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House, Senate on track to pass budget plan

WASHINGTON – President Barack Obama’s Democratic allies in Congress are aiming to give him a gift to cap his 100th day in office: passage of a congressional budget plan that endorses much of his ambitious agenda, especially his plan to reform the U.S. health care system.

While a welcome victory, congressional passage of the budget would be only a first, relatively easy step toward Obama’s goal of providing health care coverage for all Americans. Next would come arduous negotiations among lawmakers, the Obama administration and a vast array of interest groups.

The House debated the $3.4 trillion spending plan Tuesday afternoon and both the House and Senate were to vote Wednesday. With the economy in recession and the bailout of the financial sector costing hundreds of billions of dollars, deficits would rocket to $1.7 trillion for the ongoing budget year, dipping to a still-astonishing $1.2 trillion in 2010.

The budget measure is a nonbinding outline for follow-up tax and spending legislation. It is Congress’ response to Obama’s $3.6 trillion budget plan released in February.

Perhaps most significantly, the budget plan would give Democrats a stronger hand in advancing Obama’s health care initiative this fall by allowing it to go forward without threat of GOP stalling tactics in the Senate. Democrats pledge to first try passing health care legislation with GOP support.

“We invest in health care reform, not just to improve health care quality and improve coverage, but to reduce the crushing burden of health care costs on American businesses,” said Rep. Jim McGovern, D-Mass. “Everybody likes to talk about health care reform; this budget actually gets it done.”

But the budget plan skirts difficult decisions on how to pay for Obama’s health care plan, which is expected to cost more than $1 trillion over the next decade. It allows the new president’s signature $400 tax credit for most workers to expire in 20 months — but devotes $512 billion over five years to extend tax cuts passed during President George W. Bush’s first term for middle-class workers, investors and families with children.

And votes in the Senate made it clear that Obama’s initiative to combat global warming by making it more expensive to emit greenhouse gases faces great obstacles.

Democrats say they and Obama inherited a record budget mess and deserve credit for cutting the deficit by two-thirds over the next five years. Most of those deficit savings, however, occur normally as the economy recovers, tax revenues rebound and the Iraq war winds down.

Republicans say Democrats rely on the usual bag of budget tricks: savings that won’t appear, spending caps that won’t hold, and tax cuts that aren’t “paid for” as promised.

The Democratic plan assumes Congress will devote only $50 billion a year for operations in Iraq and Afghanistan for 2011 and beyond and pass an annual fix for the alternative minimum tax without adding to the deficit over 2013-14.

“It is just so disingenuous it’s almost unbelievable,” said Sen. Judd Gregg, R-N.H. “The $500 billion number is a total fraud.”

The Democratic plan embraces several of Obama’s key goals besides a health care overhaul, including funds for domestic programs and clean energy, and a tax increase for individuals making more than $200,000 a year or couples making more than $250,000.



Highlights of the nonbinding Democratic budget blueprint for the 2010 budget year starting Oct. 1.

• Spending: Calls for $3.4 trillion in new spending, including $1.2 trillion for defense and domestic programs funded through appropriations bills, and $130 billion for the wars in Iraq and Afghanistan. Non-defense appropriations would receive a $40 billion, 8 percent boost. Benefit programs such as Medicare and Social Security, as well as interest payments on the $11.2 trillion national debt, account for most of the rest.

• Health care: Permits Obama’s health care reform initiative to advance under fast-track rules that block GOP filibusters in the Senate.

• Taxes: Endorses extending middle-class tax cuts passed in 2001 and 2003 under President George W. Bush; they include a 10 percent tax bracket, lowered rates on income and investments, relief from the “marriage penalty,” education tax breaks and the child tax credit. Provides a three-year “patch” of the alternative minimum tax so more than 20 million taxpayers don’t get hit with tax increases averaging $2,000 a year. Increases the top income tax rate from 35 percent to 39.6 percent for individuals making more than $200,000 per year. Allows Obama’s $400 “Making Work Pay” tax credit for most workers to expire at the end of next year.

• Deficits: Projects deficits of $1.7 trillion in 2009, $$1.2 trillion in 2010, $916 billion in 2011, $620 billion in 2012, $581 billion in 2013 and $523 billion in 2014.

• Debt: Foresees an increase in the national debt to $17 trillion by 2014.

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