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House and Senate leaders face an intense workload this week with major decisions looming on Arctic drilling and other budget issues, while attempting to close out fiscal 2006 appropriations.

Conferees will meet on a $142.5 billion Labor-HHS spending bill, and after reallocating some funds to rural health care and education, supporters are expected to eke out a narrow victory on the House floor later this week, reversing a defeat before Thanksgiving.

Negotiations are all but finished on a $453.3 billion fiscal 2006 Defense bill, but extraneous issues continue to hold up final action.

Senate Defense Appropriations Subcommittee Chairman Ted Stevens, R-Alaska, is seeking assurances that ANWR will be in the final budget reconciliation package before moving forward with the Pentagon budget, while House Speaker Dennis Hastert, R-Ill., wants to include a 1 percent across-the-board cut in fiscal 2006 spending that is contingent on wringing higher mandatory savings out of reconciliation.

Senate Appropriations Chairman Thad Cochran, R-Miss., wants to attach to the Defense bill a Hurricane Katrina relief package that would cost billions of dollars more than the White House has proposed, and House leaders are demanding offsets that aides are still trying to cobble together.

The Defense bill also is the likely vehicle for an avian flu preparedness package in the $3.5 billion range.

On reconciliation, Stevens has opened up a new line of attack after CBO released new estimates doubling potential revenues from Arctic drilling to $10 billion, half of which would count as savings for the federal government.

That could mean more sweeteners for Gulf Coast lawmakers seeking to rebuild their states or low-income heating subsidies of more than $1 billion as in the House bill. ANWR is "the elephant in the middle of the room" for budget negotiators, as a House GOP aide put it.

The budget bill seeks to trim up to $45 billion from the deficit over five years, including around $13.5 billion from the Medicaid and Medicare healthcare programs for the poor and elderly.

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