FACTBOX-How the U.S. budget works in Congress

Fri Feb 27, 2009 8:42pm GMT

Feb 27 (Reuters) - President Barack Obama has unveiled the first budget of his presidency, kicking off debate in the U.S. Congress over spending and tax priorities for fiscal 2010 and beyond.

In the proposal, Obama set out a $3.55 trillion spending plan for next year, while concluding that this year's deficit would hit $1.75 trillion, the highest ever.

Obama's plan also sketched out major new initiatives, such as expanded health care, troop withdrawals from Iraq and expanded aid to ailing banks, making this year's debate more controversial than recent budget battles.

The budget that Congress will try to write in response to Obama's proposal will be a complex bill. But rules on how that budget is approved by Congress and what the document actually accomplishes also are complicated.

Here are some key things to keep in mind:

THE RULES OF THE GAME:

* While the budget sets broad spending and tax parameters, it doesn't actually make those spending and tax policies happen. Subsequent legislation must do that.

* The budget cannot be "filibustered" in the Senate. It only needs a simple majority to pass instead of the 60 supporters that regular bills must win to avoid roadblocks. As a result, Democrats ought to be able to push a budget through Congress with little or no Republican support. Last June, the Senate passed the fiscal 2009 budget by a vote of 48-45, with only two Republicans in favor. Not a single Republican voted for it in the House.

* Congress can embrace or reject any of the ideas contained in the president's budget proposal. Congress might even disagree with some of the economic assumptions the White House budget is built upon and opt for its own -- meaning the final budget could look quite different from that proposed by Obama.

* The document that Congress will try to pass in coming months is called the "budget resolution." The House of Representatives and Senate will try to pass their own versions. If so, a compromise would then be presented to each chamber for final passage.

* The budget resolution does not have the force of law and the president does not sign it. Instead, it is a blueprint that will guide subsequent legislation - appropriations bills that actually spend money on programs contained in the budget or authorization bills that likely would be needed to allow new Obama programs to start, such as expanded health insurance.

* Congress sometimes fails to pass a budget but the government typically keeps operating through appropriations measures. The last time that happened was in 2006, when the Republican majorities in the House and Senate could not agree on an election-year budget. Budget experts say it's important to have a budget resolution in place each year so that spending is not done haphazardly.

* In years it does pass a budget, Congress is sketching out its priorities and intentions for the coming year as well as looking ahead four years or so.

THE PLAYERS:

* Liberal Democrats: Led by House Speaker Nancy Pelosi, the budget will be an opportunity for these lawmakers to set the stage for more spending on social programs such as health care and education that they think were short-changed by the Bush administration. They also applaud Obama for using the budget to call for ending Bush's tax cuts for the wealthy.

* Blue Dog Democrats: This group of fiscally conservative Democrats has been frustrated by the huge budget deficits that have made the government's debt burden explode over the past eight years. They want a budget with strict rules outlawing deficit-spending, unless a new emergency arises. Obama says he will respect their "pay-as-you-go" beliefs.

* Moderate Republicans: There aren't many of them left. While they want the federal government's role in citizens' lives to be kept to a minimum, they also support some of the tax policy and social spending Democrats pursue. Last year, Maine Senators Olympia Snowe and Susan Collins voted for the Democrats' budget. The two also were key to this year's compromise on Obama's $787 billion economic stimulus.

* Conservative Republicans. Don't count on any of them to vote for Obama's budget. They hate its tax increases on those making more than $250,000 and the continued growth in government spending. Ironically, it was the large spending increases they enacted when they controlled Congress and the White House that contributed significantly to the current deficit problem.

(Compiled by Richard Cowan, editing by Vicki Allen)

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