U.S. Senate approves budget giving Democrats a win

An exhausted U.S. Senate gave pre-dawn approval Saturday to a Democratic $3.7 trillion US budget for next year that embraces nearly $1 trillion US in tax increases over the coming decade but shelters domestic programs targeted for cuts by Republicans in the House of Representatives.

Pre-dawn budget approval leaves debt battle with GOP unresolved

An exhausted U.S. Senate gave pre-dawn approval Saturday to a Democratic $3.7 trillion US budget for next year that embraces nearly $1 trillion US in tax increases over the coming decade but shelters domestic programs targeted for cuts by Republicans in the House of Representatives.

While their victory was by a razor-thin 50-49, the vote let Democrats tout their priorities. Yet it doesn't resolve the deep differences the two parties have over deficits and the size of government.

The vote came after lawmakers laboured through the night on scores of symbolic amendments, ranging from voicing support for letting states collect taxes on Internet sales to expressing opposition to requiring photo identification for voters.

Shrink annual federal shortfalls

The Senate's budget would shrink annual federal shortfalls over the next decade to nearly $400 billion US, raise unspecified taxes by $975 billion US and cull modest savings from domestic programs.

In contrast, a rival budget approved by the Republican-run House of Representatives balances the budget within 10 years without boosting taxes.

That blueprint — by Paul Ryan, the Republican party's vice-presidential candidate last year — claims $4 trillion US more in savings over the period than Senate Democrats by digging deeply into health care and food benefits for the poor and other safety net programs. It would also transform the health care program for older Americans into a voucher-like system for future recipients.

"We have presented very different visions for how our country should work and who it should work for," said Democratic Sen. Patty Murray, who chairs the Senate Budget Committee. "But I am hopeful that we can bridge this divide."

Congressional budgets are planning documents that leave actual changes in revenues and spending for later legislation, and this was the first the Democratic-run Senate has approved in four years.

That lapse is testament to the political and mathematical contortions needed to write fiscal plans in an era of record-breaking deficits that until this year exceeded an eye-popping $1 trillion annually, and to the parties' profoundly conflicting views.

Though budget shortfalls have shown signs of easing slightly and temporarily, there is no easy path for the two parties to find compromise — which the first months of 2013 have amply illustrated.

Already this year, Congress has raised taxes on the rich after narrowly averting tax boosts on virtually everyone else, tolerated $85 billion US in automatic spending cuts, temporarily sidestepped a federal default and prevented a potential government shutdown.

By sometime this summer, the U.S. government's borrowing limit will have to be extended again — or a default will be at risk — and it is unclear what Republicans may demand for providing needed votes. It is also uncertain how the two parties will resolve the differences between their two budgets, something many believe simply won't happen.

Obama demanding tax increases and spending cuts

Both sides have expressed a desire to reduce federal deficits. But U.S. President Barack Obama is demanding a combination of tax increases and spending cuts to do so, while Republican leaders say they won't consider higher revenues but want serious reductions in benefit programs that have rocketed deficits skyward.

Obama plans to release his own 2014 budget next month, an unveiling that will be studied for whether it signals a willingness to engage Republicans in negotiations or play political hardball.

The Democratic budget's $975 billion US in new taxes would be matched by an equal amount of spending reductions coming chiefly from health programs, defence and reduced interest payments as deficits get smaller than previously anticipated.

This year's projected deficit of nearly $900 billion US would fall to around $700 billion US next year and bottom out near $400 billion US in 2016 before trending upward again.

Shoehorned into the package is $100 billion US for public works projects and other programs aimed at creating jobs.