US House cuts budget to 2008 levels, rig inspections could take hit

Washington (Platts)--25Jan2011/323 pm EST/2023 GMT

The US House of Representatives Tuesday fulfilled a Republican pledge to cut federal spending by passing a bill that would to return the government's budget to the fiscal 2008 level.

The bill, which would roll back non-security discretionary spending to levels before the massive economic stimulus measure was enacted, could curtail efforts to improve oversight of offshore drilling operations, sought in the aftermath of the Deepwater Horizon accident, by denying the funding that the White House has sought for added inspectors.

Republicans, who took control of the House after November's mid-term elections, said the bill responds to the calls of Americans who are demanding that Congress tighten its belt in the face of growing debt and unsustainable spending under the Obama administration.

"Today's resolution is a clear signal that we are making that change in course," said Republican Representative David Dreier of California, who introduced the bill. "[It] is the first step in what will be a long and admittedly difficult process of learning to live within our means. This resolution lays down a marker to return to pre-bailout, pre-binge spending levels."

The vote comes hours before President Barack Obama is set to deliver his annual State of the Union address to Congress. Obama is expected to call for a five-year freeze on non-security discretionary spending in his speech.

Some Democrats protested the potential impact of Dreier's bill on the US Department of Interior's ability to hire new offshore oil rig inspectors and improve their training. Obama and congressional Democrats have been seeking up to $100 million for those efforts.

Drier's bill would roll back Interior's fiscal 2011 budget to $17.5 billion, down from the $18 billion requested by the White House, though it is unclear where the spending cuts will fall.

Virginia Representative Jim Moran, the top Democrat on the House Appropriations subcommittee that sets Interior's budget, said the bill "will undercut the reforms both the Oil Spill Commission and the secretary of interior outlined to improve worker safety and safeguard the environment."

"And for drilling proponents, of which I am not one, it will also slow down the permitting process for new operations," Moran added.

Dreier's bill would set so-called budgetary "top lines," or overall spending levels, for each department of the executive branch. It would then be up to House appropriators to determine how much money would be allocated among each department's agencies and subdivisions, said Dreier spokeswoman Jo Maney.

House Appropriations Committee Chairman Hal Rogers vowed during debate on the bill "to make the largest series of spending cuts in history."

The Kentucky Republican said his staff is going "line by line" through the federal budget to find areas to cut.

"These cuts will go deep and wide, and will hit virtually every agency and every congressional district in this country, including my own," Rogers said.

House Republican Leader Eric Cantor said the formal fiscal 2011 budget, a so-called continuing resolution that would set spending through September 30, would come up for a vote the week of February 14. He added that Democrats would be allowed to offer a budget of their own.

The government is currently operating under a continuing resolution that keeps federal spending at fiscal 2010 levels. That continuing resolution expires March 4.

--Herman Wang, herman_wang@platts.com --Tom Lobianco, tom_lobianco@platts.com

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