US Republicans say hurricane won't stop budget cuts

WASHINGTON, Sept 7 (Reuters) - Republicans in Congress on Wednesday rejected calls by Democrats to suspend work on tax cuts, that would mainly benefit the rich, and spending reductions on social programs because of the huge costs of hurricane relief.

"Now is not the time to cut services for our most vulnerable, cut taxes for our most fortunate and add $35 billion to the deficit," the Democratic leaders of the Senate and the House of Representatives said in a letter to their Republican counterparts.

Congressional committees face a Sept. 16 deadline to come up with $35 billion in spending reductions over five years to programs including the Medicaid health-care program for the poor, student loans, food stamps and pension insurance.

The committees are also scheduled to approve $70 billion in tax cuts this month. The cuts could be extensions of reductions on capital gains and dividends, which affect mainly the incomes of the wealthy.

The Democrats said that budget plan "would likely cut programs that many victims of Hurricane Katrina will be relying on" and asked that it be suspended "indefinitely."

Senate Budget Committee Chairman Judd Gregg, a Republican from New Hampshire, said "nothing could be further from the truth" and insisted that the spending reductions being considered could have an impact on Gulf Coast aid efforts.

For example, he said that slowing growth in Medicaid by one percent over five years would improve its efficiency by giving governors more flexibility in administering the health care.

"Dramatically more people will be covered" if the budget changes are made, Gregg said.

Kent Conrad of North Dakota, the senior Democrat on the Senate Budget Committee, countered: "You don't just stick with the same old plan when something of this consequence occurs."

House Republicans said hurricane disaster relief legislation would slow the spending and tax cut legislation by only about two weeks.