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Senate passes $2.36 trillion budget

Senate approval of a $2.36 trillion budget easing President Bush’s tax-cutting and spending plans shifts the spotlight to the House, where a similar package has so far bounced along a rocky road.
/ Source: The Associated Press

Senate approval of a $2.36 trillion budget easing President Bush’s tax-cutting and spending plans shifts the spotlight to the House, where a similar package has so far bounced along a rocky road.

The Republican-led Senate approved its package early Friday on a mostly party-line 51-45 vote. Though it mostly follows Bush’s vision of defense increases, restrained domestic spending and gradual deficit reduction, it ignores his call for permanent tax cuts he considers the heart of his plan for reviving the economy.

Like the Senate plan, the fiscal outline debated Thursday by the GOP-run House Budget Committee has smaller tax cuts, less spending and faster reduction of record deficits than Bush proposed. That underscores an election-year desire by Republicans to show action against shortfalls expected to approach an unprecedented half trillion dollars this year.

“We have to start that long journey with a first step, and that’s what today allows us to do,” said House budget panel chairman Jim Nussle, R-Iowa.

Nussle, who ran into objections from GOP defense and veterans advocates as he crafted his plan, hit more problems Thursday.

They were resolved — for now — when Nussle said his committee would approve new procedures making it harder for Congress to increase spending not paid for with other savings. The dispute forced him to delay final passage of the budget and a separate bill creating the procedural hurdles until next week.

Congress’ budget sets ceilings for revenues and expenditures, but its details are only advisory. Actual tax and spending changes are made in later bills.

Partisan fighting
Senate approval came after Republicans fought off a mountain of Democratic amendments. Many would have trimmed tax cuts on the richest Americans and shifted the money to health care, schools, firefighters or other popular programs.

“Our good friends are after you,” said Senate Budget Committee Chairman Don Nickles, R-Okla., warning taxpayers about Democratic proposals he said would in effect raise taxes. “They’re coming, coming after your pocketbooks.”

Democrats scored the Senate plan for calling for more tax cuts, shortchanging needed programs and doing too little to mop up spreading red ink.

“I don’t see any cutting of the deficit in half,” said Sen. Kent Conrad, D-N.D., saying the plan omitted expected costs such as an extended U.S. stay in Iraq and easing the alternative minimum tax’s growing impact on middle-income families.

The only senators crossing party lines on passage were Trent Lott, R-Miss., and Zell Miller, D-Ga. Sens. John Edwards, D-N.C.; John Kerry, D-Mass.; Harry Reid, D-Nev., and Tim Johnson, D-S.D., did not vote.

One amendment the Senate approved would halt the government from filling its petroleum reserve, which critics say has driven up gasoline prices. Though non-binding, the 52-43 vote showed there could be sentiment for congressional action.

Bush has proposed taking five years to halve this year’s projected deficit — a far cry from the seemingly endless surpluses projected as he took office in 2001.

Call for permanent tax cuts ignored
The Senate plan seeks to halve shortfalls in three years, while the House’s claims to achieve the goal by 2008.

The House, Senate and Bush get much of their deficit reduction not from budget cuts but from assumptions that a strengthening economy will produce more federal revenue.

The House and Senate plans would hold most domestic programs to about last year’s levels and give Bush the 7 percent defense increase he requested to about $421 billion.

Democrats attacked the House budget’s plan to give procedural protections to $138 billion in tax cuts over the next five years, which they called excessive.

“These tax cuts can only add dollar to dollar to the deficit,” said Rep. John Spratt, D-S.C.

The Senate budget would expedite $81 billion in tax reductions, $100 billion less than Bush proposed. Both congressional plans ignored Bush’s call to make permanent most of the tax cuts passed in 2001 and 2003, which would worsen deficits.

The House and Senate plans endorse Bush’s call to renew the expanded 10 percent tax bracket and children’s tax credit and breaks for married couples, which otherwise expire next year. The House plan also leaves room to extend cuts in the capital gains and dividends tax rates.

The House budget calls for $13 billion in savings over the next five years from what Nussle calls waste, fraud and abuse in programs that pay automatic benefits. Specific decisions on programs affected will be made in later bills.