Budget Frames Campaign Themes

By: AP
By: AP

WASHINGTON (AP) -- The budget plans approved by Congress this week framed a stark election-year fight over taxes, with Democrats backing a plan that relies on letting President Bush's tax cuts die once he leaves office.

The roughly $3 trillion tax-and-spend blueprints are certain to figure prominently in both parties' campaign talking points, though they're unlikely to affect what the government does this year.

Votes cast by all three presidential candidates - who returned to Washington to weigh in on the measure - instantly became fodder for campaign ads and dueling charges.

"It's bound to tee up arguments for the fall, and in some respects is designed to tee up arguments for the fall," said Brookings Institution analyst Bill Galston, domestic policy adviser during President Clinton's first term.

Republicans are accusing Democrats of perpetrating a massive tax increase by failing to extend Bush's tax cuts, which are set to expire in 2010. Democrats hammer the GOP for what they call irresponsible tax cuts for the wealthy that they blame for ballooning the deficit, and blast the Republican plan for huge reductions in social programs like Medicare and Medicaid.

"It's good that we have these choices... That's what's good about elections," Rep. Paul Ryan, of Wisconsin, the top Republican on the Budget Committee, said shortly before the House plan passed without a single GOP vote. "The last thing the American taxpayer needs is a big tax increase."

Republican nominee-to-be John McCain of Arizona voted to extend the full roster of Bush's tax cuts, which he opposed seven years ago as being skewed toward the wealthy.

Democratic rivals Hillary Rodham Clinton of New York and Barack Obama of Illinois both voted to extend only some of the cuts while allowing reductions in income tax rates and investments expire. They joined other Democrats in a 52-47 vote against extending $376 billion of them.

Democrats argue that they can afford more spending and still bring the federal budget into the black in four years without raising taxes, by closing tax loopholes and going after tax cheats.

Sen. Kent Conrad, D-N.D., the Budget Committee chairman, says his plan "restores the fiscal responsibility that has been shattered by the Bush administration."

"It returns the budget to surplus in 2012 and 2013. It reduces debt and spending as a share of the economy. The Democratic budget cuts taxes," Conrad says in a radio address to be delivered Saturday.

In fact, it will be up to the next Congress and a new president to decide whether to keep Bush's tax cuts alive. Still, Democrats' budget proposals predict surpluses in 2012 - even with new spending increases - based on projections that Bush's tax cuts expire.

The nonbinding annual congressional budget resolution is a slippery document on which to base political claims. Under Congress' arcane budget process, the annual budget sets forth a strategic vision of the majority party - on taxes, spending and reducing the deficit - but does nothing to achieve such goals unless follow-up legislation is passed.

A standoff with Bush means Democrats may even take a pass on advancing the 12 annual appropriations bills.

Republicans charge that Democrats' proposed spending increases of $20 billion to 25 billion a year for domestic programs would take up most of the room in the budget to renew the Bush-sponsored cuts in income tax rates, taxes on investments and breaks for married couples and people with children.

To illustrate the point, Sen. Wayne Allard, R-Colo., even offered an amendment that proposed to add $1.4 trillion to the budget, which he said was the cost of Obama's plans. It failed unanimously, to nobody's surprise.

"The obvious question will be, 'How are you going to pay for this,' so (Democrats) will be on the defensive," said Robert Bixby of the Concord Coalition, a budget watchdog group.

Democrats accused of raising taxes can correctly counter that they actually haven't done anything yet. In fact, they'll be able to claim before Election Day they'd have actually cut taxes, citing bills stopping the expansion of the alternative minimum tax and other expiring tax breaks.

"They'll turn it back around on McCain and say, 'How can you talk about this big tax cut agenda that you have when we're already deeply in debt, the deficit is huge and the Baby Boomers are about to retire?' " Bixby added.

The budget debate also elevated one of McCain's favorite themes - his longtime crusade against earmarks, which lawmakers use to steer federal dollars to their districts. Clinton and Obama supported McCain's bid to place a one-year moratorium on the pet projects, part of a GOP push to restore its credibility with voters.

"It wasn't the war in Iraq that caused us to lose the 2006 election, it was the wasteful pork barrel spending," McCain said. "The tipping point was the 'Bridge to Nowhere' in Alaska."

Still, the proposal's defeat on a 71-29 vote pointed up Republican divisions on the issue.

Analysts note that earmarks account for only a tiny fraction of federal spending - not nearly enough to finance big new tax cuts without further swelling the deficit.

"In order to justify those tax cuts, you really have to come up with some spending cuts, but the only cuts (McCain is) paying attention to are small things like earmarks," Bixby said.

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Associated Press Writer Andrew Taylor contributed to this report.

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