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Democrats move to curb spending practices

WASHINGTON—On their second day in power, Democrats led the House of Representatives to vote Friday to curb two types of controversial spending.

One new House budget rule requires lawmakers to attach their names to spending "earmarks" for pet projects that traditionally are slipped anonymously into spending bills.

A second rule requires the House to offset any new tax cut with equal cuts in spending to make sure the deficit doesn't swell. It would require the same "pay-as-you-go" cash offsets for any new expansion of federal "entitlement" benefit programs, such as Medicare.

The "earmark" disclosure enjoyed support from both sides of the aisle, not least because exploding spending on earmarks was an issue that hurt Republicans in November's elections. But it was packaged with the "pay-as-you-go" provision, which many Republicans see as a publicity stunt for the new Democratic majority that they fear will lead to the eventual undoing of President Bush's tax cuts.

The 280-152 vote for the so-called "fiscal-responsibility" package marked the first major policy split of the two-day-old 110th Congress. Most Republicans voted against it, although 48 joined Democrats in favor.

Democrats said the pay-as-you-go or "paygo" provision is needed to clean up five years of irresponsible spending by the former Republican-led Congress and President Bush, who passed tax cuts in wartime.

"We will proceed in a fiscally sound way to provide opportunity for our children, not heap mountains of debt on them," said House Speaker Nancy Pelosi, D-Calif.

"It's a recipe for tax increases," countered Rep. Paul Ryan, R-Wis., the ranking Republican on the House Budget Committee.

Independent experts said that tax increases are unlikely in this Congress, because they would have trouble passing the Senate, and Bush would veto them if they did.

House Majority Whip James Clyburn, D-S.C., said in an interview, "It all depends on what you define as taxes going up. Nobody's going to increase anybody's taxes, but what we are going to do is make these tax cuts more fair. What we've seen is the overloading of all the tax cuts on the upper 1 or 2 percent of people in the country and the middle-income people in this country got little or nothing. What we are going to do is reorder those priorities."

Budget experts said the "paygo" House rule could help contain federal spending—if the Democrats stick to it. And it would be more likely to be effective if the Senate adopts a similar restriction. Senate Democrats say they intend to.

"It says to anyone who wants to cut taxes or increase entitlement spending, `How are you going to pay for it?'" said James Horney: director of fiscal policy for the Center on Budget and Policy Priorities, a liberal think tank.

"The idea that you can just willy-nilly cut taxes for people and give them new benefits and not worry about how that affects our ability to meet real national needs in the long run, that's wrong."

Analysts cautioned that the rule could block temporary tax cuts aimed at jump-starting the economy. They also observed that the rule will not restrain spending on big-ticket expenses such as the war in Iraq and the current Social Security, Medicare and Medicaid programs.

"The long-term danger comes not from new entitlements, but from the escalating costs of current entitlements," said Brian Riedl, lead budget analyst for the Heritage Foundation, a conservative think tank.

Because the paygo requirement was passed as a House rule rather than as a law, a House majority can waive it whenever it wants.

Analysts predicted that Democrats would waive the paygo restriction in at least one case—to shield many working families from having to pay the alternative minimum tax, or AMT, this year—because it's unlikely that lawmakers can easily find $50 billion to cover the cost of amending the AMT.

The paygo rule is likely to complicate the Democrats' other legislative goals, including cutting interest rates on student loans, fixing gaps in Medicare coverage for seniors and increasing spending on energy conservation. All would require offsetting spending cuts elsewhere, or higher taxes.

A similar pay-as-you-go budget rule was enacted in 1990 as part of a deficit-reduction agreement between the then-Democratic Congress and the first President Bush. It remained in effect until 2002 and helped to convert chronic federal deficits into a four-year budget surplus from fiscal 1998-2001.

The surplus peaked in fiscal 2000 at $236 billion; last year the deficit was $247 billion.

Friday's vote was the latest in a barrage of votes that House Democrats have scheduled between now and Bush's Jan. 23 State of the Union address. Next week the House is expected to pass a minimum wage increase and measures to expand embryonic stem-cell research and negotiate lower prescription costs for senior citizens.

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(c) 2007, McClatchy-Tribune Information Services.

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