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Senate Adopts $3.53 Trillion Budget Resolution

By David Clarke, CQ Staff

April 3, 2009 -- The Senate adopted its fiscal 2010 budget resolution Thursday night after a day of considering dozens of amendments.

The vote was 55–43, with no Republicans supporting the plan and two Democrats—Evan Bayh of Indiana and Ben Nelson of Nebraska—voting against it.

The House adopted its budget (H Con Res 85) on a 233 to 196 vote earlier Thursday with no Republicans voting for the proposal and 20 Democrats rejecting their party's fiscal blueprint.

While neither budget mirrors President Obama's proposal, they pave the way for implementing his proposals on health care, energy, and education. Getting these policies into law, however, will prove more difficult than getting a budget blueprint adopted.

Conference negotiations will focus on whether to include provisions that would, like the House plan, allow health care overhaul legislation move through the filibuster proof reconciliation process and how much in discretionary spending should be provided to the Appropriations panels to write the 12 annual spending bills.

The Senate plan (S Con Res 13) would provide the Appropriations panel with $1.08 trillion, which is $15 billion less than the president requested and about $8 billion less than the House resolution.

The Senate budget (S Con Res 13) would total $3.53 trillion in fiscal 2010, which is slightly below the $3.6 trillion proposed by President Obama. Senate Budget Chairman Kent Conrad, D-N.D., had to scale back some of Obama's proposals to show lower debt and deficit levels than were contained in an assessment of Obama's proposal by the Congressional Budget Office.

For instance, the budget does not make room to extend Obama's "Making Work Pay" program, which provides a payroll tax credit of $400 per individual and $800 per couple to most workers, beyond its expiration at the end of 2010.

It also assumes that the Alternative Minimum Tax will be "patched" in the first three years of the budget, so middle class tax bills do not rise, but not the last two, or that the cost of patching it will be offset with other tax increases or spending cuts. Obama's budget assumes the AMT is patched each year over the next 10 years.

"I wish to make clear that this budget is responsible, it controls spending, it reduces the deficit by two-thirds, it extends the middle-class tax cuts, and it adopts the president's priorities of reducing our dependence on foreign energy, putting a focus on excellence in education, and providing the possibility of major health care reform," Conrad said. "Those are the priorities of the American people, and they are contained in our budget."

Debate Marked by Partisan Divide
As is usually the case, the debate over the budget was partisan with little agreement among the two parties on substantive issues.

Republicans panned the proposal, repeating the mantra that it "spends too much, taxes too much, and borrows too much."

Even though the Senate plan would pare back Obama's budget, the deficit picture it projects is bleak as Congress struggles with how to deal with the faltering economy's affects on revenues and spending.

The Senate budget shows a deficit of $1.7 trillion in fiscal 2009 and $1.2 trillion next year. It then steadily drops, hitting $507.6 billion in fiscal 2014. Those figures have moderate Democratic senators worried especially because there is little guarantee Congress will keep within the spending or tax levels outlined in the budget going forward.

Senate Republican leaders decided not to introduce their own alternative believing the best strategy was to fire amendment after amendment at the Democrats' plan.

But Sen. John McCain of Arizona, the GOP's 2008 presidential candidate, produced his own plan, which was voted down 38 to 60 Thursday.

It focused on reducing spending and providing more tax breaks—a policy Democrats argued would short-change key programs and keep the economy in the ditch. No Democrats voted for the proposal and three Republicans voted against it: Sens. Olympia J. Snowe of Maine, Susan Collins of Maine, and Bob Corker of Tennessee.

It called for $17.5 trillion in spending over the next five years, $1.15 trillion less than Obama's plan, $776 billion less than the House budget, and $435 billion less than the Senate blueprint, according to a chart provided by McCain's office.

Most of his cuts focused on entitlement programs such as Medicare, Medicaid, and Social Security, spending $922 billion less than Obama over the next five years on those and other entitlement programs and $3.1 trillion less over 10 years, according to his office. It also sought to extend all of the 2001 and 2003 tax cuts (PL 107-16, PL 108-27) and keep discretionary spending at lower levels than in the Democrats' plans.

"Tough decisions have to be made," McCain said on the floor.

Democrats criticized McCain's approach as too harsh.

"Colleagues, if you want to be voting for cuts that could be $350 billion in Medicare and Social Security, vote for the McCain alternative," Conrad said on the floor. "If you do not think that is a real good idea, stick with the budget that is before us."

Republicans were able to score one victory on the estate tax with the help of 10 Democrats.

Under current law the estate tax—now with a top rate of 45 percent with an exemption of $3.5 million per person—will disappear Jan. 1, 2010, and will return with higher rates and lower exemptions in 2011.

Sen. Blanche Lincoln, D-Ark., offered an amendment, adopted 51–48, that she worked out with Sen. Jon Kyl, R-Ariz., that adjusts the budget to accommodate a 35 percent rate and an inflation-adjusted $5 million per-person exemption on the estate tax. It would create a deficit-neutral reserve fund that would require unspecified revenue-raising offsets to cover the cost, which is estimated at $28 billion over five years and $85 billion over 10 years, according to Lincoln's office.

Reid spoke out strongly against the amendment.

But right after adopting Lincoln's amendment, the Senate adopted, 56–43, an amendment offered by Sen. Richard J. Durbin, D-Ill., to create a point of order against any legislation providing additional estate tax relief beyond what is assumed in the resolution unless an equal amount of tax breaks are provided to those making less $100,000 a year.

Uneasy Democrats
The debate also made clear there is unease among many Senate Democrats about Obama's proposal to implement a cap-and-trade system for carbon emissions that would raise $646 billion in revenue over 10 years.

Senators from industrial states are worried it could cost jobs and cause their constituents energy bills to rise sharply.

The chamber adopted, 65–33, an amendment offered by Sen. Lindsey Graham, R-S.C., to create a 60-vote point of order against any legislation that includes any energy tax increases that would affect individuals with annual incomes of $200,000 or less, or married couples with incomes of $250,000 or less. Twenty-six Democrats supported Graham's proposal.

Other Amendments
The Senate rejected, 43 to 55, a motion to send the budget back to committee so that funding could be cut. Two Democrats supported the motion: Sens. Evan Bayh, D-Ind., and Ben Nelson, D-Neb.

Other amendments included: 

  • By John Ensign, R-Nev., to adjust the resolution to accommodate a requirement that participants in Medicare's prescription drug program with annual incomes exceeding $85,000 for individuals or $170,000 for couples pay a higher monthly premium than other seniors. Obama proposed similar means testing in his budget, but Senate Finance Committee Chairman Max Baucus, D-Mont., urged a "no" vote. Baucus said his committee needs flexibility as it prepares a health care overhaul. Rejected, by a 39–58 vote.
  • By Bernard Sanders, I-Vt., calling for Federal Reserve banks to identify institutions getting assistance under federal lending programs, the amount, and how the funds are being used. Adopted, 59–39.
  • By Christopher J. Dodd, D-Conn., to set up a deficit-neutral reserve fund for subsequent legislation to allow for audits of the Fed's emergency actions to stabilize the economy over the past year. It also calls for the Fed to publicly disclose, on its Web site, the details of the lending facilities created to address the current economic crisis. Adopted 96–2.
  • By Jack Reed, D-R.I., essentially reasserting that funds provided by last year's $700 billion financial rescue law (PL 110-343) should be spent to help save homes, shore up small businesses and the municipal bond market, and expand credit, among other purposes. Adopted 56–42.
  • By David Vitter, R-La., to adjust the spending levels in the budget for the purpose of recovering $272 billion in funding approved as part of last year's bailout law, although separate legislation would be needed to accomplish this task. Rejected, 28–70. 


By Charles E. Grassley, R-Iowa, to make room for later legislation to "patch" the alternative minimum tax for five years. Rejected, 40–58.

Chuck Conlon and Richard Rubin contributed to this report.

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