Election-Year Budget Battle Looms

WASHINGTON (AP) -- Democrats are offering hefty spending increases for domestic programs as they draft an election-year budget plan that still promises surpluses within four years and assumes many of President Bush's signature tax cuts will die.

The roughly $18 billion in spending increases for domestic programs funded by Congress each year are included in a budget plan to be unveiled Wednesday by Senate Budget Committee Chairman Kent Conrad, D-N.D., for the fiscal year starting Oct. 1. A party-line committee vote to approve the plan is expected Thursday.

Democrats argue that their plan - which has large boosts for energy, education and transportation programs - could be paid for by closing loopholes and improving tax collections. Republicans say their promises of budget surpluses rely on tax increases on upper income taxpayers and many small businesses.

The competing claims highlight the battle lines in this year's congressional budget debate, which is playing out against the backdrop of the presidential campaign and isn't likely to generate much in the way of actual results.

Much of the debate is likely to center on whether to extend Bush's 2001 and 2003 tax cuts, many of which expire in 2010 - and if so, which of them to preserve. Conrad's plan allows them to end, although he said it leaves room to resurrect some $304 billion over five years' worth of middle-class tax cuts and estate tax relief and still produce surpluses by 2012.

Under Conrad's proposal, the government would bring in just 2.7 percent more revenue over the next five years than Bush's plan, he said.

"The basic purpose of this budget is to strengthen the economy and create jobs. We're going to do that by investing in energy, education and infrastructure," Conrad said.

The budget tussle took on a distinctly political tone on Tuesday, even before Democrats presented their plan, when Republicans bashed Sen. Barack Obama's proposals as the "Obama Spendorama," charging that his policies would increase spending by some $300 billion per year and result in large tax hikes. Obama is seeking the Democratic nomination for president.

"The numbers don't work for (Democrats), and I don't think they get the benefit of the doubt any longer," said Sen. Judd Gregg of New Hampshire, the senior Republican on the Budget Committee.

GOP officials were preparing a detailed breakdown of the cost of Obama's proposals, signaling that the specter of a big-spending Democratic president will figure prominently in this year's budget debate.

Democrats have bashed Bush's $3.1 trillion budget as unrealistic because it doesn't include the cost of the Iraq war or any provisions after this year for keeping the alternative minimum tax - originally aimed at the wealthy - from hitting millions of middle-class taxpayers. But Conrad's plan also omits both, funding Bush's request of $70 billion for the war in Iraq and Afghanistan, and nothing after that, and including $62 billion to fix the AMT for just one year.

The annual congressional budget resolution is a nonbinding document that sets guidelines for subsequent legislation to implement its tax and spending goals. Democratic leaders have signaled they're not interested in reprising last year's battles with Bush over the annual spending bills setting agency budgets, however, and may instead wait until next year to pass those bills.

Democrats are proposing a $3.5 billion increase for energy programs, a $5.7 billion increase for education programs and Head Start, and a $3.9 billion hike for transportation accounts.

Their overall blueprint, including entitlement programs that grow automatically, differs from the president's by just 1 percent. But Democrats want to boost domestic programs funded by Congress - which comprise less than one-fifth of the federal budget - by about 4 percent.

Bush's budget called for a five-year freeze on such programs, and Bush has said he would veto spending that exceeds his bottom line.

Jim Nussle, Bush's budget director, took the unusual step of reiterating those threats even before Democrats unveiled their budget plans. Bills that top Bush's "reasonable and responsible spending levels will be met with a veto because every dime Congress spends beyond those limits will push the budget deficit higher," Nussle warned in letters Monday to Conrad and Rep. John Spratt, D-S.C., the House Budget Committee chairman.

In fact, the most important budget bills this year will involve Bush's remaining $108 billion request for current-year funding for operations in Iraq and Afghanistan and easing the pinch of the AMT on middle class taxpayers.

The AMT was originally designed to apply only to the wealthy, but now threatens to ensnare more than 20 million additional taxpayers this year unless Congress comes to the rescue.

The plan also endorses an emergency economic stimulus plan of up to $35 billion that could include jobless benefits, food stamps and heating subsidies for the poor - items dropped from a $168 billion package enacted last month that will send rebates of $300-$1,200 to 130 million households.

Conrad called the measure "an insurance policy," adding, "None of us yet know whether this trigger needs to be pulled."

Bush has said he opposes such a bill and one aimed at easing the housing and foreclosure crisis, but Democrats seem to relish the prospect of election-year battles with the president and Republicans on additional proposals to boost the faltering economy.

In some years, lawmakers use the arcane congressional budget process to blueprint ease filibuster-proof passage through the Senate of tax legislation or cuts to benefit programs like Medicare. Conrad doesn't plan to do that, he said.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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