House, Senate panels take up revised Obama budget

[March 25, 2009]  WASHINGTON (AP) -- Facing opposition even within his own party, President Barack Obama is heading to Capitol Hill today to press hard for approval of a $3.6 trillion budget that Republicans argue would burden the country with debt for years to come.

Obama, who successfully lobbied lawmakers earlier this year for approval of his stimulus plan, maintains approval of the 2010 budget plan is crucial because it's at the heart of his strategy to revitalize the economy and improve American competitiveness.

His visit comes as the budget panels in both the House and Senate begin to work on the 2010 plan and as the second-ranking House Republican charged that his proposal is "so far out of the mainstream" that even members of Obama's own party are reluctant to support it. In fact, Obama was starting his fresh push Wednesday by meeting with congressional Democrats.

House Minority Leader Eric Cantor said Wednesday that Obama's budget would tax too heavily the small businesses that create a large share of the jobs across the country. "We've got to provide the relief to the job creators," the Virginia Repubican said.

Both the House and Senate budget chairmen have been forced by worsening deficit estimates to scale back Obama's requests for domestic programs, while deeply controversial revenues from his global warming initiative won't be included either.

Senate Budget Committee Chairman Kent Conrad, D-N.D., announced a budget blueprint Tuesday that would scrap Obama's signature tax cut after 2010 while employing some sleight of hand to cut the annual budget deficit to a sustainable level.

Conrad promises to reduce the deficit from a projected $1.7 trillion this year to a still-high $508 billion in 2014. Along the way, the Senate plan would have Obama's "Making Work Pay" tax credit, delivering $400 tax cuts to most workers and $800 to couples, expire at the end of next year. Those tax cuts were included in Obama's stimulus package.

In the House, Budget Chairman John Spratt Jr., D-S.C., said his companion blueprint would employ fast-track procedures to allow Obama's overhaul of the U.S. health care system to pass Congress without the threat of a GOP filibuster in the Senate.

Democrats point out that Obama inherited an unprecedented fiscal mess caused by the recession and the taxpayer-financed bailout of Wall Street. Rather than retrenching, however, they still promise to award big budget increases to education and clean energy programs, while assuming Obama's plans to overhaul the U.S. health care system advance.

"The best way to bring our deficit down in the long run is ... with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest," Obama said in a Tuesday night news conference.

It's also becoming clear that Obama's controversial global warming initiative has experienced a setback, as neither House nor Senate Democrats are directly incorporating into their budget plans Obama's controversial "cap-and-trade" system for auctioning permits to emit greenhouse gases.

Obama's budget has ignited a firestorm on Capitol Hill, with Republicans assailing it for record spending and budget deficits. Democrats are generally supportive, though some have sticker shock over the deficit figures.

Conrad's plan was released in the wake of new Congressional Budget Office estimates that predicted Obama's plan would produce alarming estimates of red ink -- $9.3 trillion over 10 years and a deficit of $749 billion in 2014. Obama's budget promises a $570 billion deficit in that year, and to get below that figure Conrad was forced to make a series of difficult choices.

Conrad said his budget makes room for Obama's hopes to deliver health care to the uninsured. He said the plan would not add to the deficit over the long haul.

In grappling with the deficit, Conrad would cut Obama's proposed increases for next year for domestic agencies funded by lawmakers to growth of about $27 billion, or 6 percent. Over five years, the savings from Obama's budget would be $160 billion.

But Conrad also makes several shaky assumptions, especially that Congress will raise taxes by about $114 billion over 2013-14 to make sure middle-class taxpayers won't get hit by the alternative minimum tax. He also saves $87 billion by promising Congress will come up with spending cuts or new revenues to avoid cuts in Medicare payments to doctors.

Both problems have been fixed in recent years by using deficit dollars.

Under Congress' arcane procedures, the annual congressional budget resolution is a nonbinding measure that sets the terms for follow-up legislation.

Neither budget includes Obama's $250 billion set-aside for more bailouts of banks and other firms.

Cantor was interviewed Wednesday morning on NBC's "Today" show.

[Associated Press; By ANDREW TAYLOR]

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