Final passage of budget blueprint likely next week

Final passage of the $2.9 trillion fiscal 2008 budget resolution is likely to slip into next week amid continued disagreements over spending and tax policies and other procedural hurdles, lawmakers and aides said Monday.

That should not affect the start of the appropriations process, which is already off to a slow start. House Appropriations Chairman David Obey, D-Wis., is deeply involved in negotiations over a second war supplemental, as Democrats struggle to find a way to fund troops in Iraq while imposing enough restrictions on the administration's prosecution of the war to placate the party's liberal wing.

Senate Budget Chairman Kent Conrad, D-N.D., said sticking points on the budget remain how to structure assumptions of future tax-cut extensions and procedural protections for legislation to expand direct government aid to college students by cutting private lender subsidies.

An overall spending cap allotted to the Appropriations committees -- necessary to divide up the budget among 16 Cabinet departments and scores of smaller agencies -- is being held up by those unrelated disagreements. "A lot of things are not decided, and we have a rule: Nothing's decided until everything's decided," Conrad said Monday.

On tax policy, the main issue is how to draft a "trigger" mechanism in the budget blueprint that allows extensions of tax cuts expiring in 2010 to go forward in the House only if surpluses materialize. If not, they would have to be offset under pay/go rules.

The Senate prefers to waive the offset requirements for certain bipartisan tax breaks affecting the middle class and family farms. An amendment by Finance Chairman Max Baucus, D-Mont., to do so passed on a 97-1 vote, far in excess of the 60 votes required to waive pay/go.

Conrad said a "House-only trigger" was being explored, but negotiators were waiting for a decision from the Senate parliamentarian on the matter.

He said the parliamentarian had concerns about such a mechanism being "overly prescriptive" on the tax-writing panels, to the point where it could be considered out of the scope of the budget resolution. "If it passes muster with the parliamentarian, then we go to our Finance Committee colleagues," Conrad said.

Congress will not have to act until after the 2008 elections on the underlying tax legislation, but the budget blueprint "sends a signal" about Democrats' intentions, Conrad said.

The budget resolution can only lay out broad spending and revenue targets; it cannot dictate specific policies to committees of jurisdiction. Conrad said there was some concern about a trigger impinging on the autonomy of the tax-writing panels by dictating when and how they could move tax legislation.

Depending on the wording, the budget could be found to be "overly prescriptive" and thus lose its procedural protections -- that guarantee limited floor debate. "Once you go beyond those rules, a budget resolution can be in danger of losing its privileged status," he said, which would impede progress further.

The House will not even appoint conferees until Tuesday, and the Senate can only act as early as Wednesday because of floor action on the Food and Drug Administration reauthorization bill.

Also in dispute is a House proposal to include "reconciliation" instructions to the education committees for student-aid legislation.

The provision would allow House Education and Labor Chairman George Miller, D-Calif., and Senate Health, Education, Labor and Pensions Chairman Edward Kennedy, D-Mass., to move a bill requiring only a Senate majority vote, rather than the normal 60 votes to overcome a filibuster.

Conrad opposes the House provision, saying reconciliation is meant to be reserved for deficit reduction, and the House version would require only $75 million in savings.

He and House Budget Chairman John Spratt, D-S.C., have been discussing a compromise that would deliver additional savings, but Conrad declined to lay out his bottom line. "A whole lot more than $75 million," he said.

Industry analysts watching the debate because of its implications for lending companies expect Conrad to eventually agree to reconciliation.

He said that, as of Monday, it had about a "50-50" chance.

"We've got to negotiate and it's got to be part of an overall structure, an overall framework that involves trigger, that involves domestic discretionary," Conrad said.

The domestic discretionary target for the Appropriations committees is considered likely to end up in the ballpark of $20 billion above the White House request.

Even if it ends up at that figure, Democrats will have a hard time funding all of their priorities.

For example, a bill reaching the House floor this week would authorize a $5.9 billion increase over fiscal 2007 for the Homeland Security Department, to $39.9 billion, according to the Congressional Budget Office.

That is a 17 percent increase over the current year, when overall domestic discretionary spending is likely to increase only around 6 percent in fiscal 2008.

Final funding will be up to appropriators. But passage of a bill authorizing such a generous increase for homeland security will significantly raise expectations during the appropriations process.