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The Honolulu Advertiser
Posted on: Thursday, March 26, 2009

Congress, Obama closer on budget

 •  Obama campaigns, fundraises

By David Espo and Andrew Taylor
Associated Press

THE HIGHLIGHTS

Highlights of the proposals of President Obama, House Democrats and Senate Democrats for the 2010 budget year starting Oct. 1.

SPENDING

Obama: $3.7 trillion in total government outlays, including $1.4 trillion for defense and domestic programs funded through appropriations bills, and $130 billion in new money for the wars in Iraq and Afghanistan. Benefit programs such as Medicare and Social Security, as well as interest on the $11 trillion national debt, account for most of the rest.

House: $3.6 trillion, largely tracking the president's proposal, except for $125 billion in both 2009 and 2010 sought by Obama for a further financial stabilization. Projects slightly slower growth in long-term spending.

Senate: Slows spending growth slightly more over the long term.

TAXES

Obama: Extends President Bush's tax cuts on income and investments, as well as benefits for married couples and people with children — except for individuals making $200,000 a year or couples earning $250,000 a year. Permanently addresses alternative minimum tax so more than 20 million taxpayers don't get tax increases averaging $2,000 a year, and extends $400 "Making Work Pay" tax credit for most workers and $800 for couples after it expires next year.

House, Senate: Generally track Obama, except $400-$800 tax credit and AMT relief expire after 2010.

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WASHINGTON — In a spring show of unity, congressional Democrats welcomed President Obama to the Capitol yesterday and unveiled budget blueprints that embrace his key priorities and point the way for major legislation this year on healthcare, energy and education.

Even so, both the House and Senate versions lack specifics for any of the administration's signature proposals. And Democrats decided to cut spending — and exploding deficits — below levels envisioned by Obama.

Administration officials and congressional leaders said any differences were modest.

"This budget will protect President Obama's priorities — education, energy, healthcare, middle-class tax relief, and cut the deficit in half," Senate Majority Leader Harry Reid, D-Nev., said after the chief executive met with rank-and-file Democrats.

Earlier, White House Budget Director Peter Orszag said the congressional budgets "may not be identical twins to what the president submitted, but they are certainly brothers that look an awful lot alike."

Neither house included the $250 billion that the administration seeks for any future financial industry bailout. Additionally, both House and Senate Democrats assume in their version that Obama's $400 tax credit for most workers will expire after 2010 and fail to permanently extend relief from the alternative minimum tax.

Those tax cuts can be kept in place in 2011 and beyond if lawmakers find offsetting revenue to pay for them, said Kent Conrad of North Dakota, chairman of the Senate Budget Committee.

The House and Senate plans both call for spending $3.6 trillion in the year that begins Oct. 1, according to the Congressional Budget Office, compared with $3.7 trillion for Obama's plan.

The House plan foresees a deficit of $1.2 trillion for 2010 but would cut that to $598 billion after five years. The comparable Senate estimates are $1.2 trillion in 2010 and $508 billion in 2014.

Obama's budget would leave a deficit of $749 billion in five years' time, according to congressional estimates — too high for his Democratic allies — and would grow to unsustainable levels exceeding 5 percent of the economy by the end of the decade.

Sen. Judd Gregg, R-N.H., said the president had laid out a "blueprint to move the government dramatically to the left ... hard left."