Craig, Stevens, DeWine, and Shelby
• Democratic Members: Senators Harkin (Ranking), Hollings, Inouye, Reid, Kohl, Murray, and Landrieu

Legislative Branch (3-2)

• Republican Members: Senators Campbell (Chairman), Bennett, and Stevens
• Democratic Members: Senators Durbin (Ranking) and Johnson

Military Construction (5-4)

• Republican Members: Senators Hutchison (Chairman), Burns, Craig, DeWine, and Brownback
• Democratic Members: Senators Feinstein (Ranking), Inouye, Johnson, and Landrieu

Transportation/Treasury (8-7)

• Republican Members: Senators Shelby (Chairman), Specter, Bond, Bennett, Campbell, Hutchison, DeWine, and Brownback
• Democratic Members: Senators Murray (Ranking), Byrd, Mikulski, Reid, Kohl, Durbin, and Dorgan

VA/HUD (7-6)

• Republican Members: Senators Bond (Chairman), Burns, Shelby, Craig, Domenici, DeWine, and Hutchison
• Democratic Members: Senators Mikulski (Ranking), Leahy, Harkin, Byrd, Johnson, and Reid

Over on the analysis side of the website, we've posted a new article covering Homeland Security funding for Fiscal Year 2004. The administration proposal doesn't use entirely new money, so it's important to go through the chart to see which programs have been cut and which have seen an increase in funds.

On March 5, the House Judiciary Committee passed 'The H.E.A.L.T.H Act' (HR 5), by a straight party line 15-13 vote. The bill, introduced by Rep. James Greenwood (R-Pennsylvania) of the House Committee on Energy and Commerce, would implement caps on non-economic and punitive damages sought in medical malpractice suits. The bill would also restrict contingent fees for attorneys representing plaintiffs in medical liability cases.

On March 6, the House Committee on Energy and Commerce will mark up the portions of the bill under its jurisdiction. Floor action could occur as early as the week of March 10.

The committee debated the measure for nearly 6 hours and Democrats on the committee introduced 8 amendments, which all failed on party line votes. Democrats are generally opposed to imposing caps on non-economic damages. House Judiciary Ranking Member John Conyers (D-Michigan) stated, "there is no correlation between caps on non-economic damages and rising insurance programs" and argued rising insurance premiums are related to a decreasing investment income.

Democrats also contended that each state should have the right to set their own caps on non-economic damages. Rep. Melvin Watt (D-North Carolina) felt that HR 5 would supersede state law and infringe upon states rights. Watt introduced an amendment that would have applied caps on non-economic damages only to cases in federal court.

Democrats also introduced amendments that would index the cap on non-economic damages, raise the cap to $1.6 million, repeal the 'fair share rule' (entities may only pay damages in proportion to their liability for the injury), and require the public disclosure of all doctors who were forced to pay damages in excess of $10,000.

Republicans were unified in their opposition to these amendments, with only a few defections on some of them.

We will have more information on this legislation as events occur.

Congressional Republicans have indicated that they plan to split up the President's economic plan. Republicans are seeking to make President Bush's proposed tax cut/stimulus package filibuster-proof in the Senate, but will not do the same for his proposal to make permanent the large tax cut enacted in 2001. Therefore those cuts in income tax rates, taxes paid by families with children and other reductions will otherwise expire after 2010.

The decision to protect the economic plan from filibuster means they need only 51 votes in the 100-member Senate to prevail. The part of Bush's tax cuts not protected from filibuster would need 60 votes to overcome Democratic procedural delays. The Republicans have a 51-48 majority in the Senate with one Independent.

This decision by the Republicans may indicate a concern that they might lack the votes for Senate passage of Bush's entire tax cut package. The plan is opposed by nearly every Democrat and has been received cautiously by some of the moderate Republicans. Since the plan's unveiling, administration officials have focused primarily on the economic growth portion which would erase the corporate dividend tax and accelerate personal income tax rate reductions enacted in 2001 that have yet to take effect.

At the House Ways and Means Committee's first hearing Tuesday on the President's tax plans, Democrats challenged the Administration's proposals. Concerns were raised as to why Congress should pursue the possibility of tax cuts when a potentially costly war with Iraq may be about to begin.

House and Senate committees are planning to begin writing budgets next week covering the next 10 years. Both are hoping to develop plans that would be balanced at the end of that period.

Here in the District, the D.C. Council has unanimously elected to speed up next year's presidential primary to January 13th, ahead of every state. They did so in order to focus attention on the city's lack of voting representation in Congress although party leaders of both parties have opposed the decision, saying they'll withold delegates if DC goes ahead as planned. Prominent district politicians from both sides, including Mayor Anthony Williams (D) and Council Member Carol Schwarz (R-At Large), have expressed support for the move which must, like all bills introduced by the city government, be approved by Congress. One of the reasons supporters drafted the bill was to highlight the very process by which it must be approved. The District's primary is normally held in May.

Senator Majority Leader Bill Frist (R-Tennessee) has decided to seek a cloture vote on the nomination of Miguel Estrada. Although the vote is expected to fail, Frist expressed that he would continue to push for cloture votes to press the Democrats on the nomination issue. A loss on the cloture vote would allow Senate business to continue although it would set a precedent for a 60-vote majority for future judge confirmations, something that House Majoirty Whip Mitch McConnell (R-Kentucky) and Conference Chairman Rick Santorum (R-Pennsylvania) had sought to avoid though the use of the no-cloture tactics. With upcoming Senate business on arms control and abortion, a cloture vote will allow the Senate to continue to function normally.

Today, before a joint session of the Pennsylvania Legislature today, Governor Edward G. Rendell unveiled a $21 billion budget that requires spending cuts, but balances a $2.4 billion budget deficit for the fiscal year 2003-2004.

To eliminate an estimated $2.4 billion shortfall in 2003-2004, the budget calls for cuts in spending from virtually every area of the state budget. The budget, released today, however, includes more than $750 million in increased revenues for fiscal year 2003-2004. Included is the assessment of the balance of the Tobacco Settlement Fund Endowment Account and the use of the balance of the Rainy Day Fund

These cuts, however, will be balanced by an investment program which will be designed to stimulate the state's economy while placing a down payment on the Governor's key campaign promises of property tax releif and reformed education funding. The new plan which will be revealed when he returns for a second joint session of the legislature on March 25, 2003 is entitled, "The Governor's Plan for a New Pennsylvania."

The White House has released an outline for overhauling Medicare which focuses on giving seniors the option of choosing from a selection of private plans or staying in the current fee-for-service plan. The new framework offers limited prescription drug coverage in the traditional Medicare coverage, however the more extensive drug options would be provided through private insurers. This plan offers more generalities than details and has left the specifics up to Congress.

The President's plan calls for a drug discount card with a cap on out-of-pocket costs for senior who want to stay in the traditional Medicare program. Seniors whose incomes place them below the federal poverty line would be given an additional subsidy of $600 a year to help pay for their medicine. Seniors will be encouraged to leave the Medicare fee-for-service plan because they would get more generous prescription drug benefits under private plans.

The Administration's plan would offer seniors Medicare coverage in the following ways:

• Seniors remaining in the current fee-for-service plan would be offered a drug discount card beginning in 2004. Seniors would also receive coverage for their drug costs over a certain threshold.
• To gain drug coverage and coverage of preventive services seniors could obtain a new version of the Medicare managed-care program known as Medicare + Choice. Through the program, renamed "Medicare Advantage," the government would offere subsidies for providing drug benefits to an array of private managed care plans. This program would begin in 2006.
• New private insurance plans would allow seniors to choose from a wide private network of doctors. Seniors would pay a single deductible for physicians' visits and hospital care.

House Democrats plan to offer a proposal that offers full coverage for prescription drugs. Under their proposal, seniors would pay a $25 montly premium and a $100 deductible. Seniors also would have a 20 percent copayment, and the government would be responsible for the remaining costs. Once beneficiaries had $2,000 in out-of-pocket expenses for prescriptions, Medicare would pay for any additional drug costs.

The Democratic proposal is expected to cost about $900 billion over ten years. Senate Democrats' plan would cap out-of-pocket expenses at about $3,700 a year; its costs would top $600 billion over a decade. Bush proposes to boost spending by $400 billion over 10 years.

This two-pronged approach by the Administration is different than the Medicare plan offered earlier this year that would have required Medicare patients to join a managed-care plan to receive drug coverage. This plan was never announced but lawmakers panned it after details circulated in the health care community.

The President's new plan was received more warmly by Finance Committee Chairman Charles Grassley (R-Iowa), and Rep. Billy Tauzin (R-LA), chairman of the House Energy and Commerce Committee. However, Democrats, on the other hand, denounced the plan as being too meager for the traditional Medicare patients and claim the plan is turning an entitlement into a voucher plan.