Senate passes budget retaining some tax cuts

By ANDREW TAYLOR
The Olympian

March 24, 2007

WASHINGTON, D.C. - Senate Democrats on Friday pushed to passage a budget they said would boost spending for domestic programs, renew some of the tax cuts from President Bush's first term and still balance the books in five years.

The 52-47 vote represented a victory for Democratic leaders, who viewed passing the $2.9 trillion budget plan as a key test of their ability to govern.

But the narrow margin of Democratic control of the Senate was on ample display through four days of debate, particularly when party moderates favoring extending middle-class tax cuts forced a rewrite.

Moderates insisted on extending the most popular of Bush's tax cuts, including the $1,000 child credit and marriage penalty relief. On the spending side of the ledger, there are big increases for defense, education, veterans medical treatment and other programs popular with both Democrats and Republicans.

The Democratic blueprint is nonbinding but sets guidelines for follow-up legislation.

The most immediate outcome would be to put Democrats in Congress on a collision course with Bush later this year when lawmakers write budget bills for Cabinet agencies. Action to renew some or all of the Bush tax cuts isn't likely until after next year's presidential election.

The companion Democratic plans provide for Bush's full, $145 billion request for next year's war costs and his $50 billion-plus increase for the core Pentagon budget. But they greatly exceed Bush's budget hike of less than 1 percent for domestic agencies.

Nonmilitary spending would increase by $18 billion under the Senate plan, a 4 percent increase that's much larger than passed in recent years by GOP-controlled Congresses - and likely to prompt vetoes from Bush.

The vote was mostly along party lines, with Republican Sens. Olympia Snowe and Susan Collins of Maine joining the Democrats.

Snowe and Collins deliberated in the well of the Senate - as a duo and also with GOP Whip Trent Lott of Mississippi - for more than 10 minutes before casting the last votes.

The budget plan would require that lawmakers seeking to cut taxes or boost benefit programs - such as Medicare, children's health care or farm subsidies - to "pay for" the changes with tax increases or offsetting spending cuts.

That would make it more difficult to expand the popular State Children's Health Insurance Program that's up for renewal this year or to ease the alternative minimum tax so that it doesn't strike 20 million more middle-class taxpayers. Many Congress-watchers believe lawmakers will simply ignore the so-called pay-as-you-go rule.

The budget suffers, however, from some of the same flaws Democrats see in Bush's budget plan. Like Bush, the Democrats left out funding for the long-term costs of the war in Iraq and for fixing the alternative minimum tax.

"I don't assert that this is a perfect budget," said Budget Committee Chairman Kent Conrad, D-N.D. "But at the end of the day, the test for us is, 'Can we write a budget for our country?' "

Republicans criticized the Democratic plan for allowing above-inflation increases for domestic agency budgets and for assuming that lower taxes on income, inheritances and investments passed during Bush's first term will expire in 2010.

Conrad's original budget assumed all of Bush tax cuts expired in 2010, creating a $132 billion surplus in 2012. But Democrats who voted for the 2001 Bush tax cuts, including Max Baucus of Montana, Ben Nelson of Nebraska and Blanche Lincoln of Arkansas, moved to take that surplus - and more - and devote it to renewing tax cuts aimed at the middle class.

They won a 97-1 vote Wednesday in favor of extending tax relief for married couples, people with children and those inheriting large estates. The vote foreshadows renewal of those tax cuts - most likely after the 2008 presidential election, with the details depending on the balance of power in Washington and on the fiscal outlook at that time.

By a 51-48 vote on Friday, senators rejected an amendment by Sen. Jon Kyl, R-Ariz., to erase taxes on estates worth up to $5 million and impose a 35 percent top rate on larger estates, beginning in 2011.

Democrats only narrowly rejected, 50-49, a bid by Lott to repeal a Clinton-era increase in the alternative minimum tax.

Sen. Gordon Smith, R-Ore., won a 59-40 vote to put lawmakers on record in favor of increasing taxes on tobacco to pay for a big boost in a popular program providing health insurance for children from poor families. On the web

Senate Budget Committee: budget.senate.gov