US Senate passes $2.8 trillion fiscal 2007 budget

WASHINGTON - The US Senate has narrowly passed a US$2.8 trillion (NZ$4.44 trillion) election-year budget that would continue a string of huge deficits while rejecting some of President George W. Bush's domestic spending priorities.

By a vote of 51-49, the Senate approved the fiscal 2007 budget that is non-binding, but provides guidelines for spending bills Congress will try to pass this summer.

After four days of debate and hours of voting on amendments that added about US$16.5 billion to the bill's tally, Senate Budget Committee Chairman Judd Gregg, a New Hampshire Republican, lamented, "How can you be happy?" with some of the additional provisions.

Gregg has argued that his budget plan would cut deficits in half within five years, a conclusion Democrats challenged.

Sen. Kent Conrad of North Dakota, the senior Budget Committee Democrat, hammered away at the rising debt amassed by recent Republican budgets. "The debt is going to go up every year more than US$600 billion in each of five years. It's utterly unsustainable," Conrad said.

The nation's debt problem was underscored earlier on Thursday when Republicans in the Senate pushed through legislation raising US borrowing authority by US$781 billion to a limit of US$8.965 trillion.

The House of Representatives has not yet written its version of a fiscal 2007 budget and leaders there will have to deal with conservative Republicans restive over big deficits and skyrocketing debt.

The Senate budget, which won the support of only one Democrat, projects a US$359 billion deficit in the fiscal year beginning Oct. 1, down slightly from the US$371 billion estimated for this year.

It also calls for the opening of Alaska's Arctic National Wildlife Refuge to oil and gas drilling, generating an estimated US$6 billion in leasing fees and bonus bids paid by energy companies.

The budget document fails to embrace Bush's goal of cutting US$36 billion over five years from Medicare, the federal health care plan for the elderly. Nonetheless, White House budget director Joshua Bolten applauded the Senate bill as an "important first step."

With congressional elections less than eight months away, senators did not want to chip away at popular programmes such as Medicare, especially after trimming them in a recently enacted law.

The measure also defied Bush, as well as conservative Republicans in Congress, by adding US$7 billion to health, education and labor programmes.

Sen. Arlen Specter, a Pennsylvania Republican who teamed up with Iowa Democrat Tom Harkin to win the added funding, told reporters, "This vote is caused by the abject neglect for the last two years" in budgets for social programmes.

On military spending, the Senate bill gave Bush his request for about US$439 billion for next year.

Throughout Thursday, Republican leaders were in negotiations with Sen. Mary Landrieu, a Louisiana Democrat, who worked to steer budget priorities to her state, which was hit hard by Hurricane Katrina last August.

In the end, Landrieu was the only Democrat to vote for the budget blueprint. Her support came after she won language creating a US$10 billion fund for levee rebuilding and coastal development using future revenues from oil and gas drilling and the auction of the digital television spectrum.

In voting for the Republican budget, Landrieu said she was doing what was best for her state. But her discomfort was apparent. "I most certainly don't relish this position," Landrieu said of being the only Democrat to vote yes.

- REUTERS