Congress' budget plans boost Obama agenda

updated 11:30 a.m. ET April 3, 2009

WASHINGTON - House and Senate passage of companion budget plans gave President Barack Obama and his Capitol Hill allies a key victory, but the debates also exposed vulnerabilities in the president's agenda.

Obama's Democratic allies passed plans broadly supporting the young administration's agenda of higher spending on domestic programs like education and overhauling the health care system. The $3.6 trillion House plan passed by a 233-196 vote Thursday.

But 20 House Democrats, mostly from GOP-leaning areas, abandoned Obama on the final vote due to unhappiness over deficits. Even after modest cuts to Obama's budget, the House plan predicts a $598 billion deficit in five years. The Senate plan projects a $508 billion shortfall.

The Senate approved its budget 55-43 late Thursday. Only two Democrats — Sens. Evan Bayh of Indiana and Ben Nelson of Nebraska — voted against the plan, along with all 41 Republicans. Sen. Robert Byrd, D-W.Va., did not vote.

Budget resolutions are nonbinding blueprints that set goals for future legislation. But the companion House and Senate 2010 budget plans offer little guidance on how to pay for a health care overhaul or an extension of Obama's signature $400 tax credit for most workers.

Political danger
In the Senate, Obama lost a symbolic but politically resonant vote on lowering the estate tax, while votes on several GOP amendments demonstrated broad uneasiness with his global warming initiative. Votes there also dealt a blow to his plan to help pay for his health care initiative by reducing the tax benefits wealthier people take on itemized deductions like charitable gifts and mortgage interest.

Video   Gen. Colin Powell on the GOP counter-budget April 1: Former Secretary of State Colin Powell offers his views on the Republican budget propsal to MSNBC's Rachel Maddow. The Rachel Maddow Show

At the same time, the debate also exposed political weaknesses in his House GOP rivals. House Republicans had even more defections on their alternative budget, losing 38 of the chamber's more moderate members in a 293-137 tally that rejected cuts to Medicare and the Medicaid health care program for the poor and disabled.

GOP leaders are clearly nervous that votes in favor of the alternative have exposed their members to political danger.

The plan, drafted by Wisconsin Rep. Paul Ryan, top Republican on the House Budget Committee, called for eventually replacing the traditional Medicare program with subsidies to help retirees enroll in private health care plans. Current beneficiaries would keep their coverage and those 55 and older also would go into the current system.

Critics said the Medicare subsidies would inevitably not keep pace with inflation and people in poor health might end up uninsured, while many needy people on Medicaid could lose coverage.

Gaining the momentum
Democrats were relieved to have the budget debate behind them.

Video   Obama: Health costs threaten economy March 5: At the opening of a White House health summit, President Obama says that it is imperative to reign in spiraling health care costs for both individuals and the government, to lower costs now, and in the future. MSNBC

"I think it does provide some momentum. It does provide the framework of his (Obama's) agenda," said Sen. Bob Casey, D-Pa.

The most difficult question facing Democratic negotiators responsible for producing a final compromise is whether to use the measures as a precursor to allowing health care legislation to pass the Senate by a simple majority — which Republicans worry could cut them out of the action — and after just 20 hours of debate.

Seeking the upper hand over Senate Republicans, House leaders want a filibuster-proof bill at the ready if bipartisan efforts to pass health care collapse. That effort is being resisted by the Senate, though it seems increasingly likely that House Speaker Nancy Pelosi, D-Calif., will prevail.

Negotiators will also decide how much to cut from Obama's $49 billion requested increase for non-defense programs. The House trimmed $7 billion from Obama's request, while the Senate cut $15 billion. Such programs have already been awarded significant sums through Obama's economic stimulus bill and the recently passed omnibus appropriations measure.

On global warming, senators voted 67-31 against allowing a future "cap-and-trade" bill to pass the Senate with fewer than 60 votes. The vote revealed Democratic skepticism on the legislation, which is likely to lead to significantly higher energy bills.

And on Thursday, nine Democrats broke with their leaders to vote for cutting taxes on multimillion-dollar estates. The 51-48 vote endorsed a nonbinding plan by Sens. Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz., to exempt estates up to $10 million from the estate tax, and taxing estates at a 35 percent rate.

But they would have to raise taxes elsewhere to finance 10-year costs exceeding $100 billion, a difficult chore at best.

Obama is proposing to exempt estates up to $7 million and taxing estates at a 45 percent rate instead of the $2 million exemption and 55 percent rate set to take effect in 2011.

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