Congress passes $3.5 trillion budget outline

House and Senate versions of next year's federal budget largely track Obama's initial proposed spending plan.

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WASHINGTON (CNN) -- The Senate passed a $3.53 trillion version of the federal budget for fiscal year 2010 late Thursday night in a party-line vote, ending several weeks of acrimonious partisan debate.

The package was approved on a 55 to 43 vote. GOP Sens. Arlen Specter of Pennsylvania, and Olympia Snowe and Susan Collins of Maine -- who voted in favor of the president's stimulus bill last month -- voted against what is essentially the blueprint of Obama's economic policies going forward.

Earlier in the evening, the House of Representatives passed its own version of the $3.55 trillion budget, capping off a long day of debate and voting marked by the defeat of several alternative spending plans.

The House version of the budget, which passed by a margin of 233-196, passed in a virtual party-line vote. All but 20 House Democrats supported it; no House Republican voted in favor.

Neither budget package garnered a single GOP.

In London, England, where he has been attending the Group of 20 summit, President Barack Obama lauded the budget votes.

"Tonight, the Senate has joined the House of Representatives in taking an important step toward rebuilding our struggling economy," he said in a statement.

"And by making hard choices and challenging the old ways of doing business, we will cut in half the budget deficit we inherited within four years. With this vote comes an obligation to pursue our efforts to go through the budget line-by-line, searching for additional savings. Like the families we serve, we must cut the things we don't need to invest in those we do."

The House budget largely tracks Obama's initial proposed spending plan, with the exception of a decision to drop his $250 billion request for potential future bailouts of struggling financial institutions.

Fiscally conservative House Democrats, known as Blue Dogs, also negotiated with House Democratic leaders to cut $7 billion from the president's $540 billion request for non-defense discretionary spending.

Under the House Democrats' plan, the federal government will run an anticipated deficit of $1.2 trillion in the next fiscal year. Their plan promises to cut the deficit by more than half by 2013.

House Democrats agreed to extend the middle class tax cut that was included in the recently-passed economic stimulus plan, but failed to specify how the cut would be paid for after 2010.

They also included language that allows for the controversial procedure called "budget reconciliation" for health care, a tool that would limit debate on major policy legislation.

Senate Democrats did not include reconciliation in their version of the budget. The matter is guaranteed to be a major partisan sticking point when the two chambers meet to hammer out a final version of next year's spending plan. If it passes, it would allow the Senate to pass Obama's proposed health care reform without the threat of a Republican-led Senate filibuster.

Sen. Mike Enzi, R-Wyoming, speaking for most of his GOP Senate colleagues, warned Tuesday that if a health-care "reconciliation winds up in the budget bill, it'll be like a declaration of war. ... I hope that that wedge doesn't get thrown in there."

Both the House and the Senate version of the budget allow former President George W. Bush's tax cuts for couples who make more than $250,000 to expire in 2010, and both plans let Obama's signature tax cuts -- $400 for individuals and $800 for couples -- expire as well, unless the White House finds a way to pay for them.

Under the House plan, the cuts would expire in 2010; in the Senate plan, they would expire in 2012.

Both plans also do away with Obama's request for an additional $250 billion, if needed, in financial-sector bailout money.

Key differences include deficits and non-military discretionary spending. The House budget would reduce the deficit from $1.7 trillion in 2009 to $598 billion in 2014, House Democrats said, while the Senate Democrats say their plan would bring the deficit down an additional $80 billion.

The Senate bill also calls for less non-military discretionary spending in 2010 -- $475 billion compared to the House plan's $532.6 billion.

Before passing the Democratic budget proposal, the House rejected an alternative proposal put forward by the GOP leadership, which called for $4.8 trillion less in overall spending over the next decade, in part through a five-year freeze in most non-defense discretionary spending.

"House Republicans were united in the desire to find reasonable solutions for middle class families, focused directly on creating jobs, tax relief, and empowering small businesses to survive and grow," said House Minority Whip Eric Cantor.

"The Republican budget was crafted to help those Americans worried about their jobs, their healthcare, their financial security, and their real fears that Washington is spending and borrowing money that America does not have. Republicans offered a comprehensive budget that provides the American people with the ideas, energy and common-sense solutions they are looking for."

Among other things, the House GOP's version of the budget would have repealed the entire $787 billion economic stimulus package except for an extension of unemployment insurance benefits. It also would have rolled back a recently passed 8 percent spending boost in the budget for the remainder of the current fiscal year.

Thirty-eight Republicans voted against their own leadership's bill in that vote, while two Democrats voted in favor of it. The final vote was 293-137 against the GOP proposal.

Overall, the Republican version of the budget called for $3.6 trillion less in borrowing over the next 10 years.

-- CNN's Dana Bash and Deirdre Walsh contributed to this report To top of page

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