The Senate's first vote on amendments to the budget resolution today was on Senator Conrad's (D-ND) pay-as-you-go (PAY-GO) provision. Under Conrad's amendment, both changes to entitlement spending and any tax cuts would have to be offset in order to pass by a simple majority in the Senate. The amendment was cosponsored by Senators Russ Feingold (D-WI) and Bill Nelson (D-FL).

Although it is the intention of Senate leaders to finish work on the spending bills as well as other must-pass legislation by Nov. 18 (the date they are slated to recess as well as the date the continuing resolution expires), it remains to be seen whether or not this is possible. Progress continues though, with lawmakers saying they expect action soon on a number of final conference reports. Late in the day yesterday conferees completed work on the $20.9 billion Foreign Operations spending bill. The House and Senate will vote on the measure by the end of this week. Lawmakers are also were hopeful that conferees on the Energy and Water spending bill would agree upon a funding level for the Army Corps of Engineers soon in order for a final bill to be voted on before Nov. 4. Conferees on the Military Quality of Life and Veterans Affairs and the Science, State, Justice, and Commerce appropriations bills are expected to be named soon. Finally, Senate Appropriations Defense Subcommittee Chairman Ted Stevens (R-AK) told reporters that conferees on the Defense bill plan to meet early this friday to hopefully agree on a measure that would permit lawmakers to sign off soon on the massive bill and get needed funding to the Pentagon by mid-November.

With reconciliation moving full steam ahead, Sen. Kent Conrad (D-ND) of the finance committee commented, "I have never felt that a budget going through the Congress of the United States is more disconnected from reality than this budget." It truly is disconnected -- the Senate Budget Committee yesterday approved a spending blueprint which would cut $39 billion from mandatory programs over the next five years. Overall the bill would actually produce $71 billion in gross savings, but would put about $32 billion of those savings back into new spending. The legislation will likely be considered on the House floor next week. House Republican leaders are currently still working to put together 218 votes for support for a larger $50 billion plan. Some Republicans, including Ways and Means Committee Chairman Bill Thomas (R-CA) have privately expressed frustration to House leaders over the increased spending cut targets. Ways and Means, for example, is now being pressured to cut $8 billion, which is up from $1 billion in the original FY06 budget resolution.

The House will set to work on the reconciliation budget bill tomorrow, with markups in eight separate committees. The Energy and Commerce Committee will be looking to trim as much as $12 billion from Medicaid over five years. These cuts could be problematic for some members of the Energy and Commerce Committee Republicans such Rep. Heather Wilson (R-NM), who was responsible for sending a letter to Budget Committee Chairman Jim Nussle back in April, asking him to remove reductions to Medicaid in the reconciliation instructions. The letter was signed by 43 other Republicans, including former leader Tom Delay, Speaker Dennis Hastert, and House Whip Roy Blunt. The cuts to Medicaid which would be included in the House budget reconciliation bill would, unlike the Senate Finance Committee proposal, hit Medicaid beneficiaries directly. The House reconciliation instructions will also look at ANWR, offshore drilling, and LIHEAP funding. According to BNA, on Wednesday and Thursday of this week two House committees "plan to mark up language that would open the Arctic National Wildlife Refuge, expand offshore oil and gas exploration, and increase federal assistance to low-income families that need help paying their winter heating bills." Opening the ANWR coastal plain to oil and gas leasing is projected to raise $2.4 billion over five years (although this money is not guaranteed), yet will have a number of environmental consequences and do little to alleviate national dependancy on oil. House Energy and Commerce Committee Chair Joe Barton (R-TX) also plans to ask for an extra $1 billion to fund LIHEAP, which provides heating and cooling assistance to one out every five American families. In the Senate there have been two amendments to increase LIHEAP funding by $3.1 billion. Each of the two votes, which were procedural, have been rejected; however in anticipation of a 50 percent increase in heating bills many will be experiencing this winter, it is almost certain funding will go up significantly. The White House is expected to request a third supplemental spending bill for hurricane recovery by the end of this week, and that could potentially be a vehicle through which LIHEAP funding could be increased.