Democrats Make Budget Proposal

By Lori Montgomery
Washington Post Staff Writer
Thursday, May 17, 2007

Congressional Democrats yesterday proposed a $2.9 trillion budget plan that seeks to boost spending by $23 billion over the president's request, setting up a confrontation with the White House over funding for education, health care and veterans' services.

The White House has threatened to veto spending bills that exceed President Bush's targets, a threat budget director Rob Portman reiterated yesterday. Democratic budget leaders defended their proposal, saying an administration that has increased federal spending by more than 40 percent since 2001 and added more than $3 trillion to the federal debt has little standing to complain about a 2 percent increase over Bush's goals for domestic programs.

"It's that 2 percent difference that makes him a president, not a king, and I don't plan on crowning him," said House Appropriations Chairman David R. Obey (D-Wis.). "I haven't had too many people grab me back home and say, 'Obey, why don't you come to your senses and cut cancer research?' That's what the president's budget has done for the past two years, and that's what it would do again."

While the Democratic blueprint would increase spending, it also seeks to balance the federal budget in five years, reducing the annual deficit from $252 billion in the fiscal year that begins in October until a projected $41 billion surplus emerges in 2012. To get there, Democrats assume some of Bush's signature tax cuts would expire on schedule in 2010, prompting Republicans to accuse them of plotting one of the biggest tax increases in history.

The budget plan, expected to come before the House and Senate today for final approval, is the product of weeks of negotiations between leaders in both chambers. They concluded their work early yesterday, offering a package that would increase spending on domestic programs by about 3 percent over current levels, and fully comply with Bush's request for an 8.5 percent increase in defense spending.

The blueprint would fund Bush's request for the wars in Iraq and Afghanistan, providing $145 billion next year and $50 billion in 2009. It would make no major changes to entitlement programs such as Medicare, Medicaid and Social Security, despite projections showing that these programs threaten to swamp the budget in coming decades unless Congress cuts benefits or increases taxes.

On the revenue side, the plan proposes to rein in the expansion of the alternative minimum tax to prevent the expensive levy from ensnaring 23 million households at tax time next April. The blueprint offers no prescription for replacing the lost revenue, about $52 billion in 2008. But Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the money could be found by collecting unpaid taxes and closing corporate tax shelters rather than raising taxes.

The five-year budget plan proposes to extend some of Bush's tax cuts past the 2010 expiration date, including a new 10 percent tax bracket for the first $12,000 of a family's income, a reduction in the marriage penalty and an increase in the child tax credit. It assumes, for now, that taxes on dividends, stock sales and the income of the wealthiest families would go up in 2011.

Administration officials criticized that proposal. "Tax-and-spend is no way to balance the budget. It jeopardizes continued economic growth and job creation," Portman said.

Because the budget blueprint is a nonbinding resolution that does not require Bush's signature, the White House can do little to block it, at least until the 12 spending bills needed to implement the spending side of the proposal begin arriving on his desk, probably sometime in September, Obey said.

At that point, budget analysts are bracing for a nasty battle that has the potential to shut down the government and carries political risk for both parties. Anti-tax activist Grover Norquist said the dispute would reinforce the popular perception that "Democrats want to spend too much" going into the 2008 election.

Bush may find it uncomfortable to veto big increases for popular programs such as veterans' health care, said Scott Lilly, a longtime House Appropriations staff member now at the Center for American Progress. "If he vetoes that, I would certainly feel very much at risk if I were a Republican member voting to withhold funding from soldiers coming back from Iraq."

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