Democrats Propose Surcharge on Wealthy to Pay for Vets' Educations

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House Democrats are proposing a tax surcharge on millionaires to pay for a big increase in education benefits for veterans of the war in Iraq, lawmakers said Tuesday.

The plan, if accepted by rank-and-file Democrats, would clear the way for a vote Thursday on a long-stalled war funding bill that would pay for military and diplomatic operations in Iraq and Afghanistan into next spring.

Conservative "Blue Dog" Democrats blocked a vote last week over Democratic leaders' attempts to add an additional $51.8 billion over the next decade for veterans education to the $183.8 billion war funding tab. They insisted on finding a way to pay for the new benefit without simply adding to the deficit.

"What we're talking about is a one-half percent income tax surcharge on incomes above $1 million," said Rep. Mike Ross, D-Ark., a leader of the Blue Dog group. "So someone who earns $2 million a year would pay $5,000. ... They're not going to miss it."

The $1 million adjusted gross income level would apply to couples. Individuals would pay the surcharge on adjusted income exceeding $500,000.

The idea earned support from House leaders at a late afternoon meeting of top Democrats, including Speaker Nancy Pelosi of California.

The new GI Bill would essentially guarantee a full-ride scholarship to any in-state public university, along with a monthly housing stipend, for individuals who serve the military for at least three years.

It's not at all clear that the tax surcharge could survive the Senate and it would likely prompt a veto from President Bush if it were to be presented to him. Still, the development allows House Democrats to keep promises to adhere to pay-as-you-go budget rules that were a top campaign plank in 2006.

The war funding bill still faces a troubled path to enactment and Democrats appear likely to miss their goal of passing the bill by Memorial Day.

Overall, the measure provides $96.6 billion of the $100 billion Bush requested to fund the wars in Iraq and Afghanistan through the end of September. The $3.4 billion left over would be used to pay for military base and hospital construction, additional food aid and cover shortfalls identified by the Bureau of the Census and the Bureau of Prisons.

Another $66 billion for the Pentagon for the 2009 budget year beginning Oct. 1 would keep troops funded until the next administration can set war policy.

Democrats are seeking to add a two-year, $15.6 billion plan to give 13 more weeks of unemployment checks to people whose benefits have run out and 13 weeks beyond that in states with especially high unemployment rates. That provision would not comply with the budget rules requiring deficit neutrality.

Democrats also plan to use the war funding bill to carry legislation to block new Bush administration regulations that would cut federal spending on Medicaid health care for the poor by $13 billion over the next five years. The House last month passed that measure by a veto-proof 349-62 margin.

Democrats will try -- as they have unsuccessfully in the past -- to force the troops home. The bill would require that troops start leaving Iraq within 30 days of its enactment and set a nonbinding goal of withdrawing combat troops by the end of December 2009. It also would require that any troops deployed into a combat zone exceed the Pentagon's peacetime standards for being fully trained and equipped.

However, both of these provisions are expected to fail in the Senate and be stripped from a final bill the House is to approve this spring.

The legislation also includes another $5.8 billion, as requested by Bush, to build flood protection levees around New Orleans.