Negotiators settle on federal budget blueprint for 2010

McClatchy NewspapersApril 28, 2009 

WASHINGTON — When President Barack Obama assesses his first 100 days at a White House news conference Wednesday night, he'll probably have fresh congressional votes endorsing a $3.5 trillion fiscal 2010 budget that includes almost every one of his major initiatives.

The Senate and the House of Representatives are expected to pass it Wednesday. That's the easy part, however, because the congressional budget is only a blueprint, with key details yet to be worked out bill by bill in Congress.

Nevertheless, it's a good start, some analysts said, because it puts Obama and the Democrats in Congress firmly on the record — and committed by congressional votes — to reduce this year's projected $1.7 trillion deficit to $620 billion by 2012 and $523 billion by 2014.

"This is fairly significant, because Congress is setting up its plan for the rest of the year," veteran federal-budget analyst Stan Collender said.

At the same time, critics charge that the budget doesn't make the difficult choices about spending that will be needed to pare the deficit, nor does it offer details about how health care will be overhauled, global warming restrained and other major Democratic objectives. It just directs Congress' committees to hit its tax and spending targets.

Under the complex budget process, Congress now will consider separate bills that spell out exactly how money will be spent and raised, a process that's likely to continue through the fall.

The most controversial point is likely to involve overhauling health care, since the budget authorizes the Senate to use a procedure called "reconciliation" to vote on it. Under that rule, only 50 votes would be needed to cut off debate and move to a decisive vote — Vice President Joe Biden would break any tie — instead of the 60 usually required under Senate rules.

That neutralizes the Republican minority. Democrats now command 59 Senate votes, with Pennsylvania Sen. Arlen Specter's announcement Tuesday that he'll switch from Republican to Democrat.

The budget spells out that the reconciliation procedure could be used if lawmakers haven't reached agreement to proceed under regular rules by Oct. 15. The same process could be used to overhaul the federal student-loan system to end federal subsidies for private lenders.

Senate Majority Leader Harry Reid, D-Nev., voiced optimism that the reconciliation process wouldn't have to be used. "We certainly should be able to do a bipartisan bill by that time," he said.

However, Republicans howled Tuesday that the reconciliation terms could steamroll them.

"Why wouldn't we want to have a full and clear and significant discussion of what we're doing to the American public and what the policy implications of health-care reform are on the floor of the Senate?" asked Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee.

The budget also sets the framework for other Obama initiatives, and gives him virtually everything he sought.

It creates a "reserve fund" that could be used to implement his climate change proposals, notably a cap and trade system to reduce carbon emissions. The fund would have to be revenue-neutral; that is, its costs must be paid for with taxes or spending cuts elsewhere.

A similar fund would be created to accommodate certain of Obama's education initiatives. The amount of Pell grants — higher education grants to lower-income students — would be increased, but only if they were paid for by spending cuts or tax hikes.

The budget also calls for slowing the growth of nondefense discretionary spending, which is rising at its fastest pace since the 1960s when adjusted for inflation.

The budget notably pledges to reduce the federal deficit, which the nonpartisan Congressional Budget Office has projected will reach a record $1.7 trillion this fiscal year and $1.4 trillion in fiscal 2010. That clearly won't be easy, however, not least because the bill also projects tax cuts of $764 billion over the next five years.

The budget envisions extending middle-class tax cuts — such as the 10 percent income-tax bracket, the child tax credit, "marriage penalty" relief and help for many who are subject to the alternative minimum tax — and continuing the 2001 and 2003 tax reductions for most people who earn less than $250,000 a year.

Cuts for higher-income taxpayers would be allowed to expire after 2010.

The budget recommends $97 billion in tax increases through "loophole closers and raisers," leaving it up to tax-writing committees to fill in the blanks.

The budget did deny Obama one major initiative: the "making work pay" tax credit of $400 for most taxpayers, which he wants to become permanent. Instead, it would be allowed to continue past next year only if its costs are offset with cuts in spending or other tax increases.

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McClatchy Newspapers 2009

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