Both the House and Senate approved the Democrats’ version of a $3.5 trillion budget plan for fiscal year 2010, but without a single Republican vote.
The House approved the House budget resolution by a vote of 233-196, while the Senate voted 55-43 in favor of the spending plan. The budget reflects Democrats’ priorities in areas such as health care reform, renewable energy and education, but the lack of support by Republicans sets the stage for partisan battles over those initiatives.
The two chambers are expected to reconcile differences between the two versions of the bill after a two-week recess. The Senate version includes a bipartisan amendment that raises the estate tax exemption by $1.5 million to $5 million and cuts the maximum rate by 10 percentage points to 35 percent.
The budget plan also cuts approximately $1.8 trillion in taxes for middle-income taxpayers by extending the 2001 and 2003 income tax cuts for those making under $250,000 per year. However, the Bush tax cuts for families making more than $250,000 per year would expire.
It also protects American families who would be hit with the alternative minimum tax in 2010, but not to the extent that President Obama had originally proposed. Among the tax relief included in the budget is an expansion of the Earned Income Tax Credit, which provides tax relief to millions of American families with three or more children. Additionally the budget aims to make college more affordable by making the $2,500 American Opportunity Tax Credit permanent. However, Obma's signature Making Work Pay tax credit for working families was not made permanent.
Both plans reduce spending further than President Obama’s initial budget request and cut the annual budget deficit to under $600 billion in five years. The Office of Management and Budget has projected a $1.2 trillion deficit for fiscal 2010.
Obama had requested a budget of about $3.6 trillion, but both the House and Senate cut about $100 billion from the plan, mainly by not authorizing another $250 billion for the Treasury Department's financial bailout program. Obama will have to come back to Congress later to request the funds if needed. Spending on government agencies was also scaled back from Obama's original budget request, with the Senate axing $15 billion and the House $7 billion.
