U.S. House Approves Budget Embracing Obama’s Agenda (Update2)

April 29 (Bloomberg) -- The U.S. House approved a $3.55 trillion budget plan that embraces President Barack Obama’s agenda, including his call to allow fast-track approval of an overhaul of the nation’s health-care system.

The tax-and-spending proposal, which passed on a 233-193 vote today, allows Democrats to use a parliamentary procedure known as reconciliation to prevent Senate Republicans from blocking health-care legislation later this year.

No Republicans supported the plan and 17 Democrats joined in voting against it.

The measure also permits fast-tracking of the administration’s plans to end subsidies for student-loan providers, endorses Obama’s proposal to raise taxes on couples earning more than $250,000 and calls for permanently extending the estate tax at current levels. It would boost domestic “discretionary” spending by 9 percent, defense expenditures by 4 percent and generate a $1.2 trillion deficit next year.

The Senate is scheduled to vote on the measure later today in time to mark Obama’s 100th day in office.

Democrats said the plan, for the fiscal year beginning Oct. 1, will shore up critical priorities.

“These tough times are no excuse to cut back on investments that will pay off many times over down the road,” said House Majority Leader Steny Hoyer, a Maryland Democrat.

Republican Opposition

Republicans said the plan taxes, spends and borrows too much while threatening to leave their party on the sidelines during this year’s health-care debate.

A health-care overhaul, “to be accepted by the American people, needs to be perceived -- and really be -- a fair document reached through compromise,” said Senator Judd Gregg, the top Republican on the Senate Budget committee. “That’s not going to happen under reconciliation.”

The House vote came after a last-minute disagreement among Democrats over whether to strengthen so-called pay-go rules, which require spending increases and tax cuts to be financed with offsetting savings to keep from adding to the budget deficit. The two chambers of Congress have frequently been at odds over the rules, with the Senate ignoring the restrictions on numerous occasions in recent years.

A group of House Democrats, known as Blue Dogs, had demanded lawmakers put more teeth into the rules by enshrining them in law before agreeing to back the budget. The restrictions are now part of Congress’s internal rules, which can be waived.

Dispute Resolved

The dispute was resolved after Obama issued a letter outlining his support for carving pay-go into law. In addition, House Speaker Nancy Pelosi, a California Democrat, said the chamber won’t consider several tax bills later this year -- including ones dealing with the estate tax and middle-class tax cuts -- unless the Senate agrees to abide by the restrictions.

The budget is a nonbinding agreement establishing ground rules for considering tax and spending bills later this year. The reconciliation provisions would allow Democrats to approve health-care changes and plans to eliminate subsidies for lenders such as Reston, Virginia-based Sallie Mae with a simple majority in the Senate rather than the 60 votes needed to overcome stalling tactics.

Hoyer said Democrats included the reconciliation procedure in the budget measure as a “fallback if partisanship blocks progress” on health-care legislation.

“Essentially, we’re saying the majority will make policy,” Hoyer said. “It didn’t take 60 percent to elect a president; it didn’t take 60 percent to elect any of us to this body. The premise of our founding fathers was, if a majority of Americans believe we ought to move in a direction, that’s the direction we ought to move.”

To contact the reporters on this story: Brian Faler in Washington at   or bfaler@bloomberg.net