Tuesday, April 28, 2009

Negotiators Reach Deal on Budget

April 27, 2009 – 10:12 p.m.
Negotiators Reach Deal on Budget
By Paul M. Krawzak and David Clarke, CQ Staff

House and Senate budget negotiators reached agreement Monday night on a budget resolution, setting the stage for Democrats to move the legislation through Congress by Wednesday to mark the first 100 days of Barack Obama’s presidency.

Most details had been decided earlier in the day, but negotiators were working into the evening to assuage the concerns of the Blue Dog Coalition, a group of fiscally conservative House Democrats who want the Senate to commit to advancing a bill this year that would put into law the pay-as-you-go rule, which requires tax cuts and new mandatory spending to be offset with tax increases or budget cuts elsewhere in the budget.

Senate Budget Chairman Kent Conrad’s office announced a deal on the overall budget resolution Monday night, although the specifics were unclear at press time.

As a condition of supporting the House budget in March, Blue Dog leaders won a provision in the House version of the budget (H Con Res 85) that would pave the way for a House vote on statutory pay-as-you-go legislation.

But a tentative agreement between House and Senate negotiators did not include a corresponding requirement for the Senate to vote on similar legislation, raising questions about what, if any, impact it ultimately would have.

As a result, Blue Dog leaders were pressing Monday for some kind of commitment that the Senate would also vote on pay-as-you-go legislation.

“Congress doesn’t have the will to do the right thing on fiscal responsibility,” said Rep. Allen Boyd, D-Fla., a Blue Dog leader and a member of the budget conference committee. “We’ve proven that time and time again.”

Anticipating an agreement and aware of the 100-day milestone on Wednesday, the House Rules Committee approved a procedural rule allowing the budget agreement to be voted on by the House on Tuesday.
Other Differences Bridged

Democratic lawmakers announced agreements earlier in the day on other issues.

The most controversial provision in the agreement is a fast-track procedure called reconciliation. It would allow Democrats to pass an overhaul of the nation’s health care system and student aid legislation with a simple majority in the Senate, rather than with the 60 votes needed to end debate and thus bypass opposition from Republicans and possibly some moderate Democrats.

Reconciliation instructions were included in the House budget resolution but not the Senate version (S Con Res 13).

The procedure came under heavy fire during a conference committee meeting Monday.

The Senate Budget Committee’s ranking Republican, Judd Gregg of New Hampshire, blasted Obama for supporting reconciliation, saying he could understand the president’s shaking the hand of Venezuelan President Hugo Chavez but “I can’t understand embracing his politics, basically shutting down the minority.”

Conrad, D-N.D., predicted that it ultimately would not be used, at least not for health care.

“It is there as an insurance policy,” Conrad said, adding that the instructions would not be effective until Oct. 15.

“ ‘Gun’ would be more accurate than ‘insurance policy,’ ” Gregg responded.

Conrad ruled out using reconciliation to pass a cap-and-trade system for reducing carbon emissions, which would cap the emissions and set up a market-based trading system. Republicans argue that Democrats could use reconciliation for energy legislation, even though the budget resolution only specifies its use for health care and student aid.
Debating the Impact

The budget resolution is a nonbinding blueprint that provides a framework for tax and spending bills that can be moved later in the year. Most importantly, it sets spending levels for the appropriations committees.

House leaders were hoping to have a vote on the fiscal 2010 budget resolution Tuesday, with the Senate to follow on Wednesday.

Conrad lauded the agreement for addressing Obama’s top priorities — reducing the nation’s dependence on foreign oil, improving education, overhauling the health care system and reducing the deficit — while including $764 billion in tax cuts.

Republicans countered that the plan is fiscally unsustainable; Gregg said it would leave the next generation with “a debt which under no circumstances they can afford.”

Though exact details of the agreement had not been released Monday, Conrad said it would reduce by $10 billion Obama’s request for $1.096 trillion in non-emergency discretionary spending in fiscal 2010.

The plan would reduce the deficit to $523 billion, or 3 percent of gross domestic product, in 2014, Conrad said.

Tax reductions in the agreement include $512 billion to extend existing “middle-class” tax cuts, $214 billion for a three-year alternative minimum tax fix to prevent the levy from reaching further into the middle class, $72 billion for Obama’s estate tax proposal and $97 billion in loophole closures.

Under the agreement, the estate tax rate would be 45 percent. The exemption would be $3.5 million for individuals and $7 million for couples, indexed for inflation.

As Republicans kept the spotlight on what they called the irresponsible spending that the resolution would authorize, House Speaker Nancy Pelosi, D-Calif., sent a letter to committee chairmen asking them to find ways to cut spending on programs under their jurisdiction and report back to her by June 2.

“A vigorous oversight process, with the goal of reducing inefficiency and consolidating operations, is one way for Congress to demonstrate our commitment to fiscal discipline,” said Pelosi, who did not give a total figure she wants cut.

Last week, Obama asked his Cabinet to come up with plans to cut $100 million in spending. He said it was a down payment on bigger cuts, while Republicans decried it as a pittance.

Chuck Conlon contributed to this story