Nov. 7 (Bloomberg) -- Senator Robert C. Byrd, the 90-year- old chairman of a congressional panel that controls about $1 trillion in spending, is turning his post over to a younger man: 84-year-old Daniel Inouye.

``A new day has dawned in Washington, and that is a good thing,'' said Byrd, the longest-serving senator in U.S. history, in a prepared statement. ``For my part, I believe that it is time for a new day at the top of the Senate Appropriations Committee.''

Inouye, the committee's second-ranking Democrat, whose seniority puts him next in line for the post, will take over Jan. 6. He said in a statement he is ``honored by the confidence Majority Leader Harry Reid has placed in me'' and plans to continue running the panel's subcommittee with jurisdiction over the Pentagon's budget.

Byrd's ability to run a panel that annually distributes a third of the entire federal budget has been at issue for months. The committee chairman has broad discretion over the 12 annual spending bills that fund government initiatives such as the space program, the national parks and the Pentagon.

The committee will be one of the busiest in Congress next year, likely handling parts of a proposed economic stimulus package, an Iraq War spending bill and more than a half-dozen annual appropriations bills left over from this year.

Committee Changes

Byrd, who has led the committee off and on since 1989, is known for using his perch to funnel federal dollars to his home state of West Virginia.

The move could set off a chain reaction, forcing a series of changes in Senate committee chairmanships. Inouye will have to give up his current post as head of the Commerce, Science and Transportation Committee in order to take over Appropriations. His gavel would fall to that panel's No. 2 Democrat, West Virginia Democrat Jay Rockefeller, who already heads the Senate Intelligence Committee.

Jamie Smith, a Rockefeller spokeswoman, declined to say which panel Rockefeller would choose.

Before Obama

Democrats also have to replace Vice President-elect Joe Biden as head of the Foreign Relations Committee, and are considering stripping independent Senator Joseph Lieberman of his chairmanship of the Homeland Security and Governmental Affairs Committee for backing Republican John McCain's presidential campaign.

Byrd began his congressional career before President-elect Barack Obama was born. Now serving his ninth term, Byrd walks with two canes and sometimes gets around in a wheelchair. In June, he was hospitalized for the third time this year.

When asked about his capacity to run the panel after a hearing in April on Iraq War funding, Byrd denied he was too frail to continue on as chairman, and told a reporter to ``shut up.''

Byrd said today he plans to continue to run the homeland security appropriations subcommittee. He said he is ``confident that stepping aside as chairman will not adversely impact my home state of West Virginia.''

Byrd ranked seventh in Congress last year in sending federal money to his home state for special projects, called earmarks, according to the Washington-based Taxpayers for Common Sense.

He secured approximately $407 million for West Virginia. Inouye ranked just ahead of him with $414 million in earmarks, according to the group.

Byrd entered the Senate on Jan. 3, 1959, when Dwight D. Eisenhower was president. He was first named to the Appropriations Committee by President Lyndon B. Johnson when Johnson was Senate majority leader.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Brian Faler in Washington at faler@bloomberg.net

Last Updated: November 7, 2008 19:18 EST