Agreement Reached on FY10 Budget Plan

WASHINGTON – Senate and House negotiators reached agreement late today on a budget plan for fiscal year 2010 that embraces the priorities of the President’s budget. Like the House and Senate budget resolutions passed earlier this month, the conference agreement puts the budget back on a fiscally sustainable path while making strategic investments to rebuild the economy, through investments in health care reform, higher education, and energy independence.

“We have agreed on a framework that will cut the federal budget deficit by nearly two thirds by 2013, and even further in 2014,” said House Budget Committee Chairman John Spratt. “The record deficit for this year – most of it inherited from the Bush Administration – represents 12 percent of GDP. Our budget cuts the deficit to a more sustainable level of 3.0 percent in 2014.”

The Democratic budget is designed to lower the deficit from $1.7 trillion in 2009 to $523 billion by 2014. “Our budget cuts the deficit by $1.2 trillion by 2014,” said Spratt. “I think it’s fair to call this a deficit-reduction budget.”

The conference agreement includes a level of discretionary funding between that of the House and Senate budgets, providing $10 billion less than the President’s request for 2010. It matches the President’s request to increase defense funding by 4 percent.

“Our plan will support initiatives to boost the economy – in health care, in alternative energies, and in education, expanding access to college for more people,” Spratt said. “These are investments with proven returns and the cost of these initiatives will be offset.”

If legislation for health care reform and education investment cannot be achieved through regular procedures, then the budget’s reconciliation instructions requiring committees to report legislation by October 15 provide a fall-back to ensure that these initiatives can move through Congress.

The budget agreement includes tax cuts of more than $1.7 trillion over the next ten years for middle-income Americans, permanently extending the middle-income tax cuts adopted in 2001 and 2003: the 10 percent bracket, the child tax credit, and marriage penalty relief. It also indexes the alternative minimum tax to keep it from burdening middle-income taxpayers for whom it was never intended. And it extends estate tax exemptions at the 2009 levels, and indexes the exemptions for future years.

The full House and Senate are each expected to vote on the fiscal year 2010 budget conference agreement this week.