* Appropriations committees spar over Obamacare, IRS funding
* Obama hails first annual budget bill passed since 2009
* Senators vow to change military pension cuts
By David Lawder and Richard Cowan
WASHINGTON, Dec 18 (Reuters) - The U.S. Senate passed a two-year budget deal on Wednesday to ease automatic spending cuts and reduce the risk of a government shutdown, but fights were already breaking out over how to implement the budget pact.
By a vote of 64-36, the Senate sent the measure to President Barack Obama to be signed into law, an achievement for a divided Congress that has failed to agree on a budget since 2009.
“All told, it’s a good first step away from the shortsighted, crisis-driven decision-making that has only served to act as a drag on our economy,” Obama said in a statement.
He also urged Congress to pass an extension of long-term unemployment benefits that expire at year-end for some 1.3 million jobless Americans, a move sought by Democrats that was not part of the deal struck by Republican Representative Paul Ryan and Democratic Senator Patty Murray.
The budget measure, passed in the House of Representatives last week by an overwhelming margin, restores overall fiscal 2014 spending levels for government agencies to $1.012 trillion, trimming the across-the-board budget cuts that were set to begin next month by about $63 billion over two years.
It pays for the additional near-term spending with a variety of other savings, including increased airport security fees paid by airline passengers and pension benefit cuts for new federal employees and working-age military retirees.
Wednesday’s vote fired the starting gun on a mad dash by the House and Senate Appropriations committees to assemble a massive spending bill that implements the deal and carves up the funding pie among thousands of government programs from national parks to the military.
Without the new spending authority, the federal government on Jan. 15 could partially shut down, as it did for 16 days last October.
Not surprisingly, one of fights ahead involves funding of “Obamacare,” the president’s signature healthcare law, according to Republican and Democratic aides in the House and Senate.
“It’s one of many flashpoints,” said a House Republican aide who asked not to be identified, adding, “But it’s not insurmountable.”
Republicans are warning that they will not tolerate any increase in funding for administering the troubled health insurance reform law. Democrats hope to maintain or add small amounts of money for the program they say will provide healtcare to millions of previously uninsured people.
As is the case with all spending bills in a deeply divided Congress, there are plenty of other disagreements besides the Obamacare funding level.
Among the most difficult will be money for the Internal Revenue Service, the nation’s tax collector; funds for western wildfire fighting and for the Yucca Mountain, Nevada, nuclear waste repository.
Separate battles also could be waged over policy proposals that House Republican leaders are likely to attach to the funding bill.
These could include forcing the Obama administration to approve a controversial Keystone oil pipeline from Canada to the U.S. Gulf of Mexico.
There also could be moves to stop the Environmental Protection Agency from enforcing carbon emissions regulations that the coal industry hates and to block federal money for building a California high-speed train.
Given all of the disagreements, one House Democratic aide familiar with the appropriations process that is under way warned: “Nobody should be getting ahead of themselves; it’s not a given that we’re out of the woods” in passing the bill that would carry out the budget deal and avoid a Jan. 15 government shutdown.
The budget plan won support from some of the most conservative House members, as well as nine Republicans in the Senate.
But congressional aides said there nonetheless are worries that some of those conservatives might balk at the prospect of voting for a $1 trillion spending bill that wraps a slew of controversial programs into one gigantic package.
“There was broad bipartisan support for the (budget) deal. There should be the same broad bipartisan vote for the package implementing that deal,” said the House Democratic aide, adding, “This is a very open question.”
The House Republican aide echoed those concerns.
The budget measure passed over objections from senators in both parties to a pension benefit cut for military retirees, vowing to make changes to the provision before it takes effect in 2015.
The plan provides $6 billion in 10-year savings by reducing annual cost of living adjustments for retirees under age 62, who often draw pensions while pursuing a second career outside the military. But some Republicans said the bill’s language would also apply the reduction to veterans who had to retire because of war wounds - not what they intended with wars in Iraq and Afghanistan still winding down.
“The military retiree provision is a pay-for that has got everybody wondering. And upon a second evaluation, it’s probably, certainly not the right thing to do,” said Senator Lindsey Graham, a South Carolina Republican.