Dems embrace tax cuts in budget revision

Dems embrace tax cuts in budget revision

	Published : Wed, 21 Mar 2007 22:17 By : Agencies Print this Story

WASHINGTON (AP) - Top Senate Democrats moved to rewrite their budget blueprint Wednesday, fearing defections from moderates unhappy with the idea of allowing a variety of popular tax cuts to expire at the end of the decade.

Finance Committee Chairman Max Baucus, D-Mont., introduced an amendment to devote almost $200 billion to preserving middle class tax cuts and enhancing health care coverage for poor children.

The amendment, backed by Majority Leader Harry Reid, D-Nev., was pointed at shoring up moderate Democrats' support for the pending $2.9 trillion budget plan. It is aimed at extending tax cuts for married couples, people with children, and those inheriting large estates, among others.

But the Democratic amendment, which is not expected to be followed up with binding legislation this year, would have the effect of erasing a $132 billion surplus promised under the Democrats' original budget. A late afternoon vote was expected.

Across the Capitol, a Democrat-dominated House panel began debating a companion budget plan to boost spending for domestic programs while assuming that a variety of the popular tax cuts expire at the end of the decade.

The House Budget Committee took up the $2.9 trillion plan, which envisions big increases for homeland security, veterans health care and aid to local schools. A late-night vote was expected.

The House budget plan promises a $153 billion federal surplus in five years -- if President Bush's tax cuts indeed disappear and, as a result, more revenue flows into the federal treasury.

Republicans blasted the Democratic budget for its hefty spending increases and its assumption that the lower taxes on income, married couples, inheritances and investments will expire at the end of 2010 as current law states.

'The best way to balance the budget is to control spending, not raise taxes,' said top panel Republican Paul Ryan of Wisconsin.

House Budget Committee Chairman John Spratt Jr., D-S.C., said decisions on the tax cuts, passed at the urging of President Bush in 2001 and 2003, should be made closer to their expiration date.

Despite much debate over taxes, the immediate impact of the companion House and Senate budget blueprints for next year is to award sizable increases to domestic agencies for the portion of their budgets passed each year by Congress.

The Senate Budget plan would give such programs an $18 billion increase, about 4 percent. At the urging of Rep. David Obey, D-Wis., House Budget Committee Democrats were poised to award domestic agencies with a $23 billion increase.

Democrats opted to put off politically painful decisions on shoring up the finances of Medicare and Social Security.

The measure is largely a response to Democratic complaints that Bush has shortchanged programs funded each year by appropriations bills -- including education, health research and grants to local governments -- while awarding expensive tax cuts tilted toward affluent, GOP-leaning constituencies.

Congress' annual debate on the budget is guided by an arcane process in which a nonbinding congressional budget resolution sets the stage for subsequent bills affecting taxes and benefit programs such as Medicare, as well as the annual appropriations bills.

In many years, Congress opts to punt on difficult budget issues and simply focus on the 12 annual bills funding the budgets of Cabinet agencies such as Defense, Education and Agriculture. This year is likely to be such a stand-pat year.

At the same time, Democrats are putting difficult procedural hurdles in front of attempts to cut taxes or increase spending on federal benefit programs such as farm subsidies and Medicare.

Democrats are restoring so-called pay-as-you-go rules requiring tax cuts or new spending on benefit programs such as Medicare to be 'paid for' with new taxes or spending cuts elsewhere in the budget.

Tests loom later this year as Congress advances legislation to increase health insurance coverage for poor children, forestall Medicare cuts and fix the alternative minimum tax to spare almost 20 million taxpayers from unexpected tax increases.