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House Panel Adopts Budget Resolution that Includes Reconciliation

By Paul M. Krawzak and David Clarke, CQ Staff

March 26, 2009 -- House Democrats approved a budget outline for fiscal 2010 late Wednesday that would advance President Obama's plans to remake the health care system and transform student aid programs.

The measure, adopted by the House Budget Committee in a 24–15 party line vote, includes reconciliation instructions to allow legislation implementing Obama's health and education policies to move later in the year without the threat of a Senate filibuster.

The Senate Budget Committee, which will finish marking up its resolution Thursday, does not include similar language—a discrepancy between the two chambers that will be resolved later this spring.

Although both plans largely hew to the priorities Obama laid out in February, they also scale back some of his spending and tax measures for fiscal 2010, with the House proposing $7 billion less in discretionary spending and the Senate trimming about $15 billion.

Before adopting the resolution, the House committee considered 28 amendments, defeating all but the final one, a proposal by ranking Republican Paul D. Ryan of Wisconsin. It added to the resolution a non-binding "sense of Congress" that "additional legislative action is needed to ensure that states have the necessary resources to collect all child support that is owed to families."

The other 27 amendments—all from Republicans—were defeated in mostly party line votes.

Several of the GOP amendments sought to prevent the administration from creating a cap-and-trade program to reduce carbon emissions, as Obama has proposed, or strike reconciliation instructions from the resolution.

Under an amendment by Cynthia M. Lummis, R-Wyo., a revenue-neutral fund for energy programs could not be used to impose a cap and trade policy. It was defeated 15–24.

The committee also rejected several amendments by Ryan. One would have barred the use of a health care reserve fund in the resolution to pay for creation of a government-controlled health insurance plan. The committee defeated it 14–23.

Ryan also tried to strike the reconciliation language from the measure, but his effort failed 14–22.

The issue of reconciliation has become a flash point in this year's budget debate. Senate Republicans view the use of the fast-track procedure as highly partisan because it would greatly diminish their ability to influence major pieces of legislation by taking the threat of a filibuster off the table. While reconciliation primarily affects the Senate, House leaders are pushing the idea because they have grown wary of their priorities being stalled or watered down in the Senate because Democrats lack the 60 votes to avoid filibusters.

"The Senate leadership on the Democratic side does not want its membership to vote on reconciliation in an open-floor battle in the budget," said Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget panel. "They want to bring it back out of conference where it can be buried in a conference report and used as a vehicle to jam, jam the Senate on some very big substantive matters of public policy."

Democrats have been quick to point out that Republicans used the process in the past to move their priorities, including the 2001 and 2003 tax cuts (PL 107-16, PL 108-27) that added to the deficit.

Whether to include reconciliation provisions in the final budget resolution will almost certainly be the biggest issue for House and Senate negotiators when they hammer out a conference agreement next month.

Neither Senate Budget Chairman Kent Conrad, D-N.D., nor Senate Finance Chairman Max Baucus, D-Mont., wants reconciliation instructions on health care, because such a move would inflame partisan tensions and they believe the process should be used only for deficit reduction.

"I don't believe reconciliation was ever intended for this purpose," Conrad said.

But he and Baucus will be challenged hard on this point by House Democrats, and possibly the White House, who do not want to see a key part of the president's agenda stalled in the Senate.

Obama met with Senate Democrats for about 40 minutes in a Wednesday visit to Capitol Hill. Senate Majority Leader Harry Reid described the tone of the meeting as "comfortable." The president may meet with House Democrats on March 30.

Support for Reconciliation
Several Democratic members of the Senate Budget Committee expressed support Wednesday for using reconciliation.

Using reconciliation for education programs may be less problematic than for the health care changes, since the education proposals are more budget-related.

The president has proposed eliminating subsidies to private lenders that now participate in the Federal Family Education Loan program, making the government the originator of all federally backed student loans.

Rather than include reconciliation instructions, Conrad's budget simply sets up a "reserve fund" for both health care and education legislation. These provisions essentially leave it to the committees of jurisdiction to craft the legislation if they choose to, so long as it doesn't add to the deficit. The bills would then move through regular order, setting up the possibility of a filibuster.

But, as in the House's case, a budget resolution can set the stage for the reconciliation process by instructing specific committees to achieve a net change to the deficit, which can be accomplished through policies affecting tax and mandatory spending programs.

The authorizing committees can produce legislation to implement almost any policy, so long as it meets the deficit target laid out in the budget resolution. Republicans have noted that this means Democrats, despite their stated intentions, could use reconciliation for purposes other than health care and education policy, such as the president's proposal to use a "cap-and-trade" emissions program to combat climate change. For instance, the House Budget resolution instructs both the Energy and Commerce and Ways and Means committees to report legislation by Sept. 29 that would reduce the deficit by $1 billion over six years. These committees would write the health care legislation but could also deal with cap-and-trade.

Democrats have heralded their budgets as an attempt to invest in health care, education, energy and other domestic programs they believe will help the economy in both the short and long term.

But Republicans have bashed the proposals as tax-and-spend plans that would double the nation's deficit and involve the government too deeply in Americans' lives.

"There is a price to be paid for this kind of paternalism," Ryan said.

The amount of debt in Obama's budget has also been a concern for some moderate Democrats, and the Budget panels in both chambers had to trim some of Obama's spending and tax proposals in order to appease them. One area that was targeted was the discretionary funding accounts the Appropriations panels use to write their annual spending bills.

While the budget resolution never becomes law, it sets the parameters for considering tax and spending bills later in the year. One of the most important parts of the blueprint is that it sets the discretionary spending cap for the annual appropriations bills.

The House blueprint would provide $1.089 trillion in non-emergency discretionary spending in fiscal 2010, which would be slightly less than the $1.096 trillion requested by the president.

The Senate Budget version would allow about $1.08 trillion in non-emergency discretionary funding in fiscal 2010. Both the House and Senate match the president's request for defense spending, so trims would come from his domestic program requests.

Assuming the AMT
Both the House and Senate were able to show higher tax revenue figures than the administration by assuming that the alternative minimum tax (AMT) will hit more taxpayers in future years or that, if it doesn't, a comparable amount of taxes or spending cuts will be found elsewhere.

But this is a questionable move that critics deride as a gimmick. The administration championed its budget as being "honest," in part because it didn't assume additional revenue from the AMT, as Congress has never allowed this parallel tax system to hit more taxpayers each year, enacting a "patch" instead.

Because of these changes, the House and Senate plans show deficits falling faster and further than in the president's budget. The Congressional Budget Office projects the deficit for this fiscal year will total $1.7 trillion.

Under the House plan it would drop to $598.4 billion in fiscal 2014. The president's budget would lead to deficits of $672.3 billion in fiscal 2013 and $748.6 billion in fiscal 2014, according to CBO. The Senate resolution shows the deficit falling to $508 billion in fiscal 2014.

Both chambers plan to vote on their budget plans next week.

Senate leaders have expressed confidence they will have the 51 votes needed to adopt the plan. Twelve moderate senators wrote Conrad on March 24 stating they wanted to see deficits controlled but did not draw any lines in the sand about what needed to be done to win their votes.

On the House side, leaders appear to have mollified the concerns of the fiscally conservative, 51-member Blue Dog Coalition. They included a provision in the resolution that essentially states that some current policies, such as middle-class tax cuts, should not be extended if they are not offset, unless the House has already passed a bill that would put the pay-as-you-go deficit rule into law to cover future programs.

Since there is little chance that the extension of some existing popular tax provisions will be offset, Blue Dogs wanted assurances that a stricter pay-as-you-go system would be in place in the future.

"We simply cannot run trillion-dollar deficits forever," said Rep. Charlie Melancon, D-La., a Blue Dog leader.

House Republicans are attempting to pressure members of the group to vote against the budget because of the amount it would increase the debt.

"Do you really want all this government?" Ryan said to Blue Dog members at the House markup Wednesday. "You hold the cards. You have the votes that can make the difference on this. You can stop this."

Kathleen Hunter, Paul M. Krawzak and Chuck Conlon contributed to this story.

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