It was over six weeks ago when the House and Senate passed their $2.9 trillion budget resolutions for the federal fiscal year starting on October 1, 2008 and projected budgets through 2012. Since then, the attention of most members of Congress has been on the war in Iraq and whether or how to end it.

But a small group of budgeteers like House Budget Committee chair John Spratt (D-SC), his Senate counterpart Kent Conrad (D-ND) and other Democratic congressional leaders have been wrestling with the differences between the House and Senate resolutions, trying to arrive at compromises that the budget resolution conference committee can ratify. The conference committee finally convened yesterday, but there was no resolution, so to speak, of the main sticking points between the House and Senate.

The stakes are large; nothing else the Congress works on comes close to the $15 trillion in total spending over the next five years. The budget resolution sets goals for subsequent tax and spending bills. It makes a statement about the priorities of majority Democrats and provides an early test of the party's ability to prove it can govern. But at the same time, the resolutions are non-binding -- it’s only a resolution, not a statute; it lacks the force of law. Nothing in it is ultimately binding, except on the current Congress, and only if both houses approve it. If adopted this year, it would only be the third time in six years that Congress produced a budget blueprint -- budgets can be backed-into, rather than filled-in.

What are the biggest obstacles to compromise between the House and Senate versions of the budget resolution?

• The Baucus Amendment: A provision in the Senate version of the resolution dedicating the $132 billion surplus projected for fiscal 2012 to pay for extending popular tax cuts over 2010-12, such as those benefiting married couples and the child tax credit, while fixing the estate tax at 2009 levels.

• House: the main issue is how to design a "trigger" mechanism in the resolution that allows extensions of tax cuts expiring in 2010 under the Amendment to go forward only if surpluses actually materialize -- otherwise, they would have to be offset with spending cuts or tax increases, under the pay-as-you-go PAYGO rules.

• Senate: Via the Amendment, the Senate indicated a preference to waive the offset requirements for certain tax breaks affecting the middle class and family farms, given that the Baucus amendment passed on a 97-1 vote, far in excess of the 60 votes required to waive the Senate’s PAYGO rules.
  

• Reconciliation Instructions: The House version seeks special procedural protections from filibusters in the Senate afforded by a “reconciliation instruction” to expand direct government aid to college students by cutting private lender subsidies. Conrad opposes instructions to the Education committees; he is on record saying that reconciliation is meant to be reserved for deficit reduction, he doesn’t like the precedent the House would set, and the House version sets aside a paultry $75 million in savings in any case.

• Discretionary Spending Caps: The House and Senate are roughly $7 billion apart, with the Senate proposing a $948.8 cap on overall discretionary spending and the House proposing $955 billion. Word is that the compromise figure will tilt toward the House number. OMB Director Rob Portman is warning Democrats he will recommend a veto of any spending bill that exceeds President Bush's discretionary FY 08 budget request of $933 billion.
  

The conferees have a lot to work out in a tightening timeframe. Tuesday, May 15 stands as a form of deadline for Congress to produce a budget resolution, since it provides tax and spending caps and goals, particularly for the appropriations committees and subcommittees of Congress, who are permitted to report their spending bills to the floor or their respective chambers starting on May 15. Without the guidance the budget resolution provides, the spending process becomes more of a free-for-all, first-come, first-served, with the faster-acting subcommittees leaving budget crumbs for the slower ones.

And Kent Conrad was clear, speaking to reporters this week: "The important thing is to get it done next week. May 15 is what appropriators said they need."

I’ll report back with further developments next week.