Democrats' Budget Plan Narrowly Passes in House

By Lori Montgomery
Washington Post Staff Writer
Friday, March 30, 2007

Democrats marshaled a $2.9 trillion budget blueprint through the House yesterday, uniting a diverse coalition behind a spending plan that would increase funds for education, health care and veterans' services while aiming to erase the federal deficit within five years.

To balance the budget, the proposal would permit President Bush's signature tax cuts to expire on schedule in 2010, prompting Republicans to accuse the new congressional majority of plotting a massive tax increase. Those charges helped persuade a dozen Democrats, including several freshmen from conservative districts, to reject the blueprint, which was approved on a vote of 216 to 210.

House Budget Committee Chairman John M. Spratt Jr. (D-S.C.) said the tight count had been expected. That was why he spent weeks shopping the budget plan around the Democratic caucus, he said, accommodating liberals with modest increases for domestic programs and winning over most conservatives with a strict adherence to pay-as-you-go deficit-reduction rules.

"It's not easy to do in the Democratic Party. We don't have a lot of like-minded people," Spratt said. "The leadership made clear this was a critically important vote."

Democrats took control of Congress in January after more than a decade out of power, and they say passing a balanced-budget plan would establish their fiscal credentials and clean up years of red ink under a Republican president and GOP-controlled Congress. The Senate approved a similar proposal last week. Spratt said Democrats are determined to work out the differences between the two plans in a conference committee and push the plan through both chambers by early May.

"Putting our house in order is necessary because for the last six years, the Bush administration and Republicans in Congress have increased spending while giving tax cuts to the wealthiest few in our country, leaving our country awash in red ink, mortgaging the futures of our children," House Speaker Nancy Pelosi (D-Calif.) said. "It's just not right."

A key difference between the two proposals is their treatment of Bush's tax cuts. Under pressure from moderate Democrats, the Senate modified its budget plan to make many of the tax cuts permanent, including an expanded child credit, elimination of the marriage penalty, a 10 percent tax bracket and a narrower estate tax.

Under the Democrats' pay-as-you-go budget rules, however, any tax cuts must be paid for by increasing other taxes or by cutting spending, and Senate Democrats came up with only enough cash to cover the cost of extending the cuts for one year. The money was taken from a surplus projected for 2012, a move Republicans said would create a $5 billion deficit that year, forcing Democrats to abandon their balanced-budget claims.

The House has taken a different approach, delaying for now a decision about the fate of the tax cuts, which remain in effect for three more years thanks to a sunset provision written by Republicans. House Republicans have nevertheless pressed claims that the budget proposal would force a $400 billion tax increase.

"The numbers are crystal clear, and they tell the truth," said Rep. Paul D. Ryan of Wisconsin, the ranking Republican on the House Budget Committee. "This budget, the Democratic budget, gives us the largest tax increase in American history."

Letting the tax cuts expire would generate billions of dollars in extra revenue, permitting the House plan to project a federal budget surplus starting in 2012. Democrats say they would like to use the cash to start paying down the national debt, which is approaching $9 trillion, the equivalent of $29,000 for every American.

However that difference is resolved, reaching an agreement of some kind with the Senate is paramount, Spratt said. "This will be a hollow victory if we don't get that."

Under the arcane congressional budget process, the budget blueprint sets limits for spending, targets for revenue and establishes the surplus or deficit for the coming fiscal year, which begins in October. Those targets must be implemented in separate spending and tax bills, which will come to a vote later in the year and, unlike the blueprint, require the president's signature.

The blueprint charts a five-year course for spending and taxes but is adjusted annually.

© 2007 The Washington Post Company