WASHINGTON — Democrats controlling Congress unveiled an election-year fiscal blueprint Tuesday that puts the federal budget mostly on autopilot, leaving the winner of November's presidential election with enormous challenges.
The House-Senate compromise, more than a month overdue, contains a host of shaky assumptions and forecasts that many of President Bush's tax cuts will expire in 2010.
It predicts a $340-billion budget deficit next year, but achieves it only by understating likely war costs and the $50-billion-plus cost of making sure more than 20-million middle-class taxpayers aren't hit by the alternative minimum tax.
The same assumptions call into question Democrats' promises to produce surpluses by 2012.
Congress' annual budget debate involves a nonbinding resolution that sets the stage for later bills affecting taxes, benefit programs and the annual appropriations bills. Unless such follow-up legislation is passed, however, the budget debate has little real effect.
Senate Budget Committee Chairman Kent Conrad, D-N.D, said the compromise retains a Senate plan to renew tax cuts aimed at the middle class, including the $1,000 per child credit, relief from the marriage penalty, estate tax cuts and the 10 percent tax rate on the first $7,825 of income for individuals. But there's not enough money to extend cuts on income tax rates, capital gains and dividend income and still produce a surplus under the Democratic plan.
Republicans attacked the Democratic plan for permitting many of Bush's tax cuts to expire. Fully extending them would cost $161-billion in 2011, according to congressional estimates, and would quickly rise above $250-billion a year.
Homeowner rescue: Democrats and Republicans joined to push a homeowner rescue plan through the Senate Banking Committee 19-2 that would give cheaper, government-backed mortgages to up to 500,000 strapped borrowers.
War funding bill: The Senate kicked off debate on legislation to add a grab bag of domestic programs to President Bush's war request, including work permits for immigrant farm labor and heating subsidies for the poor. Majority Leader Harry Reid, D-Nev., brought up the add-ons in a move designed to win their adoption before turning to companion legislation providing $165-billion to conduct military operations in Iraq and Afghanistan into next spring.
House targets OPEC: The House voted to let the Justice Department pursue antitrust and price-fixing cases against members of the OPEC oil cartel. Critics said it could prompt a backlash from oil producers.