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$2.6 Trillion Budget Is Approved

US SENATE and US House of Representatives seals over 2006 US Government Budget book
AP / CBS
A $2.6 trillion budget barely approved by Congress will cut projected spending on Medicaid for the poor and lock in tax cuts.

Democrats unanimously opposed the spending outline passed late Thursday. They said the budget reflects the president's misplaced priorities by freezing or trimming health, education and agriculture programs while cutting taxes by as much as $106 billion over five years.

The vote was 214-211 in the House and 52-47 in the Senate.

The budget resolution is nonbinding, but it sets critical guidelines for lawmakers as they make decisions on taxes and specific spending programs for the 2006 fiscal year that begins October 1. Equally important, tax and spending legislation passed under direction from the budget is immune from Senate filibusters.

That could make it easier to open the way for oil drilling in the Arctic National Wildlife Refuge and facilitate GOP efforts to reduce spending increases in Medicaid and other entitlement programs. About $70 billion of the $106 billion in tax cuts would be protected by resolution, meaning it could be approved by a simple majority in the Senate rather than the 60 votes needed to break a filibuster.

President Bush, in a statement, said the budget plan "protects America, helps economic growth, funds our priorities and keeps us on track to cut the deficit in half by 2009."

Senate Budget Committee Chairman Judd Gregg, R-N.H., said it is a first step toward confronting the "massive problem" of meeting the nation's defense and domestic spending needs while coping with relentlessly rising baby boomer health and retirement costs. "The president sent us a budget which for the first time in seven years stepped on the sacred ground of trying to address the entitlement costs of the federal budget," he said.

It was the effort to control spending on the Medicaid health program for the poor - one of the three big entitlement programs, along with Medicare and Social Security - that created the biggest obstacle to agreement on the budget. Medicaid was last cut in 1997.