April 30, 2009 / 12:32 AM / 11 years ago

U.S. Congress approves compromise budget blueprint

WASHINGTON (Reuters) - The Democratic-controlled U.S. Congress Wednesday approved a $3.4 trillion compromise budget plan for the 2010 fiscal year, clinching a big victory for President Barack Obama on his 100th day in office but with no Republican support.

President Barack Obama gestures during his 100-day anniversary news conference in the White House East Room in Washington April 29, 2009. REUTERS/Larry Downing

The nonbinding plan sets parameters for spending and tax legislation for the upcoming fiscal year that begins on October 1 and mirrors most of what Obama had sought, but Republicans blasted it for exploding the debt and undermining the ailing economy.

Obama has argued that the budget and the $787 billion economic stimulus package were necessary to heal the economy and reverse what he says has been neglect of programs like education and healthcare.

“We have to lay a new foundation for growth, a foundation that will strengthen our economy and help us compete in the 21st century and that’s exactly what this budget begins to do,” he told an evening news conference.

Democratic Senator Kent Conrad, chairman of the Senate Budget Committee, told reporters, “For every one of his (Obama’s) key priorities, reducing dependence on foreign energy, making possible healthcare reform, a focus on excellence in education, none of those things could have been pursued effectively without this budget.”

The House approved the Democratic-written budget resolution without any Republican support on a vote of 233-193, while the Senate voted 53-43, also without any Republican support. Seventeen House Democrats and four Senate Democrats also voted against the budget plan.

“We have spent in the first 100 days $12 billion a day, we are running up the deficit and the debt at an alarming rate and we’re growing the size of the government in a way that future generations are going to have to pay for it,” said Republican Senator Lindsey Graham.

The resolution includes language that would enable the Democrats to expedite under special rules the consideration of healthcare reform legislation despite fierce Republican opposition to such a route.

Democratic leaders have said they will try the normal legislative route first.

The budget forecasts $1.2 trillion in red ink for fiscal 2010 before falling to $523 billion by 2014. House Democratic leaders had to make some promises to assuage fiscally conservative members of their party who were worried about rising deficits amid a deep recession.

In one bit of intrigue, Senator Arlen Specter, who switched parties to become a Democrat Tuesday in a move aimed at winning re-election next year, voted against the budget plan. He voted against the original version earlier this month too.

“SO MUCH UNCERTAINTY”

Republicans seized on new data that showed the U.S. economy shrank at a 6.1 percent annual rate during the first quarter of 2009, steeper than expected. They argued that the data, coupled with some tax hikes and aggressive spending in the budget, would make the situation worse.

“This budget creates so much uncertainty on the part of investors, on the part of families, I don’t see how we’re going to work our way out of this economic doldrums,” said Representative Eric Cantor, a member of the House Republican leadership.

While the five-year budget outline is largely in line with Obama’s own proposed budget, it drops some provisions he sought and leaves out many of the details for overhauling healthcare and energy policies that are expected this year.

Facing huge annual budget deficits, lawmakers cast aside Obama’s requests for Congress to extend his signature tax cut for low- and middle-income workers beyond 2010 and left out additional money for the $700 billion financial bailout fund.

The budget does include provisions for $764 billion in tax cuts and calls for making permanent the current 45 percent rate for the estate tax, with the first $3.5 million tax-free for individuals and $7 million for couples.

It would also let some Bush-era tax cuts for the wealthy expire at the end of next year, a move Republicans have criticized. The Democrats’ budget also sets some $130 billion for the U.S. wars in Iraq and Afghanistan in fiscal 2010.

To temper growing concerns among some Democratic fiscal hawks in the House, leaders there made it clear they would let certain tax law changes advance — like middle-class tax cuts and the estate tax — only if they were paid for with spending cuts or other tax increases.

Editing by Peter Cooney

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