Both proposals, stuck in Congress for nearly a year, are gaining new momentum as Democrats contemplate facing voters in November without having delivered on any of Obama's major policy objectives.
Key Senate Democrats initially balked at combining the health-reform bill with a measure that overhauls the nation's student-loan program, but on Thursday they had warmed to the idea.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) had been one of the chief opponents because he feared the education proposal -- which would free up billions in federal subsidies to private lenders as it increases funds for Pell Grants -- would provoke procedural challenges from Republicans. But Conrad said the Senate parliamentarian suggested in a preliminary ruling that combining the bills could work, provided that the right balance on cost was found. "I'd say yes, we're leaning toward it," Conrad said.
White House Chief of Staff Rahm Emanuel, who supports pairing the measures, said Thursday night that lawmakers had made "a lot of decisions" but were still addressing several concerns related to the education bill. "We're getting close," Emanuel said after meeting at the Capitol with Democratic leaders.
House and Senate leaders were making final adjustments late Thursday to a package of fixes on the Senate health-care bill that would clear the way for its final passage. The education proposal would be included among the fixes and, under special budget reconciliation rules, protected from a GOP filibuster in the Senate.
Under the emerging plan, the House would accept the version of health-care reform that the Senate approved on Christmas Eve, along with adjustments to key provisions sought by House Democrats, mostly aimed at reducing the bill's financial burden on middle-class families. The process of moving the legislation through the House and Senate is expected to begin Monday in the House Budget Committee.
House leaders were still trying to resolve one of the most contentious issues on the table -- how to handle abortion coverage for people who receive federal subsidies to buy insurance. Under reconciliation rules, every fix must carry budget implications, and Speaker Nancy Pelosi (D-Calif.) is working to reassure House Democrats who oppose abortion rights that the less-restrictive language in the Senate bill is tough enough.
House Democrats planned to meet again Friday morning to review the fixes, expected to run about 100 pages, and to discuss the process for completing the bill. It could clear the House by the end of next week, assuming it encounters no obstacles. The Senate bill would then go to Obama for his signature, and the reconciliation package would head to the Senate for a vote.
Senate Republicans said Thursday that they had been informed by the chamber's parliamentarian that the bill must be signed into law before the Senate could take up the fixes. Senate Democrats had been anticipating such a ruling, but House leaders had hoped that Obama could sign the two measures simultaneously.
Senate Majority Leader Harry M. Reid (D-Nev.) and Pelosi refused to commit to a timetable for finishing, brushing aside the White House's request that the House complete its work by Thursday, when Obama is scheduled to depart for Indonesia and Australia.
Pelosi said she assured House Democrats at a meeting Thursday that they would have "at least one week" to consider the bill after the Congressional Budget Office gives a final cost estimate. "It may take longer," she noted. "We will take up the bill when we're ready to take up the bill, but it's not something we want to drag out."
White House press secretary Robert Gibbs acknowledged Thursday that the House would miss the Thursday target.
Hundreds of community college advocates converged Thursday on Capitol Hill to lobby for the student-loan measure, which would provide billions of dollars to their sector of higher education. "It's terribly urgent," said Jack Scott, chancellor of the California community college system, which has been decimated by state budget cuts.
The loan industry was pushing just as hard to slow down the proposal, expressing skepticism at the idea of combining it with health reform. SLM Corp., the Reston student-loan provider known as Sallie Mae, contends that the government could end subsidies to private lenders but preserve a role for the industry in originating loans.