By Jeremy Pelofsky and Richard Cowan
WASHINGTON (Reuters) - President Barack Obama on Wednesday personally lobbied fellow Democrats to support key initiatives in his $3.55 trillion budget proposal even as lawmakers sought to trim it to reduce long-term deficits.
"It went great," a smiling Obama told reporters after meeting with Democrats, who control Congress, for about an hour on Capitol Hill, where doubts over his huge spending plan for fiscal year 2010, which begins in October, have been rising.
Obama's huddle with the senators was aimed at bolstering support for budget priorities that would set national policy for the next five years. On Tuesday, he called the budget "inseparable" from his broader effort to pull the U.S. economy out of recession as the financial crisis continues to bite.
While any budget Congress passes would be nonbinding, it does set the funding parameters for Obama's initiatives on issues including energy and healthcare and the size of budget deficits they would create.
That, in turn, has an impact on everything from bond rates and the value of the dollar traded on Wall Street.
The budget also outlines tax policy, as Democrats are moving to maintain middle-class tax cuts established by former President George W. Bush while letting some of his tax cuts for the rich expire.
'TIDAL WAVE OF SPENDING'
Republicans have criticized Obama's budget for too much spending and large tax increases on the wealthy. They pointed to the nonpartisan Congressional Budget Office's analysis that showed the president's budget would balloon the deficit by $9.3 trillion over the next decade.
"Instead of simply righting the ship, this budget steers it in a radically different direction -- straight into the tidal wave of spending and debt that already is building," said Representative Paul Ryan, the House Budget Committee's top Republican.
Republicans were planning to offer a series of amendments aimed at freezing most domestic spending except for defense and attempt to limit government control over health care.
Senate Budget Committee Chairman Kent Conrad left the meeting with Obama proclaiming to reporters that the budget he will usher through the Senate "preserves the president's key priorities." Conrad said those included expanded spending on education, developing alternative energy and bringing healthcare reform, all the while cutting annual deficits way down from the astonishing $1.8 trillion expected this year.
But Conrad would leave to other committees the difficult task of creating those initiatives without adding to deficits.
Despite the fact that Conrad's budget plan would reduce the cost of Obama's proposals by $600 billion over five years, Conrad said Obama made "no complaints to me" about the direction he is going.
Some fiscally conservative Democrats, who will be important to winning passage of the massive budget, also had words of praise for attempts to cut Obama's spending requests.
"My guess is we're not going to walk in lock-step with everything the administration wants," Arkansas Senator Mark Pryor said.
Coming from an agriculture state, Pryor had problems with a line in Obama's budget calling for cutting government payments to some farmers. Conrad also took issue with the proposed cuts to farmers and left the move out of his budget plan.
Meanwhile, House of Representatives Budget Committee Democrats outlined a $3.45 trillion budget for fiscal 2010 -- slightly below Obama's proposed $3.55 trillion plan.
BUDGET PANELS HARD AT WORK
The budget panels hope to finish writing their proposals this week, sending them to the House and Senate floors next week. The two chambers then would have to work out their differences, probably after an April recess.
House Budget Committee Democrats said their proposal would cut the deficit to $586 billion in 2013, an attempt to reach Obama's pledge to cut the budget deficit in half by then. However, it would grow again to almost $600 billion in 2014.
The plan being sought by Senate Democrats would see the deficit drop to $570 billion in 2013 and continue down to $508 billion in 2014.
White House budget director Peter Orszag said the budget plans in the House and Senate largely matched Obama's.
"Yes, there are some differences, but I think the big story is how similar these two things are rather than the small adjustments that were inevitable," he said.
The House budget panel proposal also slims tax cut proposals from Obama's budget to about $613 billion from almost $804 billion from 2009 to 2014. Like the Senate version, it fully funds Obama's $556 billion plan for defense spending.
"I'm confident that ... we are going to get our budget with all the major elements intact," Vice President Joe Biden said as he also huddled with Democratic leaders on Capitol Hill.
(Additional reporting by Jeff Mason and Thomas Ferraro; editing by Will Dunham)