WASHINGTON (AP) &
Congressional Democrats have sealed an agreement on a $2.9 trillion budget blueprint for the 2008 fiscal year, a House Budget committee spokesman said.
The nonbinding plan, to be officially released later today, caps weeks of private negotiations and paves the way for action this summer on annual spending bills totaling $1.1 trillion.
The Democratic budget promises a balanced federal ledger in five years, but relies on tax revenues generated by the expiration of many of the tax cuts enacted in President Bush's first term.
Tax cuts aimed at the middle class could be renewed under the compromise, including provisions 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 those inheriting large estates.
The measure would also 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 so as to not worsen the deficit.
The budget plan is not binding but sets goals for subsequent 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.
Republicans said Democrats managed to project a balanced budget in 2012 only by assuming tax rates on income, dividends and capital gains revert to pre-Bush levels, costing taxpayers more than $200 billion in 2011-2012 alone.
Democrats said the emerging plan would bring to an end a steady string of deficits, producing a $41 billion surplus in five years. Democrats blame Bush for putting the budget back in deficit after taking office.
"We've been placed in a deep hole," said Senate Budget Committee Chairman Kent Conrad, D-N.D. "This plan will begin to dig us out."
But the Democratic plan produces it's modest $41 billion surplus in 2012 with some shaky assumptions. For instance, it does not provide for any spending on military operations in Iraq and Afghanistan after 2009, and it fails to provide funding for a long-term fix to the alternative minimum tax that threatens to ensnare about 20 million additional taxpayers unless addressed.
The plan also sets up a big confrontation with the administration, which has promised to veto appropriations bills &
the 12 annual spending measures funding Cabinet agency budgets &
that bust Bush's budget targets.
Democrats promise to fully fund Bush's whopping 11 percent hike in the Pentagon's budget, but Bush objects to their plans for increases averaging 5 percent for domestic agencies such as the departments of Education, Labor, Health and Human Services and Homeland Security.
The budget would also allow Democrats to use fast-track procedures to overhaul college aid programs, providing billions of dollars in additional aid for students &
financed by reducing subsidies to lenders.
The special procedures allow Democrats to sidestep the possibility of a GOP filibuster in the Senate, which is likely to allow them to take a more aggressive posture in curbing lender subsidies.
Democrats reach agreement on $2.9 trillion budget plan
WASHINGTON (AP) &