By Steven T. Dennis, CQ Staff
March 29, 2007 -- House Democrats won a narrow but important victory Thursday as the chamber voted 216-210 to adopt a nearly $3 trillion fiscal 2008 budget resolution.
The new majority largely held together, in contrast to a year ago when Republican infighting resulted in failure to adopt a joint budget resolution and a collapse of the appropriations process.
The plan, which Democrats hope to quickly reconcile with the Senate budget resolution, includes a $1.1 trillion cap on discretionary spending, about $25 billion more than President Bush sought. That's enough to allow inflationary increases in most programs plus significant increases in education and veterans' benefits.
The measure also projects a $153 billion surplus in fiscal 2012 by strictly adhering to tough new pay-as-you-go budget rules that require new mandatory spending and tax cuts to be offset.
But the plan puts off tough and divisive decisions on extending tax cuts set to expire after 2010 , as well as how to stem the growing reach of the alternative minimum tax (AMT).
The plan also fails to control the growth of entitlement programs that are projected to swamp the rest of the budget in coming decades as the baby boom generation retires.
With liberals won over by the extra discretionary spending and conservative Blue Dog Democrats pleased by the strict adherence to pay-as-you-go budget rules and full funding of defense spending requests, House Budget Chairman John M. Spratt Jr., D-S.C., managed to unify the usually fractious Democratic caucus.
Among the 12 Democrats who voted against the resolution was Rep. Dennis J. Kucinich, D-Ohio, who objected to the assumption of $195 billion in war funding in fiscal 2008 and 2009—the level requested by Bush. Most of the Democrats voting against the measure were members of the conservative Blue Dog Coalition.
Republicans offered a more austere plan that pays for tax cut extensions by cutting Medicare, Medicaid and other entitlement programs by $279 billion over five years and by freezing domestic discretionary spending.
Although Republicans unanimously opposed the Democratic blueprint, moderate Republicans voted against their own party's alternative, which was defeated 160-268.
GOP leaders accused Democrats of assuming a massive tax increase and failing to deal with the nation's long-term fiscal problems, although their alternative budget also assumes revenue from the creeping impact of the AMT on tens of millions of Americans after 2007.
Ranking budget panel Republican Rep. Paul Ryan of Wisconsin hammered the Democratic plan as allowing "the largest tax increase in American history" while calling the lack of an entitlement overhaul "irresponsible."
But House Majority Leader Steny Hoyer, D-Md., ripped the Republican plan, noting that it proposed deep spending cuts that they never proposed when they held the majority, and that Republican control had turned surpluses into deep deficits.
"Your party could not agree with one another," Hoyer noted, despite controlling both Houses and the presidency. Democrats would show the way back to a balanced budget, he said. "When you had it all, why couldn't you do it?"
Democrats dismissed the charge that their plan included a tax increase, arguing that their budget merely assumes current law written by Republicans. Tax cut extensions are allowed under the budget plan, as are new mandatory entitlement programs such as a potential $50 billion expansion of children's health care and $20 billion for farm programs, but only if they are offset. To that end, the budget plan talks of extending tax cuts for the middle class, but does not say how it should be offset.
Spratt argued that Congress will have up to three years to decide which tax cuts to extend and how to pay for the extensions, adding that he hoped the looming expiration dates would prompt a serious effort to overhaul the tax code.
However, Democrats will have to decide later this year how to pay for another "patch" to the AMT, which would cost $50 billion for 2007 alone. Although Democrats insisted that their budget plan does not include any tax increases, offsetting AMT relief for the middle class will almost certainly result in tax increases on wealthier taxpayers, although Democrats have yet to agree on plans to do so.
Spratt also has said that pay-as-you-go rules could be waived to extend tax cuts for the middle class if surpluses return.
But more than the numbers themselves, the importance of the budget plan is that there is one at all, given that Congress has failed to adopt a joint budget resolution in three of the past five years, and the new Democratic majority is eager to show they can govern.
Focus now shifts to a conference with the Senate budget plan, with Democrats aiming for a swift conference agreement so they can move forward with appropriations bills.
Although the Senate plan was amended on the floor to spend all of a projected fiscal 2012 surplus on various tax cut extensions and children's health care, Spratt said that he wanted to keep a large surplus in 2012 to protect against the vagaries of the economic cycle and to start paying down the national debt.
Spratt noted that the fastest-growing portion of the federal budget has been interest on the national debt, which he called a "debt tax" on future generations.
In addition to the Republican alternative, two liberal plans also were defeated on the House floor.
A proposed budget alternative from the Congressional Black Caucus that would repeal tax cuts for the wealthy and dramatically increase domestic spending failed on a 115-312 vote.
An alternative from progressive Democrats that would repeal tax cuts and shift funding from defense and war spending to domestic programs failed on an 81-340 vote, with Kucinich voting "present."