Democrats in Senate, House agree on budget

Published May 17, 2007

WASHINGTON - Democrats controlling Congress presented a $2.9-trillion budget blueprint Wednesday, ensuring a confrontation with President Bush over spending boosts for education and other domestic programs.

The Democratic plan promises a budget surplus in five years but would achieve it only by allowing some of Bush's tax cuts to expire.

The nonbinding plan for next year faces House and Senate votes today. Democrats agreed to it after weeks of private negotiations between the chairmen of the House and Senate Budget committees. The House and Senate passed competing budgets in March.

The most immediate result would clear the way for action this summer on annual spending bills totaling $1.1-trillion for the budget year that begins Oct. 1.

The budget plan, while nonbinding, sets goals for later 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.

Democrats took a pass on overhauling federal retirement programs such as Social Security and Medicare. They are threatened with insolvency in the decades ahead with the retirement of the Baby Boom generation.

Instead, Democrats hope to address shortfalls in benefit programs after the 2008 election as part of broader talks that also would determine the future of the Bush tax cuts.

Fast Facts:

Budget compromise

Key points of the Democrats' budget plan:

- Proposes a budget surplus of $41-billion by 2012. After a $214-billion deficit for the current budget year, the deficit would rise to $252-billion for 2008 but fall to $235-billion the next year, according to the Democrats' plan.

- Includes $145-billion for military operations in Iraq and Afghanistan next year, but provides no spending for the operations after 2009.

- Includes an increase of $23-billion in domestic spending. The White House opposes the increase; its spending plan essentially would freeze spending.

- Renews tax cuts aimed at the middle class, including relief for married couples, people with children and people who inherit large estates.

- Lets tax cuts aimed at the wealthy expire in 2011-12.

- Provides no money to allow for a long-term fix to the alternative minimum tax.

- Restores a "pay-as-you-go" rule that requires tax cuts or spending increases to be financed by spending cuts or tax increases elsewhere. The idea is not to worsen the deficit.