Banking reform, unemployment high on US Congress' agenda

US lawmakers return to Congress today after a two-week break, facing a backlog of work and a bitterly partisan atmosphere soured by Democratic tactics in passing healthcare reform over united Republican opposition.

With congressional elections looming in November, lawmakers have limited time to take care of business on their calendar before being caught up in campaigning for all 435 seats in the House of Representatives and more than a third of the Senate's 100 seats.

Republicans are expected to pick up seats, eroding the Democrats' majority in both chambers. Here are some of the issues Congress will confront as it returns from its two-week recess:

Senate aides over the recess continued to seek a bipartisan compromise on financial reform, and senators are expected to begin formal debate soon on a Democratic Bill that was approved last month by the banking committee in a party-line vote. The House approved a Bill in December.

President Barack Obama, hoping to build on this year's healthcare reform victory, is making financial reform his top post-recess domestic policy priority, pressuring lawmakers to produce a bill.

Some 200,000 Americans saw their jobless benefits expire in the first week of April because Congress allowed the programme to lapse before the recess. Both Democrats and Republicans say the programme should be renewed and the Senate is scheduled to vote today. But most Republicans are likely to vote against a one-month extension on the grounds that its $9 billion cost should be offset by spending cuts elsewhere.

With the unemployment rate stuck at 9.7 per cent, moderate Republican senators like Olympia Snowe and Scott Brown could give the Democrats the support they need to overcome Republican opposition.

Congress is required to approve a budget blueprint by Thursday to outline its spending and revenue plans for the fiscal year that starts on October 1. But the process has already been delayed by the healthcare debate, and Democrats could be reluctant to sign off on any plan that acknowledges the record $1.5 trillion deficit projected for this year.

"I know they would prefer not to take a vote on a budget resolution because they're voting on the deficit, but I don't think they have a choice." budget expert Stan Collender said.

Congress faces no penalty if it does not pass a budget resolution, as happened in 2006 when Republicans were in control, and appropriators will begin parceling out money to government agencies next month no matter what.

But a failure to approve a budget resolution would undermine Democrats' fiscal bona fides and could unsettle investors who already question whether Washington has the courage to bring its yawning deficits under control.

Perhaps more importantly, the budget resolution also sets the rules by which the Senate can pass legislation with a simple majority, rather than the usual 60-vote threshold. Those rules helped Democrats pass their healthcare bill and could come in handy when they want to extend the middle-class tax cuts that otherwise will expire on December 31.