Congress’ budget is a red flag for Obama

WASHINGTON —  The broad outlines of the $3.5-trillion spending blueprint that Congress approved this week hews closely to President Obama’s spending targets and pays homage to his ambitious agenda. But the fine print contains a sobering warning about his marquee initiatives on healthcare, energy, education and economic recovery.

Congress’ message: We can’t do it all at once.

Both the House and Senate budget resolutions, which set guidelines for future spending, give the green light to a sweeping overhaul of the healthcare system, but only if the president comes up with an acceptable way to fund it. The resolutions do not block action on Obama’s global warming initiative, but a bipartisan coalition has dashed administration hopes of moving it on a fast track.

And the Democratic majorities in the House and Senate will probably eventually appropriate what Obama needs to shore up the banking and financial system, but their budget writers refused to set aside in the resolutions the $250 billion he wanted for that contingency.

“In Congress, they are saying: ‘Mr. President, this is more than the political traffic will bear,’ ” said William A. Galston, a political analyst at the Brookings Institution.

“They are not prepared to say no to Obama, but they haven’t figured out how to say yes.”

The House approved its budget resolution Thursday evening, 233-196, with no Republican support and 20 Democrats joining the opposition. In the Senate’s 55-43 vote, no Republican voted for the budget and two Democrats -- Sens. Ben Nelson of Nebraska and Evan Bayh of Indiana -- voted against it.

Negotiators will iron out the relatively small differences between the two measures in a conference committee after Congress returns in mid-April from a two-week spring recess. The measure does not have to be signed by the president.

The final budget resolution will not be binding but it is a telling measure of the extent -- and limits -- of Congress’ commitment to tackling so many major issues in a relatively few months as the president requested.

In both chambers, Democrats argued that the budget should shore up the economy in the short term, but also lay the groundwork for long-term economic growth with spending on education, health and energy.

Those ambitious goals were made substantially harder to achieve after the Congressional Budget Office, using less optimistic assumptions about the economy’s future performance, recently estimated that the deficit over the next 10 years would be more than $2 trillion bigger than the $7-trillion gap Obama’s aides had projected two months ago.

“When you lose $2.3 trillion in revenue because of the new CBO forecast, we felt it was necessary to make adjustments in the president’s budget while maintaining his priorities,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.).

Republicans said the budget would still saddle future generations with an insupportable debt burden. They offered alternatives that would freeze spending for 10 years and propose more tax cuts.

“We need to be adults and tackle these fiscal problems before they tackle us,” said Rep. Paul D. Ryan of Wisconsin, ranking Republican on the House Budget Committee. Responding to Democratic complaints about the GOP’s proposed spending limits, he said: “Guilty as charged! Yes, we need to cut spending. Wow! I said it! In Washington!”

The differences between the plans of congressional Democrats and Obama are relatively small, and administration officials say they are unconcerned.

“Our proposals will have to be nipped and tucked along the way,” said Kenneth Baer, spokesman for Obama’s Office of Management and Budget. “The president is clear that everyone is going to have to make sacrifices. . . . Things he campaigned on had to be modified.”

But for a new president who is now presumably at the height of his power and popularity, even small differences are red flags -- warnings about what aspects of his agenda need a bigger White House push even within his own party.

The Senate budget did not make room for an extension of the middle-class tax cut that was a pillar of Obama’s campaign platform, the $400 break for working people.

And rather than find a way to pay for a healthcare overhaul, the budget simply stipulated that the cost of any such plan must be matched with tax increases or spending cuts in other areas.

Obama’s budget proposed a $634-billion fund for his health initiative, an amount he said was a “down payment” on costs that would be at least twice that.

The budget also points to how wary Democrats remain about raising taxes -- even on the upper-income people they say could afford to pay more. Obama’s proposal would pay for his health plan by reducing tax deductions, including breaks for charitable contributions, that can be taken by families earning more than $250,000 a year.

That has gone over like a lead balloon, with charities fiercely opposing it, saying it would undercut their fundraising.

Obama’s proposal to tax employer-provided health insurance benefits to finance a healthcare overhaul also faces opposition from many quarters.

The major House-Senate differences that will face negotiators writing the final compromise bill this month are not over what Obama wants, but how he wants Congress to handle it.

The administration is encouraging Congress to consider moving its major health, energy and education initiatives through the so-called reconciliation process, in which spending and tax measures bills are considered with limited amendments and debate.

That would prevent Republicans from blocking such legislation by filibuster in the Senate.

Republicans oppose that move bitterly as a partisan power play.

So do some Democrats who see it as the nail in the coffin of bipartisanship.

Neither the House nor Senate budget resolutions would allow the process to apply when considering Obama’s plan to curb greenhouse gas emissions.

That plan has produced one of Congress’ rare displays of bipartisanship -- in opposition to Obama. Many moderates and coal-state Democrats have joined with Republicans in opposing the “cap and trade” plan, in which total emissions would be capped and companies could buy or sell credits to emit pollutants up to that limit.

During debate on the budget this week, the Senate approved, 67-31, an amendment to prevent the climate change issue from being considered through the reconciliation process.

Twenty-four Democrats backed the amendment, including Nebraska Sen. Nelson.

“It’s a deal-breaker,” said Nelson, a moderate who is a key swing vote on the budget.

The House budget resolution calls for Obama’s health and education initiatives to be expedited through reconciliation; the Senate’s resolution does not. But in recent days, Senate Democrats have signaled that they are more open to that strategy, a shift that could ignite partisan warfare.

All 41 Senate Republicans this week sent a letter to Democratic leaders protesting the prospect of expediting the health legislation, saying that it “violates the principle of bipartisanship to which President Obama and congressional leaders have publicly committed.”

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janet.hook@latimes.com