An earlier version of this article incorrectly ascribed to a Republican Congress the failure to reach a compromise on the federal budget in 2002. The GOP controlled the House that year, but Democrats held a majority in the Senate.
Congress Passes $3 Trillion Budget
Spending Plan Approved on Partisan Vote Sets Benchmarks for Funding Bills
Friday, June 6, 2008; Page A03
Congress yesterday gave final approval to a $3 trillion spending plan that proposes modest increases for domestic programs such as education, energy and veterans benefits -- and marks the first time in eight years that lawmakers have managed to adopt a budget in an election year.
Democrats hailed the feat as "a demonstration of our ability to govern effectively," in the words of House Majority Leader Steny H. Hoyer (Md.). Republicans acknowledged the accomplishment, which eluded Congresses under their control in 2006, 2004 and 2002, as well as in 1998. But they blasted Democrats for raising spending on government agencies to historic levels and for failing to slow the rampant growth of Social Security, Medicaid and Medicare, potentially adding trillions to the national debt.
Committee Chairman John M. Spratt Jr. (D-S.C.) fired back that the blueprint aims to balance the budget by 2012, erasing years of deficits racked up under a Republican president. "President Bush told the country we could have it all: guns, butter and tax cuts, too, and never mind the deficits," Spratt said. "It takes a long time to turn this battleship around, but that's what we do in this budget."
The spending plan squeaked through the House on a vote of 214 to 210, as 14 Democrats voted with a united GOP in opposition. Earlier this week, the Senate gave its approval to the nonbinding resolution, which does not go to the president for his signature but sets targets for a dozen annual appropriations bills.
Because Bush has vowed to veto appropriations bills that exceed his spending requests, Democrats are considering delaying passage of most of the bills until a new president takes office in January.
Under the budget framework adopted yesterday, congressional leaders would increase spending in the fiscal year that begins Oct. 1 by about $21 billion over Bush's request, with total spending on government agencies expected to top $1 trillion for the first time. The extra funds would go to education and renewable energy programs, as well as transportation infrastructure. Military veterans would get about $3.3 billion more than Bush requested, with much of the money targeted for health care.
Democrats project a deficit of $340 billion next year, with deficits diminishing thereafter until the government produces a $22 billion surplus in 2012. But, as with Bush's five-year plan to balance the budget, congressional leaders are counting on some unlikely circumstances to lift the government out of the red.
For example, the budget includes $70 billion next year for the wars in Iraq and Afghanistan and nothing thereafter, an unrealistic scenario even if a Democrat wins the White House and moves quickly to pull troops out of Iraq.
The spending blueprint also assumes that some of Bush's signature tax cuts will expire on schedule in 2010, bringing billions of additional dollars into the treasury. Democrats have said they will extend the tax cuts that benefit the middle class, including the increase in the child tax credit, the marriage-penalty reduction and the new 10 percent tax bracket. But Republicans accused them of plotting "the largest tax increase in the history of this Congress, which means in the history of this nation, which means in the history of the world," said Rep. Dan Lungren (R-Calif.).
The budget also counts on revenue from the alternative minimum tax, or AMT, an unpopular levy designed to snare ultra-rich tax dodgers. Because it was never indexed for inflation, the AMT is projected to hit millions of middle-class taxpayers, raising billions of dollars in additional revenue. But the money is unlikely to materialize, because Congress enacts annual "patches" to prevent it. Next year's AMT patch will take about $60 billion out of the treasury.
Budget-minded House Democrats had pushed for an agreement to cover the cost through spending cuts or tax increases. But the Senate balked, and the Democratic budget hawks known as the Blue Dogs settled for a promise that Senate Budget Committee Chairman Kent Conrad (D-N.D.) will object if the Senate tries to pass an AMT patch that increases the deficit.
Despite promises by Democrats in both chambers to adhere to pay-as-you-go budget rules, Conrad acknowledged yesterday that the chances the Senate will agree to cover the cost of the AMT patch this year are "probably not very good."