With no Republican support, the House of Representatives and Senate approved slightly different, less expensive versions of Obama's $3.55 trillion budget plan for fiscal 2010, which begins on October 1. The differences will be worked out over the next few weeks.
Obama, who took office in January after eight years of the Republican Bush presidency, has said the Democrats' budget is critical to turning around the recession-hit U.S. economy and paving the way for sweeping healthcare, climate change and education reforms he hopes to push through Congress this year.
Obama, traveling in Europe, issued a statement praising the votes as an important step toward rebuilding our struggling economy. Vice President Joe Biden, who serves as president of the Senate, presided over that chamber's vote.
Democrats in both chambers voted down Republican alternatives that focused on slashing massive deficits with large cuts to domestic social spending but also offered hefty tax breaks for corporations and individuals.
Democrats know that those policies are the wrong way to go, House Majority Leader Steny Hoyer told reporters. Our budget lays the groundwork for a sustained, shared and job-creating recovery.
But Republicans have argued the Democrats' budget would be a dangerous expansion of the federal government and could lead to unnecessary taxes that would only worsen the country's long-term fiscal situation.
The Democrat plan to increase spending, to increase taxes, and increase the debt makes no difficult choices, said House Minority Leader John Boehner. It's a roadmap to disaster.
The budget measure is nonbinding but it sets guidelines for spending and tax bills Congress will consider later this year.
BIPARTISANSHIP ABSENT AGAIN
Obama has said he hoped to restore bipartisanship when he arrived in Washington but it was visibly absent on Thursday.
The House approved its budget by a vote of 233-196 with no Republican support. Hours later, the Senate approved its version 55-43, with all Republicans and two Democrats voting against it, Senators Ben Nelson and Evan Bayh.
Democrats and Republicans have quarreled for weeks over who was to blame for the massive government deficits. The fiscal 2009 deficit is expected to hit a record $1.8 trillion before ebbing to $1.4 trillion next year.
Obama had pledged to cut the deficit in half by 2013 but his budget was criticized for raising the deficit by $9.3 trillion over 10 years. So lawmakers pared it back, dropping a signature tax break and approving only vague language on some of his major spending initiatives like healthcare reform.
Senate Budget Committee Chairman Kent Conrad said Obama had inherited a federal debt that doubled during Republican President George W. Bush's two terms.
Most of the senators on the other side were silent as that debt grew and grew and grew, Conrad said.
Republican Senator Lindsey Graham criticized Democrats' major spending initiatives in the depths of a recession.
Most families are tightening their belts, he said. We're not. We're buying a bigger suit.
FIGHT OVER HEALTHCARE
Lawmakers left most of the details until later but the House measure included a provision that would fast-track legislation for Obama's healthcare overhaul initiative, despite stiff Republican opposition.
Members of Congress are girding for a fight over this idea when budget negotiators try to write their compromise.
Obama wants to reshape the healthcare system to control spiraling costs and insure millions of Americans now without coverage. On energy, he wants to develop alternative sources and rein in industrial pollutants that contribute to climate change.
Education funding would be increased to boost programs ranging from early learning to college tuition aid.
The Senate and House Democratic budgets would continue some tax cuts for the middle class while allowing some taxes on the wealthy to rise.
The senators approved many amendments, including one that opposed the scaling back of a tax deduction for charitable contributions designed to raise revenue to pay for healthcare reform. They approved one expanding the estate tax exemption but quickly followed with another to limit the expansion.
They also backed an amendment calling on the central bank to disclose the names of institutions that get emergency loans under the $700 billion federal bailout for ailing banks.
The lawmakers rejected one Republican attempt to recall $272 billion in outstanding money from that bailout and another to rescind some or most of the $787 billion economic stimulus package approved in February.
The Senate earlier approved adding $550 million to beef up security on the U.S. border with Mexico and restore $4 billion in foreign aid.
Many of the changes adopted could be stripped when House and Senate lawmakers meet to meld the two different budgets.