- The Washington Times - Wednesday, May 16, 2007

ASSOCIATED PRESS

Democrats controlling Congress presented a $2.9 trillion budget blueprint yesterday, ensuring a confrontation with President Bush over spending increases for education and other domestic programs.

The Democratic plan promises a budget surplus in five years, but would achieve it only by allowing some of Mr. Bush’s tax cuts to expire.

The nonbinding plan for next year faced House and Senate votes today. Democrats agreed to it after weeks of private negotiations between the chairmen of the House and Senate Budget committees. The House and Senate passed competing budgets in March.

The most immediate result would clear the way for action this summer on annual spending bills totaling $1.1 trillion for the budget year that begins Oct. 1. That figure includes $145 billion, likely to be contested, in money for military operations in Iraq and Afghanistan.

A $23 billion increase for domestic-agency budgets awards sizable increases for education, veterans and health care programs.

The White House opposes the increases and has promised vetoes of annual spending bills that break Mr. Bush’s budget for such programs. His spending plan essentially would freeze them.

After a $214 billion deficit for the current budget year, the deficit would rise to $252 billion for 2008 but fall to $235 billion the next year, according to the Democrats’ plan.

But by 2012, the Democratic budget promises a $41 billion surplus. It does so by assuming taxes on income, dividends and stock sales go up in 2011 instead of the cuts being extended, as Republicans and Mr. Bush are seeking.

Tax cuts aimed at the middle class could be renewed under the compromise. That includes establishing a 10 percent rate on the first $12,000 of a couple’s income, as well as relief for married couples, people with children and people who inherit large estates.

Extending the middle-class tax cuts would cost about $180 billion over 2011-‘12; extending the rest of the 2001 and 2003 tax bills would cost about $240 billion over the same period.

The Democratic plan would restore a “pay-as-you-go” rule that requires tax cuts or spending increases in benefits programs such as Medicare, children’s health care or farm subsidies to be financed by spending cuts or tax increases elsewhere. The idea is to not worsen the deficit.

The budget plan, while nonbinding, sets goals for later tax and spending bills. It makes a statement about the priorities of majority Democrats and provides an early test for the party to prove it can govern.

“It’s not the grand solution, but it’s a good step in the right direction,” Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, told the Associated Press. “It nudges toward deficit reduction, and if the numbers pan out, we should have both a surplus and tax cuts in 2012.”

The top Republican on the Senate committee, Sen. Judd Gregg of New Hampshire, said the Democratic plan would produce “the largest tax increase in U.S. history, billions in new spending, and no attempt to address the long-term fiscal crisis” in retirement programs and Medicaid, the health care program for the poor and disabled.

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