GOP Sees Tax Hikes In Budget Proposal

By Lori Montgomery
Washington Post Staff Writer
Thursday, March 15, 2007

Republicans charged yesterday that Capitol Hill Democrats are hatching a plan to raise taxes, noting that a new Democratic budget proposal assumes a $400 billion revenue jump over five years without adequately specifying where the money would come from.

The Democratic budget blueprint, released during a hearing of the Senate Budget Committee, suggests that the extra cash could be raised by improving tax collections, closing tax shelters and cracking down on off-shore tax havens. But Republicans argued that those steps would not produce sufficient new revenue to cover the gap.

"It's almost like Wizard of Oz tax policy here," said Sen. Judd Gregg (R-N.H.), the committee's ranking minority member. "There's somebody behind the curtain, and we can't see who it is, but he's going to come up with the money to pay for this."

That $400 billion gap is just a small piece of the Democratic revenue puzzle, Republicans said. To halt the expansion of the alternative minimum tax beyond 2009, a goal many Republicans share, Democrats would need to find $450 billion more in new revenue. And at least some of President Bush's signature tax cuts would expire in 2010 unless still more billions of dollars could be raised elsewhere.

White House Budget Director Rob Portman said the president's tax cuts are as good as gone if the Democrats pass their plan. Letting the Bush cuts lapse on schedule in 2010 would mean tax increases for millions of Americans.

"We think it's exactly the wrong time to talk about raising taxes," Portman said. "It puts at risk the economic growth and job creation" that he sees as a consequence of the Bush cuts.

Democrats applauded the budget proposal, saying it would increase spending on critical domestic programs, such as health care and education, while halting the Republican practice of paying for tax cuts with deficit spending. Under the proposal, crafted by Senate Budget Committee Chairman Kent Conrad (D-N.D.), any tax cut or increase in spending would have to be offset by spending cuts or tax increases. Moreover, Conrad said his budget would rewrite Senate rules so that fast-track parliamentary maneuvers could be used only to reduce the federal deficit, not to push through tax cuts.

"We've been living through fairyland budgets where you think you can have tax cuts for free," said Sen. Benjamin L. Cardin (D-Md.).

Some budget analysts said the Republican criticism reflects a misunderstanding of the congressional budget process, which does not permit budget committees to offer detailed budgets but leaves many policy decisions to the appropriations and tax-writing committees. Budget experts at the Center on Budget and Policy Priorities said Conrad should be commended for applying a pay-as-you-go standard even to popular initiatives, such as a proposed $50 billion expansion of the nation's health-insurance program for children.

Conrad defended the budget plan as fiscally responsible, saying it would transform last year's $248 billion deficit into a $132 billion surplus by 2012. The proposal would provide about $950 billion for defense and domestic programs next year, an $18 billion increase over the president's budget proposal. Besides children's health care, much of the extra cash would go to education, veteran's programs, local law enforcement, low-income heating assistance and Amtrak.

Conrad would fund Bush's request for defense spending next year but would reduce the Pentagon's allocations by nearly 14 percent by 2012.

The Democratic proposal calls for raising $2.6 trillion in revenue next year, and $15 trillion by 2012. According to estimates prepared by the nonpartisan Congressional Budget Office, that's about $439 billion more than the Bush budget would raise, Conrad said.

Portman and Senate Republicans also criticized Democrats for rejecting Bush's proposal to reduce Medicare spending by $66 billion over five years. Instead, Democrats would cut $15 billion from Medicare over five years by reducing overpayments to health-care providers.

Conrad agreed that his budget does too little to address the "long-term challenges" of Medicare, Medicaid and Social Security. But he said those issues would be better tackled by Republicans and Democrats working together, not in a budget document proposed by one party.

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