Moving at a sprint pace, Congress is closing in on a budget resolution for fiscal year 2010 that sets a road map for President Obama’s $3.67 trillion budget.
The good news for the White House is that the priorities emerging from the House and Senate budget committees this week mainly pattern his own.
But the differences – and there are many – set up an early test of the new administration’s ability to hold Democrats in line while attracting enough Republican support to sustain a working majority on tough votes.
On the most essential items – budget priorities and the bottom line – House and Senate negotiators came out of markups this week remarkably close to the White House numbers.
The House version, which cleared the Budget Committee on a 24-to-15 party-line vote, proposes a $3.55 trillion budget. At press time, the Senate Budget panel was on track to approve a $3.53 trillion top budget line.
That translates into $7 billion less in discretionary spending than the Obama budget on the House side and $16 billion less in the Senate.
Those numbers could come back up in a conference to reconcile House and Senate versions of the budget resolution.
Both House and Senate budget panels were under pressure to make adjustments in the Obama budget after the Congressional Budget Office scored the 10-year deficits of the Obama budget at $9.3 trillion.
One casualty of the cuts was the president’s “Making Work Pay” tax credit, a campaign pledge that provides up to $400 for working individuals and $800 for married taxpayers filing joint returns.
The White House budget proposed $525 billion over 10 years to cover the cost of the tax credit. House and Senate budget panels both zeroed out funding beyond 2010.
“Make Work Pay is already preserved for two years in the stimulus bill. Beyond that, we have to say it has to be offset,” said Sen. Kent Conrad (D) of North Dakota, who chairs the Senate Budget Committee.
House and Senate panels also failed to fund the $250 billion set-aside in the White House budget to fund the Troubled Asset Relief Program – an especially sore point on Capitol Hill since disclosure last week of $165 million in retention bonuses to employees at bailed-out insurance giant American International Group.
An early casualty of the budget process this week is transparency – a signature Obama issue.
The president proposed a 10-year budget that clearly signaled an explosion of deficits and national debt in the last five years. Both House and Senate budget panels opted for a five-year window.
“On the one hand, they wanted to change the Obama numbers but keep the transparency of the Obama budget – and ended up sacrificing one for the other,” says Stan Collender, a longtime congressional budget analyst and partner at Qorvis Communications in Washington.
In a bid to show lower deficits, Democrats controlling the budget panels have resorted to budget gimmicks that they denounced during the Bush years.
These include omitting the cost of a “fix” for the alternative minimum tax – a perennial off-budget item for lawmakers wary of allowing the tax to hit millions of middle-class taxpayers.
The White House budget also provides contingency funding for natural disasters – another event typically funded off budget. The House panel cut that funding in half; the Senate zeroed it out altogether.
Moreover, rather than setting aside funding for big-ticket priorities, such as the $633.7 billion “down payment” for healthcare reform in the Obama budget, House and Senate budget resolutions leave the issue to authorizing committees to propose funding levels and find offsets.
In the past, lawmakers have used budget resolutions to set markers for authorizing and spending committees and for providing a procedure for enforcing those limits.
But House and Senate panels this year opted to punt to other committees the big-ticket decisions on issues such as healthcare reform and energy.
“Be it the [Environment and Public Works] Committee or the Energy Committee, they would have maximum flexibility to draft legislation, but it would all have to be paid for,” said Senator Conrad at the opening of his panel’s markup on Wednesday.
In response, Republicans are turning the charts that Democrats used against Bush budgets to attack Mr. Obama’s budget plan. Exhibit A for Democrats in the Bush years was a chart showing the massive expansion of debt during the Bush years. This week, Republicans simply added on the Obama deficit projections.
“To try to put it in a different context, if you take all the presidents since George Washington through George Bush and add up all the debt that they’ve put on the books for the American people, President Obama’s proposal actually equals and exceeds that amount of debt in his first term – staggering numbers when you think about it, just plain staggering numbers,” said Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget panel, at a press briefing on Wednesday.
“We are on an unsustainable course.”