Congress adopts budget plan

WASHINGTON (AP) " Democrats in Congress capped President Barack Obama's 100th day in office by advancing a $3.4 trillion federal budget for next year " a third of it borrowed " that prevents Republicans from blocking his proposed trillion-dollar expansion of government-provided health care over the next decade.

Wednesday's House and Senate votes to adopt the nonbinding budget blueprint were only a first step toward Obama's goal of providing health care coverage for all Americans. The budget plan for the fiscal year that begins Oct. 1 sets the parameters for subsequent tax and spending bills expected to boost clean energy programs and student aid and extend many of former President George W. Bush's tax cuts.

"It's a budget that reduces taxes, lowers the deficit and creates jobs," House Speaker Nancy Pelosi, D-Calif., said. "It honors the three pillars of the Obama initiatives: energy, health care and education."

Obama cheered passage of the plan, saying in a statement that it "builds on the steps we've taken over the last 100 days to move this economy from recession to recovery and ultimately to prosperity."

The Senate adopted the plan by a 53-43 vote just hours after a 233-193 House tally.

The budget outline also makes it plain that Democrats won't let a mountain of deficits and debt interfere with advancing Obama's ambitious but costly agenda.

It gives Democrats the option of moving Obama's health care plan through Congress without the threat of a Republican filibuster, though Democrats promise to try to find bipartisan agreement.

Newly-turned Democrat Arlen Specter of Pennsylvania voted against the measure as he did earlier this month when it initially passed the Senate. Three other Democrats also voted no: Ben Nelson of Nebraska, Robert Byrd of West Virginia and Evan Bayh of Indiana.

Seventeen House Democrats, mostly from GOP-leaning districts, voted against the budget.

Not a single Republican in the House or Senate voted for the measure.

Obama inherited an economy in deep recession and a financial bailout costing hundreds of billions of dollars, and even some Republicans didn't fault him for deficits rocketing to $1.7 trillion for the ongoing budget year and a still-stunning $1.2 trillion in 2010.

"We inherited a colossal mess," Senate Budget Committee Chairman Kent Conrad, D-N.D., said.

As a result, Democrats opted against extending Obama's signature $400 tax cut for most workers beyond next year and cut $10 billion from his budget for non-defense programs. Also gone are revenues from Obama's "cap-and-trade" plan for curbing global warming by auctioning permits to emit greenhouse gases.

Republicans assaulted the plan as just the latest example of a spending spree by Democrats that started with Obama's $787 billion economic stimulus bill. It was followed by an omnibus appropriations bill that showered generous increases on domestic programs and included 8,000 pet projects for lawmakers' districts and states.

"It spends money we don't have, piles unprecedented debt on our children and grandchildren, and raises taxes on families and small businesses, while taking away the middle-class tax cut the president promised during the campaign," House Minority Leader John Boehner, R-Ohio, said.

Under the plan, the deficit would drop to $523 billion in 2014, but even that figure depends on several unrealistic assumptions, notably that Congress will devote only $50 billion a year for operations in Iraq and Afghanistan for 2011 and beyond, and unrealistic projections of costs for core Pentagon operations.

There's considerable accounting legerdemain in the plan as well, reflecting a struggle by Democrats to cut the budget deficit to 3 percent of the size of the economy within five years " a figure economists say is sustainable without adding crippling debt to the nation's books.

Rep. Paul Ryan, R-Wis., said a report Wednesday that the economy had shrunk by 6.1 percent in the first quarter highlighted the likelihood that the deficit numbers were even worse than predicted in the budget.

"Put reality into the budget and the deficits and debt go much higher," Ryan said.

House Democrats promise that completion of the budget will be followed by a pay-as-you-go law that would require " after some major exceptions for Bush-era tax cuts " that new tax cuts and increases in federal benefit programs like food stamps, unemployment insurance and Medicare are "paid for" with tax increases or offsetting spending cuts.

If the new pay-as-you-go law is violated, automatic spending cuts would be imposed to bring the deficit back into line.

Also permitted to advance under filibuster-free rules is Obama's plan to eliminate student loan subsidies for banks and other lenders, with the savings being used to increase Pell Grants for needy students.

The budget plan skirts difficult decisions on how to pay for Obama's health care plan, which is expected to cost more than $1 trillion over the next decade. It allows the new president's signature $400 tax credit for most workers to expire in 20 months but devotes $512 billion over five years to extend tax cuts passed during Bush's first term for middle-class workers, investors and families with children.

Spending: Calls for $3.4 trillion in new spending, including $1.2 trillion for defense and domestic programs funded through appropriations bills, and $130 billion for the wars in Iraq and Afghanistan.

Taxes: Endorses extending middle-class tax cuts passed in 2001 and 2003 under President Bush

Deficits: Projects deficits of $1.7 trillion in 2009, $1.2 trillion in 2010, $916 billion in 2011, $620 billion in 2012, $581 billion in 2013 and $523 billion in 2014.

Debt: Foresees an increase in the national debt to $17 trillion by 2014.