Senator Gordon Smith (R-OR) walked away from negotiations on the congressional budget resolution last night moments before a final deal was struck. Smith, a key senator in the negotiations because of his successful amendment protecting Medicaid funding during the Senate debate, has said he will not vote for the final budget. This development will likely delay floor consideration of the budget this week and could doom the legislation altogether. Senate Majority Leader Bill Frist (R-TN) and Budget Committee Chairman Judd Gregg (R-NH) will have a very difficult time passing the budget without Smith's support. Smith's amendment to protect funding for the low-income health care program on the Senate floor passed with the support of five other Republicans. Because the Senate passed the budget resolution by only two votes, those Republican Senators become the key to passing the final resolution. The position of some of those Senators on final passage is still unclear. As the Washington Post editorializes this morning, this may be the best thing for the country in the end.

As support for the estate tax continues to flounder somewhat at the national level, the state of Washington recently demonstrated their support of the estate tax by approving on April 24 a new stand-alone estate tax that is expected to generate nearly $140 million of state revenue over the next two years. This move is especially significant because in February, the Washington State Supreme Court "threw out" the state's existing estate tax for various technical reasons, costing the state roughly $430 million in state revenues. However, in resistance to this, Governor Christine Gregoire (D-WA) included the estate tax in her budget proposal. State legislators rallied around her decision and passed the bill, which is now headed to the Governor for her signature. The Washington estate tax will apply to estates worth more than $1.5 million. In 2006, that level will rise to $2 million. An estimated 250 Washington estates will be subject to tax each year.

The Senate Finance Committe held a hearing yesterday on the issue of Social Security solvency and private accounts. Witnesses testifying before the committee included Peter Orszag from the Brookings Institution, Robert Pozen, whose Social Security plan has been praised by Bush, Joan Entmacher of the National Women's Law Center, Michael Tanner of Cato, and Peter Ferrara of the Free Enterprise Fund. Click here for witness testimonies. Committee Chairman Charles Grassley told reporters after the hearing that he wants to move forward with Social Security legislation. Republicans on the committee are planning to meet in two weeks to start coming with legislation that Grassley hopes will appeal to the Democrats on the committee, which include Senators Max Baucus (D-MT), Kent Conrad (D-ND), Jeff Bingaman (D-NM), John Kerry (D-MA), Blanche Lincoln (D-AR), and Ron Wyden (D-OR). While the Democratic senators seem to be united in their opposition to private accounts, Republicans are more splintered on the issue. During yesterday's hearing Craig Thomas (R-WY) questioned a move that would add trillions of dollars to our debt, and Olympia Snowe (R-ME) seemed opposed to personal investment accounts. She said, "Social Security became the bedrock of support for seniors in my state precisely because it's defined and guaranteed. What cost and what risk is it worth to erode the guaranteed benefit?" Click here and here for newspaper articles on the hearing as well as the Social Security rally that took place yesterday afternoon on Capitol Hill.

Here is the link to the House hearing. The testimony is up, even though they have not posted the transcript yet.