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Senate Democrats endorse extending tax cuts

Senate Democrats endorse extending tax cuts

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WASHINGTON - Senate Democrats went on record Wednesday in favor of extending a variety of popular tax cuts that are to expire at the end of the decade.

Their budget plan had come under heavy GOP criticism for assuming that tax cuts enacted during President Bush's first term would expire in 2010 as scheduled.

The changes to the Democrats' $2.9 trillion budget outline would cover almost half the cost of extending the expiring tax cuts and were aimed at winning support from moderates for the nonbinding but symbolically significant blueprint.

The plan also would erase a $132 billion surplus predicted to appear in five years.

The importance of the development is political rather than substantive. The Democratic-controlled Congress, like its GOP predecessors, is not expected to follow up this year with binding legislation to extend the expiring tax cuts.

It is commonly assumed that lawmakers will re-examine the tax cuts after the 2008 presidential election.

The tax cut amendment, approved 97-1, won the support of every Republican and of every Democrat except Sen. Russ Feingold of Wisconsin. The vote was on a plan by Senate Finance Committee Chairman Max Baucus, D-Mont., to devote $180 billion in 2011-12 to preserve tax cuts aimed at the middle class. That included relief for married couples, people with children and people inheriting large estates.

After Baucus' plan passed, Democrats united to kill a bid by Sen. Jon Kyl, R-Ariz., to extend further cuts on taxes on estates as well as cuts on capital gains and dividend income that Republicans credit for jump-starting the economy after they were passed in 2003.

In the House, a Democrat-dominated committee debated a companion budget plan that would award big spending increases to domestic programs.

It assumes that Bush's tax cuts indeed disappear and, as a result, would produce a$153 billion surplus in five years through more money coming into the treasury.

The House Budget Committee's $2.9 trillion plan envisions large increases for homeland security, veterans' health care and aid to local schools.

A vote was expected late Wednesday night.

Republicans condemned the Democratic budget plan for its spending increases and its assumption that the lower taxes on income, married couples, inheritances and investments would expire.

Despite much debate over taxes, the immediate impact of the House and Senate budget blueprints for next year is to award increases above inflation to domestic agencies for the portion of their budgets passed each year by Congress.

The Senate's plan would give non-defense programs an$18 billion increase, about4 percent. The House measure proposes a $25 billion increase, almost 6 percent.

Congress' annual debate on the budget is guided by an arcane process in which a nonbinding congressional budget resolution sets the stage for later bills affecting taxes and benefit programs such as Medicare, as well as the annual appropriations bills.

In many years, Congress opts to put off difficult budget issues and simply focus on the 12 annual bills covering the budgets of Cabinet agencies such as Defense, Education and Agriculture. This year is likely to be such a stand-pat one.

Even so, Democrats are eager to pass a budget, regarding it as an important test of their ability to govern. Republicans failed to pass a budget last year and action on critical spending bills stalled.

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