Lawmakers poised to make cuts to Obama's budget

WASHINGTON — Congress will begin rewriting President Barack Obama's $3.55 trillion fiscal 2010 budget Wednesday, and key lawmakers are poised to change some of his most ambitious plans significantly.

"There will be change, there's no question," said Sen. Dianne Feinstein, D-Calif., a Senate Appropriations Committee member.

The House of Representatives and Senate budget committees hope to cut hundreds of billions of dollars from the president's outline.

Obama originally proposed a 10.1 percent increase in key nondefense domestic spending last month, according to Senate Budget Committee estimates, and Committee Chairman Kent Conrad, D-N.D., wants to hold the increase to about 7 percent. Conrad also wants to eliminate a $250 billion reserve that Obama wants for future bailouts of troubled companies.

The committees are unlikely to back resorting to a controversial legislative tactic that would make it easier to win Senate approval of carbon emission curbs, however.

The president, who plans to meet Wednesday at the Capitol with Senate Democrats, is contending that he will have succeeded if the final budget achieves four general goals: making a "down payment" on a health care overhaul; creating a "path to energy independence"; overhauling education; and cutting the "inherited" deficit in half by 2013.

Few lawmakers from either party would disagree with those principles, but they're sharply divided over how to attain them — and alarmed by new deficit projections.

Obama's budget estimated that the 2010 deficit would reach $1.17 trillion, but the nonpartisan Congressional Budget Office last week projected the figure at $1.4 trillion. The CBO also issued new, dire warnings about the future. By 2019, it said, debt held by the public would double to 82 percent of the gross domestic product if the president's budget becomes law.

The new figures have made Democratic budget leaders in Congress more aggressive about cutting Obama's budget. Conrad will offer a plan Wednesday to cut the deficit to $508 billion by fiscal year 2014.

Among the changes that are being seriously discussed:

—The non-filibuster rule. The president's budget team has considered using the budget "reconciliation" process to bring up complex changes in health care and carbon emissions "cap-and-trade" measures. That tactic permits the Senate to enact budget-related bills with only a simple majority of the 100-member body.

Usually Senate rules permit a minority to hold up legislation until 60 members vote to move to a final vote. Democrats control 58 Senate seats, so they could ram big programs through under "reconciliation." Republicans object, however, and even some Democrats remember that when they were in the minority, they valued minority-protection rules.

The House Democratic Blue Dog Coalition, a group of 51 party moderates, has made it clear that it doesn't want the reconciliation process used to change policy. Also, senators from industrial states, worried about the impact of a cap-and-trade system to limit emissions from the auto industry, are voicing concern.

Still, House Democratic leaders are balking at abandoning the tactic for winning an overhaul of health care.

Using the tactic could wound already-bruised relations with Republicans. Sen. Susan Collins, R-Maine, who cast a crucial vote for last month's economic stimulus package, said she flatly opposed using the tactic for such big issues.

"Reconciliation should not be used to implement a major policy change," she said. "It's unfair to those who hold minority views."

—The financial rescue plan. Obama's budget lists a $250 billion "placeholder" aimed at giving more help to ailing industries, but Congress seems in no mood to provide it. Since the first major bailouts last fall, lawmakers have heard repeatedly from angry constituents who oppose government aid to shaky companies.

"I don't think it should stay in. I don't think there's enough support for any additional rescue plans at this point," said Sen. Ben Nelson, D-Neb., a key moderate.

Senate Majority Leader Harry Reid of Nevada agreed. "I have no problem with that. ... If it's an emergency we can do it."

—Nondefense discretionary spending. The Senate Budget Committee says the president wants a 10.1 percent increase in domestic discretionary spending, which includes most education, labor, transportation and other popular programs.

The Blue Dogs want spending on these programs held to the rate of inflation, which is nearly zero, and Senate moderates also are concerned about runaway spending. Conrad is expected to recommend a 7 percent spending increase, but that's going to be a hard line to hold in the House, where liberals have more clout.

This looms as one of the biggest budget battles. A coalition of liberal groups began mobilizing Tuesday against major cuts from Obama's wish list, and House leaders, many of them sympathetic to liberal causes, are said to be balking at cuts too.

—Pell grants. Currently, Congress and the president decide each year how much money this program to aid lower-income students should receive. Obama wants to make it an "entitlement," guaranteeing that it would get a certain level of funding each year.

He's proposed a maximum award of $5,550 for the 2010-11 school year, a sum that would be indexed to the rate of inflation plus 1 percent annually after that. Conrad would preserve Obama's increases, but wouldn't make the grants a full entitlement program, meaning that Congress would have more discretion to make changes each year.

Rep. Paul Ryan of Wisconsin, the top House Budget Committee Republican, said that while he backed Pell grants, the president's plan would make it "another autopilot entitlement, immune from congressional oversight at precisely the time when we should be reforming" entitlements.