Dems Budget Plan Gets Initial Approval, Would Provide Surpluses by Allowing Tax Cuts to Expire

WASHINGTON – House Democrats awarded initial approval of an election-year budget blueprint early Thursday that would produce sizable surpluses by 2012 by allowing President Bush's tax cuts to expire as scheduled.

The $3 trillion budget plan for 2009, which passed the House Budget Committee on a party-line 22-16 vote, would award greater-than-inflation increases to domestic programs. That immediately earned a promise from the White House that Bush would veto subsequent spending bills funding agency budgets.

The Senate Budget Committee planned a vote Thursday on a largely similar plan. At issue is the annual congressional budget resolution, a nonbinding document that sets guidelines for later legislation to put in place tax and spending goals for the budget year that begins Oct. 1.

The Senate's measure is $18 billion, or 4 percent, more than Bush's budget for non-defense programs funded each year by Congress, such as education, health research, housing and health care for veterans. The House version offers an increase of $22 billion, almost 5 percent.

Both plans ratify Bush's $36 billion, or 7 percent, increase for the core Pentagon budget.

Bush claimed victory in last year's budget fight and is eager to bring lawmakers to heel again. As a result, Democrats are signaling they do not intend to send him many spending bills this year; they prefer to deal with his successor, who they hope will be a Democrat. Bush leaves office Jan. 20.

As for the 2001 and 2003 tax cuts, the budget plans leave their fate to the next Congress and the new president. Majority Democrats say they will likely allow income tax cuts for wealthy taxpayers to expire, but extend tax cuts for lower- and middle-income people.

At least so far, however, the current Democratic plans assume the expirations of tax cuts on income, investments, married couples and people with children, as well as people inheriting large estates. Republicans are strongly opposed.

"We're not just talking about hurting the rich," said Rep. Paul Ryan of Wisconsin, top Republican on the House Budget Committee. "We're talking about raising taxes on every single American taxpayer."

The Senate Budget Committee chairman, Kent Conrad, said the Senate Finance Committee chairman, Max Baucus, would seek to renew tax cuts aimed at the middle class. That includes the $1,000 per child credit, relief from the marriage penalty, estate tax cuts and the 10 percent tax rate on the first $7,825 of income for individuals.

Conrad, D-N.D., said the budget still would produce a small surplus in 2012 and 2013, assuming the Senate approves the proposal by Baucus, D-Mont., during debate next week.

The Democratic plans do not to take on the exploding growth of Medicare, Social Security and other benefit programs. Doing so would be a painful exercise in an election year.

"Our budget ... is no grand solution, but it moves us in the right direction," said Democratic Rep. John Spratt Jr. of South Carolina, the House Budget Committee chairman.

Democrats have criticized Bush's $3.1 trillion budget plan as unrealistic. They note it does not include the cost of the Iraq war or any provisions after this year for keeping the alternative minimum tax — originally aimed at the wealthy — from hitting millions of middle-class taxpayers.

But the Democratic plans only cover Bush's request of $70 billion for the wars in Iraq and Afghanistan in 2009, and nothing after that.

House and Senate Democrats differ on how to address the alternative minimum tax problem. The Senate assumes a one-year, $62 billion fix; the House wants a permanent solution that would be offset by increasing taxes on wealthier taxpayers.

In the House committee, Democrats rejected a GOP attempt to put in place a one-year freeze on lawmakers' pet projects for their districts and states, as well as amendments designed to extend the Bush tax cuts.

The Senate plan assumes $35 billion for an additional economic aid measure to follow the two-year, $168 billion plan enacted last month. Democrats want to extend unemployment benefits, increase heating aid for the poor and assistance to states to purchase and refurbish foreclosed homes.

The budget plan Bush submitted last month would reach near-balance in 2012, according to congressional estimates. But it only does so by politically impossible cuts to veterans' health care and other popular programs.