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At first glance, the House and Senate versions of the fiscal 2006 budget resolution look like a filet mignon and a hot-fudge sundae. Consumed separately, they're quite edible, but try to mix them together and you can end up with an upset stomach.

The budget resolutions that each chamber approved on March 17 left conference committee negotiators with a seemingly daunting task. From Medicaid to farm programs to tax cuts, the two documents set some starkly different priorities, and merging these priorities won't be easy.

Nevertheless, budgeteers contend that a compromise is not only possible after Congress returns from its two-week Easter recess, it is likely. "Despite the initial concerns being raised by the two Budget Committee chairmen, I think it's possible through the normal process of give-and-take," said G. William Hoagland, director of budget and appropriations for Senate Majority Leader Bill Frist, R-Tenn.

The spokesman for House Budget Committee Chairman Jim Nussle, R-Iowa, was similarly upbeat. "The two chairmen have the same goals," said Sean Spicer, the committee's communications director.

And a key Democratic aide also said it is likely that Republicans will resolve their budget differences. "Fundamentally, they're close," said Thomas Kahn, Democratic staff director of the House Budget Committee. "I don't think it will be an easy thing to do. In the end, I think they'll be able to do it."

Such optimism is somewhat surprising, given that Congress was unable to approve a budget resolution conference agreement in two of the past four years: In 2002, leaders in the Democratic-controlled Senate could not round up the necessary votes to pass their budget plan. Last year, the GOP-controlled House and Senate could not agree on whether to extend the pay-as-you-go rules requiring offsets for new tax cuts.

This year, however, the budget resolution has taken on added significance. For the first time in years, Senate Republicans were able to push through a provision that clears the way for oil and gas drilling in the Arctic National Wildlife Refuge. The move means that -- if Congress passes a budget resolution conference report -- proponents will need only 51 votes in the Senate later this year to approve separate legislation allowing ANWR drilling. Although the House budget does not include an ANWR provision, a majority of House members have been on record as supporting drilling.

Republicans see the Senate's approval of the ANWR provision as a huge victory. "It's as important to me as the first step [Neil] Armstrong took when he stepped on the moon," Sen. Ted Stevens, R-Alaska, said last month. "We won the election, and we promised we'd do this when we won that election, and that's meaningful to me."

And perhaps more important than Arctic drilling, both versions of the budget resolution call for congressional committees to find savings in entitlement programs through the budget reconciliation process for the first time since 1997. In recent years, the budget resolution has provided a cap on spending and tax cuts. But this year, House and Senate Republicans bit the bullet and decided that, to cut the federal deficit, entitlement savings had to be on the table.

Before that debate can start, conferees from the two chambers must first reconcile their differences on the budget resolution. The House budget plan calls for discretionary spending of $843 billion in fiscal 2006, while the Senate version calls for $849 billion. The House plan includes $67 billion in entitlement savings over the next five years, while the Senate plan calls for $17 billion in such savings.

Originally, the Senate version called for $32 billion in entitlement savings. But the Senate approved an amendment, sponsored by Sen. Gordon Smith, R-Ore., to eliminate any requirement for savings from the Medicaid program. The House proposed cutting $20 billion from Medicaid.

Senate Budget Committee Chairman Judd Gregg, R-N.H., vehemently opposed Smith's amendment last month. "This concept that you can't get to this 1 percent savings, that you can't live on a 39 percent growth in Medicaid without having children lose their lives and not be able to go to the emergency room, is just scare tactics," Gregg said.

The Senate also approved tax cuts totaling some $129 billion over five years, $64 billion more than its original budget plan called for. The additional tax cuts, offered by Sen. Jim Bunning, R-Ky., were intended to repeal a tax code provision that requires some senior citizens to pay taxes on a portion of their Social Security benefits. But since the budget resolution cannot specify which taxes the Senate Finance and House Ways and Means committees will propose to cut, the Bunning amendment simply increased the overall tax-cut level. Many senators, Hoagland asserted, were unsure of what they were voting for when they voted for the Bunning amendment.

Democrats cannot be counted on to help pass a budget resolution, so Republicans must find common ground among themselves. The conference negotiators will walk a fine line as they try to craft a budget accord that can pass both the House, where many Republicans are intent on demonstrating their fiscal conservatism, and the more moderate Senate.

An aide to a House conservative said that a deal can be reached, but he warned that the House cannot cave too much to the Senate's demands. "There should be a way to negotiate this -- a compromise that doesn't compromise our principles," the aide said.

House Republicans will have to compromise, though, if a budget deal is to be reached, said Ed Lorenzen, head of centrists.org and a special consultant for the nonpartisan Committee for a Responsible Federal Budget. "This year, the price of getting a budget resolution is House Republicans giving up [some] spending cuts," Lorenzen said. He added that that might be somewhat difficult, because "House Republicans have gone out on a limb for entitlement savings."

A compromise on entitlement savings is crucial. Hoagland predicted that Health and Human Services Secretary Mike Leavitt will be able to broker a deal that includes some Medicaid savings. "I believe we can come up with a number that will be acceptable to those who are concerned about Medicaid," Hoagland said.

Once Congress passes a final budget resolution, the heavy lifting really begins. Under the budget reconciliation process, a budget resolution conference agreement would give instructions to various authorizing committees to find savings -- through policy changes -- in entitlement programs under their jurisdiction. The Budget committees would then bundle the savings proposals into a reconciliation bill. That legislation is protected from filibusters, so it needs only 51 votes and not 60 to pass in the Senate.

Many Republicans see it as imperative that Congress move ahead now on cutting entitlements -- and in a way that can circumvent a Senate filibuster. "Next year is an election year, and Congresses are not inclined to make tough choices in election years," Gregg said in a floor statement during the Senate's budget debate. "It's been years since we did the last reconciliation bill, so it's unlikely that reconciliation will occur again."

Added Spicer: "You just need to unlock the door to the reconciliation process. If you don't start the debate, it doesn't happen. If you don't start looking at these programs now, next year is an election year."

But relatively few lawmakers or staff recall the years when reconciliation bills were routine. "The rank and file has never been through this," Spicer conceded.

Hoagland has lived through many reconciliation bills, including the one in 1997, when Congress and President Clinton passed their balanced-budget deal. Even though the deal was struck in the spring, it was August before Clinton signed bills on entitlement savings and tax cuts.

Back then, four Senate committees missed their deadlines for filing their entitlement savings plans with the Senate Budget Committee. During the process, Congress created a $24 billion program to expand health benefits for children. Fights broke out over the use of tobacco-settlement money, special-interest tax cuts, and Amtrak reform. In short, it was a mess. And there's no reason to believe that the situation will be any less messy between now and September, when committees will likely have to submit their entitlement savings plans to their respective Budget committees.

For Republicans, though, the political stakes are high. With the GOP controlling Congress -- by bigger margins than last year -- as well as the White House, failing to pass a budget would be "embarrassing," Kahn said, adding, "It diminishes their credibility."

In Hoagland's view, if Republicans cannot push through a budget this year, that failure could drive the final nail into the coffin of the current budget process, which has been held together by tape and wire -- not to mention smoke and mirrors. "The question will have to be raised about whether this process makes any sense at all," Hoagland said. "If we go for another year ... then I would say the budget process will be severely wounded."

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