President Barack Obama lobbied fellow Democrats on Wednesday to support major initiatives in his $3.55 trillion budget proposal and the White House played down differences as lawmakers sought to trim the plan to reduce long-term deficits.

It went great, a smiling Obama told reporters after meeting with Democrats, who control Congress, for nearly an hour on Capitol Hill. Doubts have been rising among some Democrats over Obama's huge spending plan for fiscal 2010, which begins on October 1.

The meeting was aimed at bolstering support for budget priorities that would set national policy for the next five years. On Tuesday, Obama 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 sets the funding parameters for such Obama initiatives as alternative energy development, the expansion of healthcare and how to control the size of budget deficits.

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. Democrats rejected a request by Obama to make permanent a $400 tax break for individuals and $800 for working couples that passed in the stimulus plan last month but expires in 2010.

'TIDAL WAVE OF SPENDING'

Republicans have criticized Obama's budget for too much spending and large tax increases on the wealthy and some small businesses. 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.

The House Budget Committee Democrats outlined a $3.45 trillion budget for fiscal 2010 -- slightly below Obama's proposed $3.55 trillion plan.

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.

House Republicans offered several amendments aimed at freezing domestic spending except for defense, preventing the expiration of tax cuts and expanding oil and gas exploration. They all failed on party-line votes.

They were particularly incensed the House budget plan included instructions for Congress to address healthcare reform and education, which would allow Democrats to put such legislation on a fast-track path to pass.

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 the House and Senate proposals leave to other committees the difficult task of crafting 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 was going.

White House budget director Peter Orszag said the budget plans in the House and Senate largely matched Obama's.

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.

BUDGET PANELS HARD AT WORK

The budget panels plan 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 a two-week 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. But 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 down to $508 billion in 2014.

The House budget panel proposal also slims tax cuts in 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.

The Senate offered bigger cuts than the House to many non-defense programs and the two chambers differed over how to address the Alternative Minimum Tax, which was aimed at ensuring wealthy people paid taxes but has increasingly hit middle-income Americans.

(Additional reporting by Jeff Mason and Thomas Ferraro; Editing by Peter Cooney)

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