House passes $3.6 trillion budget plan

Marking President Obama’s 100th day in office, the House voted 233 to 193 Wednesday to pass a $3.6 trillion budget agreement that maps a course to funding his top priorities in health care, energy, and education.

“We have a president’s budget on the floor that is a statement of our national values,” said Speaker Nancy Pelosi before the vote, which passed with no Republican support. “This is a magnificent blueprint for our future.”

The budget plan provides tax relief for families with incomes under $250,000. It also includes a fast-track option for passing health care reform and an overhaul of the student loan program.

In all, the plan represents a bold move to shift federal spending priorities, but comes at a cost of soaring federal deficits – the biggest sticking point going into final votes today.

“Most new presidents try to have a series of small victories before they go after anything big. This president is making a leap,” says Stanley Collender, a budget expert at Qorvis Communications in Washington.

The price tag – federal deficits of $1.2 trillion in FY 2010, down from the $1.8 trillion deficit expected this year – has been a showstopper for Republicans and some conservative Democrats. Seventeen House Democrats voted against the plan Wednesday.

“Budgets are supposed to be about tough decisions, and there are no tough decisions in this document,” said House Republican leader John Boehner, who dubbed the proposed budget “a most audacious move toward a big socialist government in Washington.”

On Tuesday, Democrats delayed the vote on the budget resolution to work out a deal with the fiscally conservative 51-member Blue Dog coalition. In a bid to win their support, House leaders agreed to move legislation to make pay-go rules, which require offsets for new spending or tax cuts, the law of the land.

“We cannot continue to kick this can down the road. With the president’s support, the Blue Dogs look forward to enacting PAYGO into law, a critical step toward putting the country back on a fiscally sustainable path,” said Rep. Charlie Melancon (D) of Louisiana, co-chair for communications for the Blue Dog Coalition, in a statement after Tuesday’s agreement.

But support in the Senate for this stand-alone bill is less likely. Sen. Kent Conrad (D) of North Dakota, who chairs the Budget Committee, says that the statutory pay-go proposal “sends a signal that we need to do more,” but isn’t the most effective strategy to rein in deficits.

“One thing that gets missed here is that we already have pay-go. All this adds is the threat of sequester,” or mandatory program cuts if the terms of pay-go are violated, he says, adding, “[T]he problem is that the trigger is rarely if ever been pulled in terms of sequester.”

“It also gives over to OMB [the White House Office of Management and Budget] control of the scoring and control of the baseline, and these are the guys that changed the baseline by $2.5 trillion earlier this year. And I fought that every step of the way,” he adds.

Meanwhile, Republicans are expected to oppose the budget resolution on a near party-line vote.

“So far this year, the most far-reaching legislation we’ve considered is the budget. In the middle of a recession, the same Democrats who were outraged over a $455 billion deficit last year came to us this year with a budget that would lead to trillion dollar deficits and which saddles Americans with more debt than all the debt we had accumulated from George Washington to the present day — combined," said Senate Republican leader Mitch McConnell on the floor of the Senate Wednesday morning.

The budget resolution doesn’t ensure that all elements of the plan will be funded. Spending decisions are worked out in the annual appropriations process. As a guiding document for members of Congress, the budget resolution does not require the president’s signature.

“Budget resolutions don’t guarantee that anything actually happens, but they certainly make it more likely that something will,” says budget analyst Mr. Collender.