Twin congressional budget panels are taking up their responses to US President Barack Obama’s US$3.6 trillion budget plan for next year as Obama himself comes to the Capitol to pitch it to Senate Democrats.
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 as well.
Senate Budget Committee Chairman Kent Conrad announced a budget blueprint on Tuesday that would scrap Obama’s signature middle-class tax cut after next year 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 US$1.7 trillion this year to a still-high US$508 billion in 2014. Along the way, the Senate plan would have Obama’s “Making Work Pay” tax credit delivering US$400 tax cuts to most workers and US$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 said his companion blueprint would employ fast-track procedures to allow Obama’s overhaul of the US healthcare system to pass Congress without the threat of a Republican filibuster in the Senate. The filibuster is a legislative maneuver to prevent a bill from coming to a vote.
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 US health care system move ahead.
“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 nationally televised on 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 reservations 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 — US$9.3 trillion over 10 years and a deficit of US$749 billion in 2014. Obama’s budget promises a US$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 US$27 billion, or 6 percent. Over five years, the savings from Obama’s budget would be US$160 billion.
But Conrad also makes several shaky assumptions, especially regarding tax rates. He also saves US$87 billion by promising Congress will come up with spending cuts or new revenues to avoid cuts in payments to doctors through Medicare, the government-funded program that provides health care to the elderly and disabled.
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 US$250 billion set-aside for more bailouts of banks and other firms.
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