As the budget process moves forward, House and Senate Appropriations chairmen are nearing an agreement on a sweeping reorganization of the spending panels, with a deal expected as soon as today, although sources warned that it could slip to Thursday.

House Chairman Jerry Lewis (R-Calif.) has pushed to reduce the number of subcommittees from 13 to 10 while changing the way different federal agencies spending requests are grouped together. Senate Chairman Thad Cochran (R-Miss.) has made his own counterproposals after hearing complaints from his fellow Senate appropriators about the House’s plan.

Speaker Dennis Hastert (R-Ill.) told the two chairmen last week that he wanted a deal done by the close of business Wednesday. Lewis and Cochran spoke both Monday and Tuesday and their staffs also convened Tuesday, as the two sides have gradually closed the distance between their positions on restructuring the spending process.

“We’ve been in ongoing negotiations and we’re making good progress,” said House Appropriations spokesman John Scofield. “We expect that we can get an agreement by the end of this week.”

Lewis’ initial proposal called for the breakup of the subcommittee on Veterans Affairs, Housing and Urban Development and independent agencies. Veterans issues would be added to the current military construction subcommittee, along with some other personnel issues from the Defense subcommittee, to create a new “military life” subcommittee.

The plan also called for the legislative branch subcommittee to be eliminated and for District of Columbia issues to be handled by the Interior subcommittee.

Republican sources said the two chambers are very near an agreement to break up the VA-HUD panel, an important breakthrough since Senate VA-HUD Chairman Kit Bond (R-Mo.) was initially one of the most vocal opponents of the plan.

The largest remaining stumbling block, according to sources monitoring the negotiations, is the fate of the Defense subcommittee.

Defense Chairman Ted Stevens (R-Alaska) expressed doubt that his panel would be further altered by taking some military personnel accounts away from it and placing them in a retooled “military life” subcommittee. Still, Stevens dodged a question on whether the House was moving toward a compromise on that proposal.

“I still oppose taking any money from Defense and putting it” in another subcommittee, said Stevens. “We really don’t need any reorganization for Defense. For other things, maybe.”

Both the House and Senate panels have strived to keep the negotiations secret, with only Lewis, Cochran and their senior aides in the loop on the details of their discussions. Republican leaders and rank-and-file appropriators in both chambers have been kept largely in the dark in recent days.

Sen. Larry Craig (R-Idaho) said Senate appropriators expect the House to put forward their final offer for reorganization Wednesday, but noted that he did not get specifics on how the negotiations were going when he talked to Cochran on Monday.

Craig held out the possibility that the Senate would reject House efforts to restructure the committees, but noted that, for the convenience of reconciling House and Senate spending bills in conference committee, it would be preferable for the two chambers’ appropriations panels to mirror each others’ structure.

“I’m not sure we’ll be in total sync,” said Craig. “I hope [the chairmen] can work out their differences.”

Craig, an appropriator who also serves as chairman of the Senate Veterans Affairs Committee, also opposes the part of the House’s original plan that would move veterans funding into the Defense subcommittee.

If the House and Senate cannot agree on the Defense and military construction subcommittees, it remains possible that the two chambers could adopt different structures for those panels. To Members and aides involved in the spending process, that is seen as much more manageable than it would be if Lewis and Cochran could not agree on the VA-HUD breakup.

House Majority Leader Tom DeLay (R-Texas) expressed optimism about a deal at his weekly session with reporters Tuesday, saying the two Appropriations chairmen would “hopefully” have a deal this week. DeLay also praised Lewis’ determination to “accelerate the appropriations process” and to avoid the increasingly common year-end omnibus bill.

If Lewis wants to speed up the process, he will need to have the new organizational structure, complete with Members and staff, in place by the time the fiscal 2006 budget passes so he can immediately begin giving cardinals their 302(b) allocations.