Budget deal could set up health care plan

The maneuver, known as budget reconciliation, is guaranteed to incite protests from congressional Republicans. They have warned that using the fast-track method to push through a massive remake of the country's health care system would amount to a "declaration of war" on the minority party.

But the administration has prodded the Democrat-led Congress to strike a budget agreement in time to give Mr. Obama a major victory for his 100th day in office, which is Wednesday. White House Chief of Staff Rahm Emanuel and Budget Director Peter R. Orszag met with Capitol Hill negotiators throughout the week to help seal a deal.

The agreement by Democratic negotiators to use reconciliation is key to merging the Senate and House versions of the budget bill. The final legislation will be hammered out in a conference committee.

"It looks like there could be a conference committee meeting on Monday. There could be a deal announced then," said a Democratic aide close to the talks. The aide did not want to be identified discussing ongoing negotiations.

The budget will establish the framework for how Congress addresses Mr. Obama's agenda this year, though hard bargaining over the details lies ahead.

Under the deal outlined Friday, Democrats could use the budget reconciliation process to push health care reform through the Senate with just a simple majority vote and only 20 hours of debate. It would avoid the 60-vote threshold required to end a potential Republican filibuster.

Mr. Obama's energy reform program, another White House priority that has weaker support among congressional Democrats, was not included in the budget reconciliation process.

The deal currently on the table foresees the expiration of Mr. Obama's signature "Make Work Pay" tax cut after 2010. The Obama tax cut reduced income taxes by $400 a year for most workers, the Associated Press reported.

The budget also is expected to end former President George W. Bush's tax cuts for middle-class and wealthy Americans, though Mr. Obama's proposals to make the rich pay more by eliminating income tax deductions for charitable gifts and mortgage interest reportedly were nixed.

How to deal with health care reform, which is still on the drawing board in Congress, was considered a critical sticking point in the budget talks. While lawmakers will continue to work on a bill through regular legislative channels, they now have the option of attaching health care reforms to the budget if they fall short.

Several top Democrats had said they opposed using reconciliation, including Senate Finance Committee Chairman Max Baucus of Montana and Senate Budget Committee Chairman Kent Conrad of North Dakota.

"Senator Baucus has made it clear he intends to pursue a bipartisan process for health care reform," said Baucus spokesman Dan Virkstis.

Mr. Conrad declined to reveal details of the negotiation breakthrough, but he said that he and House Budget Committee Chairman John M. Spratt Jr., South Carolina Democrat, had "a productive meeting" Thursday night.

"We now have options that we will be presenting to our colleagues," Mr. Conrad said. "There is still a fair amount of work to be done and colleagues to check with before we can reach a final agreement, but we are hopeful we will be able to complete work next week."

The process would not only speed up the bill, but likely would deny Republicans the chance to force any changes to the landmark legislation.

Senate Minority Leader Mitch McConnell, Kentucky Republican, has said that the fast-track process is simply a way to "jam the minority" and would demonstrate the majority party is operating on a "purely partisan basis."

"Look, my 41 Republican senators represent 50 percent of Americans," he told CNN in a recent interview. "We expect to be a part of the process."