Obama on the Hill -- and on the Budget
By Shailagh Murray
President Obama pitched his budget blueprint to a supportive audience of Senate Democrats this afternoon, urging lawmakers to preserve his top health care, energy and education priorities, even as they cut deeply into other domestic initiatives to reduce the ballooning deficit.
"It was vintage Obama. He made us all feel content and inspired by where we need to go," said Senate Majority Leader Harry Reid (D-Nev.).
"He reiterated what he said before, that he never had any expectation that the budget would just be rubber-stamped and adopted without change," noted Sen. Evan Bayh (D-Ind.), a member of a group of Democratic moderates who signed a letter to Budget Chairman Kent Conrad (D-N.D.), asserting that revised deficit projections from the Congressional Budget Office "are simply not acceptable."
Bayh said Obama appeared to have gotten the message. "He knew this would be a collaborative process," the senator continued. "The tenor was very cooperative, it was non-confrontational, and he was very realistic." Bayh said Obama conceded, "These are tough financial times. It's going to be difficult to strike the right balance."
Conrad made a series of adjustments to Obama's proposals that would reduce borrowing by $600 billion over the next five years. When the chairman presented his version to Senate Democrats at a luncheon yesterday, he won early approval from some signatories.
"It's improving," said Sen. Mary Landrieu (D-La.).
Participants said the Obama luncheon touched on few specifics, with Obama advocating the preservation of his main goals, and senators offering mostly laudatory comments, while posing few challenging questions. No one brought up the deficit or the controversial "reconciliation" process that some Democrats are urging Obama to pursue in the Senate, as a way of preventing a filibuster of major bills such as health-care reform.
Landrieu, another moderate signatory of the Conrad letter, did urge Obama to reconsider his proposed tax increases on the oil and gas industries, and the president responded that his initiatives are not free. Landrieu told reporters after the meeting the she understood Obama's position on the issue.
Sen. Ben Nelson (D-Neb.), another moderate, said of the mood in the room, "there was no tension whatsoever." He continued: "I don't think he's surrendered anything. What he's doing is he recognized the process. He put out his proposal, and now we put out our proposal, and we go to work on it.... Then we see how together we are."
Nelson said he preferred less domestic discretionary spending than even the reduced amount that Conrad has offered. "I don't think that's an ending point, from my standpoint," Nelson said. The House budget proposal includes $7 billion more in non-defense spending than the Senate version, whereas Obama is proposing $14 billion more than Conrad's bill, for the 2010 fiscal year. All three versions would allocate the same amount to defense-related spending.
Conrad also would jettison the $250 billion Obama included in his budget for the Treasury Department's ongoing bailout of the financial system. In addition, Conrad has pressed back into service some Bush-era budget maneuvers that Obama wants to eliminate. Instead of a 10-year budget that shows deficits steadily accumulating, for example, Conrad is proposing a five-year spending plan.
And Conrad assumes that the alternative minimum tax will strike millions of middle-class families, generating billions of additional dollars in 2013 and 2014, although Congress has acted repeatedly to prevent that. To meet his goals of reducing the deficit, Conrad has said he would leave out new spending for Obama's proposed expansion of health care coverage, a program likely to cost in excess of $1 trillion over the next 10 years, as well as the president's proposal to make permanent an $800 tax credit for working families.
Lawmakers would be free to adopt those policies as long as they did not increase the deficit, Conrad said. That means health care reform would have to be accompanied by tax increases or spending cuts equal to its entire cost, not just the $634 billion down payment Obama has proposed. And the president's middle-class tax credit, dubbed the Making Work Pay credit, would have to be scrapped unless it were paired with a money-raising initiative of equal value. The benefit was included in the stimulus bill that Obama signed in February, and under Conrad's plan would expire in two years unless Congress acts.
White House budget director Peter Orszag reacted favorably to the Senate blueprint today, saying it would "fulfill the president's objectives" on health care, education, clean energy and deficit reduction. He acknowledged that the Making Work Pay credit may be lost but said the administration has "two years to figure this out" before the temporary version of the credit -- established in the recent economic stimulus package -- expires.
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