Senate bill aims to avert shutdown, lacks key budget powers

U.S. Senator Barbara Mikulski (D-MD) (C) is applauded by fellow female members of the U.S. Senate while addressing the second session of the Democratic National Convention in Charlotte, North Carolina September 5, 2012.

WASHINGTON (Reuters) - Senate Democrats on Monday unveiled legislation to prevent a government shutdown this month, but the measure stops short of giving agencies broad new powers to rearrange their budgets to limit pain from automatic spending cuts.

But the bill from Senate Appropriations Committee Chairman Barbara Mikulski of Maryland contains dozens of targeted spending adjustments for areas such as transportation, health and national parks that could provide some limited relief from the $85 billion in automatic cuts triggered on March 1.

The measure builds on a similar bill passed last week by the House of Representatives by including updated spending plans for scientific activities such as NASA as well as the Commerce, Justice, Agriculture and Homeland Security departments.

Like the House measure, the Senate bill also includes similar spending updates for the Defense Department and Veterans Administration, according to a summary released by Mikulski's staff. The updates allow agencies to shift money from outdated, unwanted projects to higher priority activities.

The Senate bill would keep government agencies funded for the remainder of the fiscal year ended September 30, but makes no effort to replace $85 billion in automatic spending cuts known as the sequester.

Without new funding legislation, known as a continuing resolution, government agencies would face a broad shutdown on March 27.

"We must prevent a government shutdown," Mikulski said in a statement, adding that the plan "improves the House CR (continuing resolution) for many critical priorities and lets us wrap up fiscal year 2013 so we can get to next year's budget and find a balanced solution to sequester."

Senate Democrats and House Republicans will unveil dueling budget plans this week, launching the next phase of Washington's long-running battle over how to tame the $16.7 trillion U.S. debt.

Mikulski had hoped to offer agencies further flexibility to shift funds between budget accounts and activities, but Republicans objected that it would hand over too much control to the Obama administration in violation of the constitutional powers that Congress holds over spending matters

The legislation was co-authored by Republican Senator Richard Shelby of Alabama.

Senate Republican aides said they had fought to keep the bill free of any provisions that had not previously been approved in spending legislation passed in the House last year. They had feared Democrats would try to use the measure as a "Christmas tree" for individual spending adjustment requests.

The bill's authors rebuffed a request from the Treasury Department to shift $65 billion from one account within the International Monetary Fund to another to help fund an increase in U.S. voting power within the institution.

As IMF funding is a controversial issue for some lawmakers, especially during a tense budget environment, they opted not to include this provision, which also would have the added effect of helping China and other large emerging economies increase their voting power at the IMF.

(Reporting By David Lawder; Editing by Paul Simao)