Democrats close to 2010 U.S. budget final passage

Speaker of the House Nancy Pelosi arrives at a news conference on Capitol Hill, December 2, 2008.

WASHINGTON (Reuters) - Democrats in the U.S. Congress are steering toward passage this week a $3.4 trillion budget plan that sets the stage for a sweeping overhaul of U.S. healthcare later this year, a major priority for President Barack Obama.

The House of Representatives is expected to debate Congress' final version of a fiscal 2010 budget blueprint on Tuesday, with the Senate hoping to pass it a day later.

If they succeed, Democrats will further enhance Obama's legislative accomplishments within the first 100 days of his presidency, a period that ends on Wednesday.

But most Republicans are expected to vote against the measure, claiming it spends too much money and undermines Obama's call for bipartisanship by including a provision that would allow Democrats to fast track healthcare reform through Congress if necessary.

Obama, fighting to dig the country out of its worst financial crisis in decades, says the big spending plan is central to helping the economy. But Republicans, still smarting from their November election defeats, have sought to use it to portray Obama as a liberal big spender.

Senate Budget Committee Chairman Kent Conrad, a Democrat, called it a "good budget" but warned that "much more will have to be done to get us on a sustainable course." He was referring to containing spiraling costs of federal retirement and healthcare programs for the poor and elderly.

Representative Paul Ryan, the senior Republican on the House Budget Committee, called the fiscal blueprint "the most irresponsible budget I've ever seen" with its deficits that will total hundreds of billions of dollars each year.

The budget is non-binding, but it provides guidelines for upcoming tax and spending bills Congress could consider.

Conrad said he thought that the healthcare fast-track procedure, which aides said the White House wanted even though it has incensed Republicans, was unlikely to be employed. Senators from both parties said efforts instead were underway to pass a healthcare bill with broad support.

"We are determined, if we can, to achieve a result that would get 70 to 75 votes in the (100-member) United States Senate on this issue," said Senator Christopher Dodd of Connecticut, a main negotiator.

Besides healthcare, the Democrats' budget would make major new investments in domestic programs such as education.

Conrad said it includes $764 billion in tax cuts and will make permanent the current 45 percent rate for estate tax, with the first $3.5 million tax-free for individuals and $7 million for couples.

Republicans want a higher threshold for exemptions and a lower tax rate.

Facing an estimated $1.4 trillion budget deficit next year as the U.S. economy reels from an economic recession, Democrats said their budget will cut the red ink in half by 2012 and by two-thirds, to 3 percent of GDP, in 2014.

(Additional reporting by Thomas Ferraro and Donna Smith; Editing by Eric Walsh)