Democrats' budget deal clears way for Obama health plan

WASHINGTON - Congressional Democrats sealed an agreement last night on a budget plan that would help President Obama overhaul the health-care system but allows his signature tax cut for most workers to expire after next year.

Senate Budget Committee Chairman Kent Conrad (D., N.D.) announced the agreement and key details. Democrats worked late on the plan, hoping the House would adopt the budget today and the Senate tomorrow, which marks Obama's 100 days in office.

Most important, the congressional budget plan would prevent Senate Republicans from delaying or blocking Obama's plan to vastly expand government-subsidized health care when it advances this fall.

The $3.5 trillion plan for the fiscal year starting Oct. 1 embraces several of Obama's top goals besides health-care legislation, including funds for domestic programs and clean energy, and a tax increase for individuals making more than $200,000 a year or couples making more than $250,000.

But the plan would allow Obama's signature $400 tax cut for most workers and $800 for couples to expire at the end of next year. Even after squeezing the defense and war budgets to levels that are probably unrealistic, the plan would cause a deficit of $523 billion in five years.

"I think this is a good budget," Conrad said. But, he added, "much more will have to be done to get us on a more sustainable course," including slowing the growth of benefit programs like Medicare.

Conrad forced cuts of $10 billion from Obama's $50 billion boost for nondefense programs funded by Congress each year. Future increases for nondefense operating budgets would be far less generous than Obama's budget, averaging 2.9 percent.

While endorsing Obama initiatives, Democrats focused a lot of attention to preserving President George W. Bush's tax cuts for middle-class workers, investors, and families with children.

The budget plan would patch the alternative minimum tax for three years to prevent more than 20 million taxpayers from getting socked with increases averaging about $2,000. The estate tax would be kept at current levels and allow for estates up to $7 million to be exempt from the tax with a 45 percent rate applying to inheritances above that.

Under Capitol Hill's arcane rules, the annual congressional budget produces an outline for follow-up tax and spending legislation. The measure would allow Obama's health plan to pass the Senate by a simple majority instead of the 60 votes that are needed for plenty of other legislation.

Obama and his Democratic allies say they still want support from Republicans for health-care legislation but need the option of expedited action in case the debate becomes overly partisan.