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Conrad Delivers Blow to Budget Reconciliation Prospects
Sunday, March 22, 2009
10:30 PM

Senate Budget Committee Chairman Kent Conrad (D-ND) told ABC's This Week that his fiscal year (FY) 2010 budget resolution, to be unveiled later this week, will not include reconciliation language that would have provided filibuster protections in the Senate for future legislation containing President Obama's health care reform initiative and cap-and-trade proposal for reducing greenhouse gas emissions.

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"I don't think it would be wise to use the reconciliation process to write major legislation, reform legislation," Conrad said. "That's not what reconciliation was designed for. It was designed for purely deficit reduction."

The White House is calling for the establishment of a new ten-year, $630 billion reserve fund that would make a down payment on overhauling the nation's health care system with the aim of lowering costs and expanding coverage. Under the president's budget outline, $316 billion of the reserve fund would be paid for partially through revenues obtained by allowing the Bush tax cuts to expire for the wealthiest taxpayers, and also through various program savings such as reducing Medicaid and Medicare overpayments. The administration's cap-and-trade proposal aims to reduce greenhouse gas emissions by roughly 83 percent below 2005 levels by 2050 through an auction of emission allowances. Revenue estimates of the cap-and-trade plan vary significantly. The Office of Management and Budget (OMB) projects an $150 billion boost to federal revenues over the FY 2012 to FY 2019 period, while the Congressional Budget Office (CBO) predicts $629 billion in higher revenues.

In response to CBO's projection that the president's budget request would result in an additional $2.3 trillion in cumulative deficits over the ten year budget window compared to the White House's estimate, Conrad announced on Friday that he would make adjustments to the president's budget in order to "keep the deficit on a downward trajectory." The Senate's chief budget writer added that his budget blueprint will still reflect Obama's key priorities on the energy, education, and health care fronts along with halving the deficit over five years.

"We have got to have fundamental reform of our entitlement programs," Conrad said on This Week. "We've got to have fundamental reform of our revenue programs, because we've got a tax system that was really built 50 years ago."

Without reconciliation protections, Obama's health care and cap-and-trade proposals face an uphill battle for enactment. The Senate Democratic leadership would be forced to secure 60 votes in favor of these bills. Majority Leader Harry Reid's (D-NV) caucus currently boasts 58 senators, and would need the help of at least two Republicans to push these initiatives past the finish line -- assuming, of course, that there are no defections from the initial 56 Democrats and 2 Independents that caucus with the majority.

However, at least one centrist-leaning Republican has already voiced her intent to vote against a possible cap-and-trade or health care reform reconciliation bill.

"It would be a big mistake," Sen. Susan Collins (R-ME) said. "You don't make major changes in policy using a system that shuts out the Republicans, that limits debate, that prohibits amendments. And I know it's not just Republicans who are concerned about this, the centrist Democrats are very concerned about this."

Collins was one of three Republican senators to cross the aisle and vote in favor of the $787 billion economic stimulus package last month, and would likely have been a primary target for Reid to court during a reconciliation push. Speaking on the president's broader fiscal plan, Collins told This Week that she could not support it, citing CBO's projection that it would double the public debt in five years and triple it in ten years.

CBO estimates that the federal debt would reach $9.3 trillion by FY 2019 under the administration's budget proposals, and that the net interest on the debt alone would add $1 trillion to the government's cumulative shortfall over the next ten years.

"Debt held by the public would rise, from 41 percent of GDP in 2008 to 57 percent in 2009 and to 82 percent of GDP by 2019," according to CBO.

The fate of reconciliation will ultimately be decided during a House-Senate conference, where White House officials are bound to play a major role in negotiations, even though budget resolutions do not get sent to the president because they do not become law.

It remains unclear whether the House's budget blueprint, also expected to be unveiled this week, would contain reconciliation language. House Majority Leader Steny Hoyer (D-MD) said on Thursday that reconciliation "is certainly under consideration, but no decision on that has been made."