From: Reuters
Published March 14, 2008 04:29 AM

Senate, House approve fiscal 2009 budget plans

By Richard Cowan and Donna Smith

WASHINGTON (Reuters) - The Senate passed a budget plan on Friday to eliminate the federal deficit by 2012 while spending more than President George W. Bush wants on domestic programs like schools and roads.

After a 15-hour debate that began on Thursday, the Senate voted 51-44 mostly along party lines to approve a nonbinding $3 trillion Democratic budget blueprint for the year beginning October 1.

Before passing the measure, senators easily rejected a one-year ban on controversial spending projects, known as earmarks, that benefit specific cities or towns.

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But they approved adding money for some international activities, including foreign aid, Iraq reconstruction, fighting AIDS globally and nuclear nonproliferation.

On Thursday, the Democratic-led House of Representatives voted 212-207 for a similar version of the budget without any Republicans supporting the measure.

Much of the House debate centered on Republican charges the bill eventually would bring a record tax increase. Democrats countered it would protect middle-class tax cuts now in place that are set to expire at the end of 2010.

This week's votes are certain to be fodder for a spirited debate on government taxes and spending in the presidential and congressional campaigns leading up to the November election.

The three main presidential candidates -- Democratic Sens. Barack Obama of Illinois and Hillary Clinton of New York and Republican Sen. John McCain of Arizona -- interrupted their campaigns to cast votes.

The House and Senate will try to work out differences between their two budgets, both of which claim to end deficit spending by 2012. This year's budget deficit is forecast to hit about $400 billion.

"Our first priority is to strengthen the economy and create jobs," Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said, noting investments in energy, education, health care, road-building and other domestic programs.

Rep. Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee, previewed the election-year debate, saying the Democrats' budget "raises taxes; $683 billion on everybody, not just rich people."

TAX DEBATE

By a vote of 99-1, with all three presidential candidates voting yes, the Senate approved an amendment to extend some of Bush's tax cuts, including one for low-income earners, a child tax credit and marriage penalty relief.

But the Democratic-led Senate rejected a Republican attempt to extend the remaining Bush tax cuts, many of which help the wealthy. Of the three senators trying to succeed Bush in the White House in January when his term ends, only McCain backed the Republican amendment.

Clinton and Obama voted in favor of the overall budget plan, while McCain did not cast a vote.

The House and Senate bills would extend for this year relief to middle-class taxpayers who otherwise would get pulled into paying more taxes under an "alternative minimum tax" originally intended only for the wealthiest.

The budget legislation that Congress debates each year provides guidance and overall spending levels for congressional committees as they consider individual spending and tax bills.

While the House and Senate Democratic budgets, as well as Bush's February spending request, claim to end chronic budget deficits by 2012, they all leave out long-term war costs and firm decisions on tax policy, which complicate budget-balancing efforts.

With a new U.S. president taking office in January, Congress is likely to wait for the new administration before writing broad tax reform legislation.

(Editing by Peter Cooney)

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