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House, Senate Reach Tentative Budget Deal

By David Clarke and Chuck Conlon, CQ Staff

April 24, 2009 -- House and Senate negotiators have struck a tentative deal on major elements of the fiscal 2010 budget resolution that includes fast-track procedures for a health care overhaul and for legislation to curtail the role of private lenders in the federal student loan program.

The compromise also would trim $10 billion from President Obama's discretionary spending request, while allowing some additional spending for household energy assistance.

The negotiators plan to hold a formal conference committee meeting April 27. Behind-the-scenes negotiations will continue Friday and through the weekend—and until all details are finalized the initial agreements could fall apart.

Democratic leaders would like to have the final budget adopted next week as Obama marks his first 100 days in office.

"There is still work to be done, people to be checked with," said Senate Budget Chairman Kent Conrad, D-N.D. "Hopefully we can move forward next week."

The Senate voted on several motions to instruct conferees on Thursday. Meanwhile, White House negotiators—including Chief of Staff Rahm Emanuel and Office of Management and Budget Director Peter R. Orszag—were in the office of Senate Majority Leader Harry Reid, D-Nev., along with House Budget Chairman John M. Spratt Jr., D-S.C., Conrad said.

The inclusion of reconciliation instructions for the health care and student loan initiatives will be a sore spot for Republicans. The fast-track procedure will make the resulting bills immune to filibuster in the Senate, significantly reducing the GOP's leverage.

Democrats contend they only want to use reconciliation as a fallback option and would prefer to move health care through the regular order. Republicans are highly skeptical the fast-track process won't be used if available.

Technically, the budget measure simply instructs committees to find a certain amount of deficit savings. Any policies can be pursued to meet the target, but Democrats plan to focus on health care and education.

The budget is expected to instruct several committees—Finance and Health, Education, Labor and Pensions in the Senate and Ways and Means, Energy and Commerce, and Education and Labor in the House—to produce legislation later this year that would save $1 billion.

This would allow health care and student loan legislation to be moved later in the year through reconciliation.

The use of reconciliation and the amount of money to allocate to the annual appropriations bills have been the two biggest issues for negotiators to resolve. The House budget measure (H Con Res 85) contains reconciliation instructions, while the Senate budget (S Con Res 13) does not.

Negotiators also have a tentative agreement on how much to dedicate to the 12 annual appropriations bills. It would allow for a spending cap that is $10 billion less than the president requested for these bills, while retaining a House provision that would allow an additional $1.9 billion to be spent on a low-income energy assistance program (LIHEAP).

The Senate resolution included $15 billion less than the $1.096 trillion requested by the Obama administration, while the House resolution allocated about $7 billion less than Obama's proposal.

Conrad is against using the reconciliation process for policies other than deficit reduction bills. But congressional leaders and the White House at least want the option of using it to move a health care overhaul bill. Such legislation is a priority for Obama, and Democrats fear congressional Republicans will not cooperate with efforts to move it through the regular legislative process.

One outstanding question is what Conrad may get in exchange for not standing in the way of reconciliation provisions.

"Would I want things? Yeah," Conrad said.

Conrad and Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee, have long pushed for creating a task force that would write policy prescriptions for the government's long-term budget problems that Congress would have to vote on.

When asked if this proposal could in some way be part of a potential deal on the budget resolution, Conrad only would say that many things have been discussed.

Conrad said negotiators have an agreement to assume the Alternative Minimum Tax will be "patched" for three years without being offset by revenue-raisers or spending cuts. This would help negotiators show a deficit that weighs in at 3 percent of Gross Domestic Product by the end of the five years covered by the resolution.

Also as part of the tentative agreement, the budget would assume that preventing a cut in Medicare payments to physicians would not have to be offset over the first two years of the resolution.

The final resolution also is expected to include a provision requiring the House to pass a bill that would enact the pay-as-you-go rule into law before it could pass legislation to extend certain tax policies without offsets.

The House's budget conferees are Spratt, Rosa DeLauro, D-Conn., Allen Boyd, D-Fla., Paul D. Ryan, R-Wis., and Jeb Hensarling, R-Texas. The Senate will send Conrad, Gregg and Patty Murray, D-Wash., to the conference.

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