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Senate Democrats eye plan to ease pain of spending cuts

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US Capitol
US Capitol

By David Lawder

WASHINGTON (Reuters) - Senate Democrats' version of stop-gap government funding legislation will likely include a new mechanism to give federal agencies more flexibility to move money between projects and programs to help ease $85 billion in automatic budget cuts.

Senate Appropriations Committee Chairwoman Barbara Mikulski said on Thursday that she and the top Republican on the panel were working to build that flexibility into a government funding extension bill to be introduced next week.

The measure would avert a government shutdown when current funding runs out on March 27, but would not seek to replace or cancel the automatic, across-the-board spending cuts known as a "sequester" that went into effect earlier this month, Mikulski told reporters.

But the Democratic changes are likely to clash with a more stripped-down funding bill passed on Wednesday in the Republican-controlled House of Representatives.

The House measure included updates to the appropriations for the Defense Department, military construction and the Veterans Administration, which will allow funds from outdated and unwanted activities to be moved to higher priority projects.

Democrats have welcomed the House vote because it averts a potential shutdown but say the Republican measure offered little help to domestic agencies, who are operating on old spending plans passed as long as 18 months ago.

Republican House Speaker John Boehner warned Senate Democrats against "loading up" the bill with partisan provisions that could sink it in the House.

Mikulski, who represents Maryland, said that her bill would also include "non-controversial" appropriations updates for the Agriculture, Commerce, Justice, State and Homeland Security departments. There also will be other, targeted funding adjustments, but she declined to give details.

But she said the panel is working on a new enhancement that would grant authority to all departments the ability to transfer funds between budget accounts and programs - a significant change that would allow agencies to move money from administrative accounts to front-line activities.

With almost no activity in Congress to stop the $85 billion in cuts that have been triggered, that change, if adopted, could help ease disruptions of key services or temporary layoffs of government employees.

"It gives them breathing room," Mikulski said of government agencies.

Many Republicans, however, oppose handing more budgetary power to the Obama administration and question whether this authority would violate the Constitution, which grants Congress control over spending matters.

"That's a no-go" an aide to a prominent Republican House committee chairman said of the enhanced flexibility plan.

To rectify this, Mikulski said her so-called "enhanced transfer and reprogramming authority," would be temporary and subject to congressional approval. Details were still being worked out, but agencies would have to submit their requests to the House and Senate Appropriations committees and gain approval before they could shift any funds.

(Reporting By David Lawder and Paul Simao)

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