Lawmakers advancing much of Obama's budget agenda

A budget pact reached on Capitol Hill would give an endorsement to President Barack Obama's agenda by his 100th day in office while putting off a series of difficult decisions on health care, global warming and taxes.

House-Senate negotiators on Monday night announced the agreement on a $3.5 trillion budget outline for 2010, with votes expected in the full House and Senate by Wednesday.

The budget plan, although nonbinding, would give Democrats a stronger hand in advancing Obama's health care initiative this fall by allowing it to go forward without threat of GOP stalling tactics in the Senate.

But the budget pact also predicts dispiriting deficits that never get below $500 billion, even after the economy recovers and billions of dollars in financial rescue money are largely repaid.

Obama's Democratic allies are endorsing his top priority of expanding health care coverage for the uninsured and boosting funding for education and clean energy programs, but they're allowing his signature tax cut for most workers to expire after next year.

Senate Budget Committee Chairman Kent Conrad, D-N.D., announced the agreement and key details in a statement.

Most importantly, the congressional budget pact would prevent Senate Republicans from delaying or blocking Obama's plan to vastly expand government-subsidized health care when it advances this fall.

The $3.5 trillion plan for the budget year starting Oct. 1 embraces several of Obama's key goals besides a health care overhaul, including funds for domestic programs and clean energy, and a tax increase for individuals making more than $200,000 a year or couples making more than $250,000.

But the plan calls for extending most of the rest of former President George W. Bush's tax cuts for middle-class workers, investors and families with children.

Democrats would allow Obama's $400 tax cut for most workers, $800 for couples, to expire at the end of next year. The temporary tax cut was part of the economic stimulus plan enacted in February, and Obama has proposed to make it permanent by using revenues from his global warming initiative to defray the cost.

Even after squeezing the defense and war budgets to levels that are probably unrealistic, the plan would cause a deficit of $523 billion in five years.

"I think this is a good budget," Conrad said. But, he added, "Much more will have to be done to get us on a more sustainable course," including slowing the growth of benefit programs like Medicare and overhauling the tax code.

Under Capitol Hill's arcane rules, the annual congressional budget produces an outline for follow-up tax and spending legislation. The budget pact agreed to on Monday would allow Obama's health program to pass the Senate by a simple majority instead of the 60 votes that are needed for many other bills.

Obama and his Democratic allies say they still want support from Republicans for health care legislation but need the option of expedited action in case the debate becomes overly partisan.