WASHINGTON—Republican lawmakers, having lost control of Congress in an election colored by war, corruption and runaway spending, are reviving an old battle cry in their bid to reclaim the political high ground.
The Democrats want to raise taxes!
Sen. Kent Conrad and Rep. John Spratt, the Democratic chairmen of the Senate and House budget committees, are pushing to resolve differences between their chambers' spending plans in time for final passage of a unified measure by May 15.
Democrats, who campaigned successfully last fall on themes of GOP economic mismanagement, are eager to produce a budget that keeps the appropriators in line and displays fiscal prudence.
But even before the Democrats complete the five-year blueprint, Republicans are on the attack.
"Regrettably, the Democrats' budget plan amounts to the largest tax hike in American history," said Rep. Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee.
"When you take everything away, this bill is a classic Democratic tax-and-spend bill," said Sen. Judd Gregg of New Hampshire, the Senate budget panel's top Republican.
Whether Ryan, Gregg and their GOP allies are right depends a lot on how you define "tax hike."
Republicans say the budgets crafted by Spratt and Conrad effectively raise taxes because they don't extend President Bush's tax cuts after those lower rates expire at the end of 2010.
The average taxpayer would pay about $2,500 more a year, with a total price tag of almost $400 billion through 2012, according to the Republicans.
Democrats counter that it was the GOP-led Congress that twice—in 2001 and 2003—failed to enact permanent tax decreases, choosing instead to sunset them in 2010.
"Our budget resolution says we will decide what to do with the expiring tax cuts when we need to decide," Spratt said in an interview.
"There's no need right now to make those tax cuts permanent, but at the same time we don't impair or restrict the tax cuts in effect now," Spratt said. "So this notion that we raise taxes is a complete fallacy."
Analysts are divided over who's right.
"Doing nothing and letting the current tax cuts expire is not an increase," said Charles Konigsberg, an assistant budget director under President Clinton from 1995 to 1999.
"A tax increase is when you pass legislation to increase revenues," said Konigsberg, who now publishes a widely read budget newsletter. "The Democrats are not proposing to pass any legislation to increases revenues. They're just letting current laws take effect."
JD Foster, a tax policy expert at the conservative Heritage Foundation in Washington, said such distinctions will be lost on most Americans when they do their taxes in 2011.
"The American people aren't going to care about how the situation came about," Foster said. "What they're going to care about is who is going to solve the problem."
The budget Bush sent Congress in February makes the tax cuts permanent without increasing the federal deficit through forecasts of economic growth that Democrats say are unrealistically optimistic.
During their election campaigns, Democrats tread a fine line between criticizing "tax cuts for the rich" and praising "middle-class tax relief."
Turns out, the tax cuts scheduled to expire Dec. 31, 2010, come from both categories.
Democrats are targeting the Bush tax cuts that they say have disproportionately benefited affluent Americans. The two main ones are the 10 percent rate on long-term capital gains and dividends, which would rise to 15 percent after 2010, and the cap on the rate on estate taxes at 46 percent, which otherwise would increase to 55 percent.
The "middle-class tax relief" backed by Democrats includes the 10 percent rate for low-income taxpayers, the $1,000-per-child credit and a continued decrease or elimination of various "marriage penalties."
"These tax cuts have been in place for as long as six years," Spratt said. "For the most part, they've had broad bipartisan support."
Already, Democrats face a revolt from one of their own: Sen. Max Baucus, a Montana Democrat, surprised Conrad and Spratt with an amendment to add $145 billion to the Senate budget to extend some of the tax cuts beyond 2010.
In a sign of the political pressure Democrats face on taxes, the Senate voted 97-1 for Baucus' amendment, even though it isn't offset by spending reductions or other tax increases as required by the party's new "pay go" (short for "pay as you go") rules.
The tax extensions, and an additional $50 billion in the Baucus provision for children's health insurance, aren't in the House budget and are among the key differences conferees from the two chambers will negotiate this week.
Neither party has yet to tackle a tax increase set to hit long before 2011: The alternative minimum tax, an alternative system originally aimed at wealthy Americans, will raise taxes this year for 19 million households.
Congressional leaders are weighing a one-year "patch" of the AMT system, though. A permanent fix is more difficult because it would cost the government tens of billions of dollars in lost revenue.
(c) 2007, McClatchy-Tribune Information Services.
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