Democrats Promise Budget Surpluse
March 5, 2008

WASHINGTON (AP) — House Democrats rolled out a cautious election-year budget blueprint Wednesday that promises to put the federal budget back in the black while awarding greater-than-inflation increases to domestic programs.

But the Democratic budget plan, like a companion plan being unveiled later Wednesday in the Senate Budget Committee, produces sizable surpluses only by assuming that many of President Bush's tax cuts will expire at the end of 2010, as scheduled.

The House panel worked toward a late-night vote Wednesday; the Senate plan is slated for a Budget Committee vote Thursday afternoon.

The twin Democratic budget plans again put Congress on a collision course with Bush over the annual appropriations bills funding domestic agency budgets for the fiscal year beginning Oct. 1. The Senate measure would permit an $18 billion increase above Bush's budget for domestic programs such as education, health research, and housing; the House plan would provide a slightly larger increase.

Bush emerged from last year's protracted appropriations battle claiming victory, and many Democrats are signaling they do not intend to send him many spending bills this year. Instead, they want to deal with his successor, whom they hope will be a Democrat.

On taxes, it's long been assumed that lawmakers will determine the fate of the 2001 and 2003 tax cuts in the years just before their expiration. Democratic presidential candidates Sens. Hillary Clinton, D-N.Y., and Barack Obama, D-Ill., and many congressional leaders in the party say they want income tax cuts for wealthy taxpayers to expire, but it's commonly assumed that tax cuts for lower- and middle-income taxpayers will be extended.

But thus far, the Democratic plans stick to tax revenue estimates that assume the expiration of tax cuts on income, investments, married couples and people with children as well as those inheriting large estates.

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

Senate Budget Committee Chairman Kent Conrad, D-N.D., said Finance Committee Chairman Max Baucus, D-Mont., would offer a plan to renew tax cuts aimed at the middle class, including the $1,000 per child credit, relief from the so-called marriage penalty, estate tax cuts, and the 10 percent tax rate on the first $7,825 of income for individuals. He said the budget would still produce a small surplus in 2012 and 2013, assuming Baucus' amendment is adopted during floor debate next week.

Ryan also blasted the Democratic plans for failing to take on the exploding growth of Medicare, Social Security and other federal benefit programs being weighed down by the retirement of the Baby Boom generation and rapidly rising health care costs. Virtually every budget expert says the spiraling growth of such programs must be addressed to avoid a fiscal catastrophe.

But there's little appetite within either party to take bold, politically painful steps to reform federal benefit programs in an election year.

"Our budget ... is no grand solution, but it moves us in the right direction," said John Spratt Jr., D-S.C., the Budget panel's chairman.

The annual congressional budget resolution is a nonbinding document that sets guidelines for subsequent legislation to implement its tax and spending goals. It contains many columns laying out proposed spending levels on various programs, but those figures are only illustrative, regardless of lawmakers' claims

Democrats have bashed Bush's $3.1 trillion budget as unrealistic because it doesn't 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 also only fund 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 AMT, however. The Senate assumes a one-year, $62 billion AMT fix while the House wants a permanent solution that would be "paid for" by increasing taxes on wealthier taxpayers.

The Bush administration, predictably, lambasted the Democratic plans.

"The Democrats' budgets include more of the same — tax hikes and higher spending," said Jim Nussle, director of the White House budget office. "Their tax and spend agenda will not help our economy or the budget bottom line."

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