President Bush summoned his Cabinet to the White House Tuesday where he challenged House and Senate lawmakers to pinch pennies as they try to hammer out a budget resolution (search) this week that would outline next year's tax and spending priorities.

"It's important we get a budget, a budget which will show the American people that we spend their money wisely," Bush said before his afternoon meeting.

The Republican-controlled House and Senate have passed differing versions of the budget resolution, which they say they hope to reconcile in a single measure this week.

When it comes to discretionary spending, appropriations for areas like agriculture subsidies (search) and federal highways (search), the House budget plan closely reflects the president's proposal — one of the leanest in decades.

Discretionary spending would hit $843 billion in fiscal year 2006, which starts on Oct. 1. That number does not include $50 billion in supplemental spending for Iraq and Afghanistan.

The Senate version falls short of the president's vision — spending more and cutting less than Bush wants. The Senate would increase discretionary spending to $849 billion plus the $50 billion for Iraq.

Bush indicated, however, that a compromise somewhere in the middle could result in an acceptable level of spending discipline, at least on the discretionary side of the federal ledger.

"I appreciate the fact that it looks like that we are going to get a solid cap on discretionary spending, one that we agree with," Bush said.

But the real battle is over how to find savings in what are called mandatory entitlements (search), programs like Medicare (search) and Medicaid that are cherished by voters and jealously guarded by lawmakers.

For the first time since 1997, lawmakers stepped up and agreed to curb entitlement spending in order to help curb the annual deficit.

But the House and Senate versions differ dramatically. The House would trim about $68.6 billion, including $20 billion from Medicaid alone. The Senate measure, on the other hand, trims $17 billion total and rejected any cuts to Medicaid (search).

The president said it would be an "interesting negotiation" and then chided lawmakers to look for more ways to save money in the nation's entitlement programs.

Twice in the last four years, Congress has failed to pass a budget resolution, which protects all items in it from a Senate filibuster (search), meaning programs can be approved with 51 instead of 60 votes.

Republicans are optimistic they will have a resolution this year, and the president is pushing particularly hard not only to curb entitlement spending but also because opening the Arctic National Wildlife Refuge to energy exploration is in both the House and Senate versions. If a final budget resolution can be reached, drilling in ANWR is practically guaranteed, realizing a top priority the president did not reach in his first term.

Click in the box near the top of the story to watch a report by FOX News' Carl Cameron.