By Larry Jones
April 6, 2009

The House and Senate approved separate budgets on April 2 that will fund the key priorities in President Barack Obama’s 2010 budget proposal which call for: reducing the nation’s dependence on foreign oil, reforming the health care system, seeking excellence in education, and reducing the federal deficit in half by 2014. But both proposals call for significantly less funding than the President requested for non-emergency discretionary spending. This category includes funds for domestic programs, including local priorities such as community development block grants, law enforcement, transportation and job training.

In submitting his budget request to Congress last February, President Obama requested $3.67 trillion in overall funding for federal agencies and programs in fiscal year 2010. Of the total amount requested, $1.096 trillion was requested for non-emergency discretionary spending. In response, the House approved, on a party line vote of 233 to 196, an overall budget of $3.55 trillion for the new fiscal year. Included in that amount is $1.089 trillion for non-emergency discretionary programs, which is $7 billion less than the President’s request.

Also along party lines (55 – 43), the Senate on April 3 approved a total budget of $3.080 trillion for 2010. Of that amount, $1.080 trillion is for non-emergency discretionary programs, which is $16 billion less than the President requested. With both chambers unwilling to provide the amount the President requested for non-emergency discretionary programs, spending on local priorities could end up being significantly lower.

Another huge difference in the House and Senate versions of the 2010 budget is the deficit projections. Both proposals would reduce the deficit to a level lower than the level called for in the President’s budget. This could also put pressure on Congress to reduce spending on local priorities. Under the President budget, the federal deficit would be reduced to $748.6 billion over the next five years. The House version would reduce the deficit to $598.4 billion, $150 billion below the President’s plan and the Senate version would reduce it even further to $508 billion, which is $241 billion below the President’s plan.

Although the House and Senate budget proposals support the President’s key priorities, neither chamber adopted the revenue raisers in his budget. The President requested $634 billion to expand health care coverage, which would be paid for by increasing taxes on the wealthy and cutting funds in the Medicare program. To invest in clean energy and address global climate change, his budget also calls for $646 billion in new revenues by establishing a “cap and trade” program to curtail carbon emissions.

Instead of adopting these revenue raisers, both chambers included a revenue'neutral “reserve fund” in their budget proposals for both health care reform and the climate change and energy legislation. What this means is that Congress must find a way of paying for these initiatives without increasing the deficit. This can be done by reducing funds in other program areas, or increasing taxes, or a combination of the two. However, the House version provides further assurance of funding for the President’s health care reform and student aid initiatives. It does so by providing reconciliation instructions which call for legislation later this year to fund these initiatives. The significance of reconciliation is that it would allow legislation to move through the legislative process without the threat of a filibuster in the Senate. Senate Republicans oppose reconciliation instructions because it would cause them to lose a powerful bargaining chip.

Although the Senate proposal does not include reconciliation instruction, Republican members fear the final compromise that will emerge from a House'Senate conference committee will include reconciliation instruction. They also believe reconciliation may be expanded to include climate change and energy legislation. However, the Senate proposal includes language that would prevent the reserve fund from being used if the climate change and energy legislation moves through reconciliation. This could change in the final compromise.

A House'Senate conference committee will be appointed to work out the differences in the two versions of the bill and will most likely begin meeting soon after members returned to Washington on April 20 following a two'week break.