Budget cuts target housing, Medicaid

Officials say president has plans to mitigate effects on cities and poor


WASHINGTON - Facing the prospect of record deficits, Bush administration officials laid out proposals yesterday for deep cuts in spending on housing and community development.

At the same time, the nation's top health official fleshed out proposals to cut $60 billion from the projected growth of Medicaid, the federal/state health program for low-income people, in the next decade.

But the official, Michael O. Leavitt, the new secretary of health and human services, said that 12 million to 14 million people could gain health insurance if Congress approves President Bush's proposals to provide tax credits for such coverage and help small businesses band together to buy coverage.

Donald L. Evans, the commerce secretary, and Alphonso R. Jackson, the secretary of housing and urban development, said Bush wants to consolidate 18 local assistance programs scattered among five departments into one new grant program, to be run by the Commerce Department.

The government is spending more than $5.6 billion a year on the 18 programs, which include the Community Development Block Grant, a lifeline for many impoverished urban neighborhoods. For the new program, Bush will request $3.7 billion, a cut of about 33 percent.

"The current system forces communities to navigate a maze of federal departments, agencies and programs, each imposing a separate set of standards and reporting requirements," Jackson said. The programs, he said, "duplicate and overlap one another and have different eligibility criteria," with little accountability for how money is used.

But Jim Hunt, a city councilman in Clarksburg, W.Va., who is first vice president of the National League of Cities, said the proposal would have "a dire negative impact on cities of all sizes." For three decades, he said, cities have used the federal money to create jobs, stimulate private investment and revitalize distressed communities.

Don Plusquellic, the mayor of Akron, Ohio, who is president of the U.S. Conference of Mayors, said: "The new proposal in unconscionable. It will cut programs that help the poorest and the neediest."

Plusquellic, a Democrat who has led his city for 18 years, said the reshuffling of federal programs obscured the likely effects: "It would be more honest if the federal government simply said, `We don't care about these poor people.'"

A summary of the proposal, prepared by the White House Office of Management and Budget, says Bush believes that communities must not "rely on perpetual federal assistance."

The proposal could face bipartisan resistance in Congress, because lawmakers take pride in earmarking some of the money for hometown projects.

Bush administration officials said the community development program was poorly focused. Eligibility for the new grant program will be based on factors such as poverty and unemployment levels.

Bush said in his State of the Union address that his budget, to be unveiled Monday, would reduce or eliminate more than 150 government programs. White House officials said the new blueprint for federal spending would be the tightest budget since Bush took office in 2001.

The White House predicted last week that the federal budget deficit would rise to $427 billion this year, from $412 billion last year. If Congress adopts his proposals, Bush says, the deficit will be less than $260 billion in 2009.

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