President Barack Obama's Democratic allies in Congress have agreed to allow his signature $400 tax cut for most workers expire after next year but are moving to give him a better chance at passing his health care bill.
Senate Majority Leader Harry Reid, D-Nev., said Friday that most House and Senate negotiators have resolved most of their differences over a congressional budget blueprint designed to advance Obama's agenda through Congress. The measure will set the rules on how Congress considers Obama's agenda for the rest of the year.
Lawmakers are rushing to agree on the budget framework in time to give Obama a victory within his first 100 days in office. Late-night talks Thursday produced the framework of a deal that would protect his ambitious plan to overhaul the U.S. health care system from a Republican filibuster.
Negotiations under wraps
A senior Democratic congressional aide revealed the fundamentals of the accord on condition of anonymity because the talks were private.
The negotiations have centered on the annual congressional budget resolution, which sets the parameters for the legislation that follows. Congressional votes next week would provide a symbolic victory for Obama's sweeping agenda to enact a universal health care system, invest in education and clean energy and cut the exploding budget deficit to manageable levels.
Obama marks his 100th day in office on Wednesday.
Most importantly, the tentative agreement would give congressional Democrats the ability to push Obama's health care initiative through the Senate under rules that prevent filibusters. Under typical Senate rules, 60 votes are needed to advance a bill, but passage of the budget plan would enable majority Democrats to enact the health care plan with just a simple majority and only 20 hours of debate.
Democrats hold 56 seats in the Senate plus two independents who typically vote with the party. Republicans have 41 seats, and there is one vacancy.
The fast-track process would limit the Republicans' ability to get concessions and give Democrats far more control over the specifics of the health care legislation. Obama's plan to cut private banks and other lending institutions out of the market for student loans would also move on a filibuster-free path.
The fast-track process could have a downside for Obama, since it's sure to anger Republicans whose support could help with business, insurers and other key interest groups.
But Obama's signature "Making Work Pay" tax cut of $400 for most workers and $800 for couples would expire at the end of 2010 as currently scheduled. The temporary tax cut was part of the economic stimulus plan enacted in February, and Obama is proposing to make it permanent.
Senate Budget Committee Chairman Kent Conrad of North Dakota told reporters that the budget plan would extend for three years a temporary fix that prevents the alternative minimum tax, or AMT, from hitting more than 20 million taxpayers. The AMT was enacted 40 years ago to make sure wealthy people can't dodge the tax system, but it was never adjusted for inflation and now increasingly threatens middle-class taxpayers with increases averaging $2,000 a year.
The budget plan also anticipates the expiration of former President George W. Bush's tax cuts on income and investments at the end of next year. But it ignores Obama's calls for raising taxes to help pay for his health care initiative by reducing the benefits wealthier people take on itemized deductions like charitable gifts and mortgage interest.
The measure also avoids taking a stand on Obama's unpopular cap-and-trade plan, proposed by the White House to raise more than $600 billion to pay for tax cuts and clean energy programs. Under cap-and-trade, the government would auction permits to emit heat-trapping gases, with the costs being passed on to consumers through higher gasoline and electric bills.
The Democratic plan promises to cut the deficit from levels as high as $1.8 trillion this year to about $500 billion by 2014, about 3 percent of the size of the economy. That's the level economists say is sustainable without producing a crippling debt burden.
Republicans are sure to protest The plan would only slightly curb Obama's proposed 10 percent, almost $50 billion increase in the operating budgets of nondefense agencies. They would instead receive an 8 percent increase, though congressional appropriators say the increases are smaller than they seem due to some complicating factors, like extra spending for the decennial Census increases in the cost of Federal Housing Administration mortgage loan guarantees. the measure as spending, taxing and borrowing too much. And they have been complaining furiously at the prospect of health care reform passing under fast-track rules.
Democrats, including Obama, have said repeatedly that they want the health care debate to be bipartisan and that the filibuster-proof terms would be used only if the GOP obstructs. But Republicans say the move has already poisoned the debate.
"Reconciliation is basically a nuclear weapon to use against the negotiators so what happens is nobody negotiates seriously because they can always go to reconciliation ... tilting the playing field unfairly," said Sen. Judd Gregg of New Hampshire, top Republican on the Budget Committee.
"If it's going to be used, it'll be used when bipartisan bills are not possible," Reid said.
Sen. Max Baucus of Montana, one of the leading Democrats trying to write a health care bill, said Friday that going the fast-track route would only complicate matters, because Republican support is needed to pass legislation that would be broadly accepted.
"When you jam something down somebody's throat, it's not sustainable," Baucus told reporters. "And I want something that will last."