U.S. Congress attempts to pass FY09 budget
By Richard Cowan and Donna Smith
WASHINGTON, March 13 (Reuters) - The U.S. Senate overwhelmingly approved extending some of President George W. Bush's tax cuts on Thursday as Congress tried to complete work on a budget blueprint for fiscal 2009 that aims to end deficit spending within four years.
By a vote of 99-1, the Senate passed a Democratic amendment to permanently extend a 10 percent tax rate, mostly for low-income earners, along with a child tax credit and marriage penalty relief. These provisions are due to expire at the end of 2010. A Republican amendment that would have extended the remaining tax cuts was defeated.
The budget debate and controversy over spending priorities and taxes is expected to spill over into the presidential and congressional campaigns for the November elections.
The three senators running for president -- Democrats Hillary Clinton of New York and Barack Obama of Illinois and Republican John McCain of Arizona -- interrupted their campaigns to vote on the budget. All three voted for the Democratic tax amendment but only McCain backed the Republican proposal.
McCain, who initially opposed Bush's tax cuts, now embraces them.
Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said his measure also would create a new property tax deduction for homeowners, including those who do not currently file itemized tax returns.
The initiative, Baucus said, "would maximize the budget's help for America's working families."
The annual budget plan is nonbinding. It is up to Congress' tax-writing committees later this year to advance legislation implementing the tax changes.
With a new U.S. president taking office next January, Congress is likely to wait for the new administration before writing broad tax reform legislation.
Sen. Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee, supported the tax-cut amendment, but chided Democrats for passing something similar last year and never enacting legislation to implement it.
"Last year, the same amendment was offered ... none of those taxes were extended. It's the gift that keeps on giving ... and nothing comes from it," Gregg said.
Meanwhile, the House of Representatives was expected to pass its version of a budget blueprint for the fiscal year that begins on Oct. 1.
Like the Senate bill, it claims to erase chronic deficit-spending by 2012 and also would spend more than Bush wants for many domestic programs next year.
Many Democrats say they want some of Bush's tax cuts, mainly those aimed at the wealthy, to expire after 2010.
House Republicans accused Democrats of embracing a $683 billion tax increase, calling it the "largest tax hike in American history."
Unlike the House Democrats' plan, the Senate bill makes room for about $35 billion in new economic stimulus, if the newly enacted $152 billion package fails to invigorate the U.S. economy adequately.
While both bills, as well as Bush's February budget request, claim to balance the budget by 2012, none provide the long-term funding for the wars in Iraq and Afghanistan that likely will be needed. (Editing by Alan Elsner and David Alexander)
WASHINGTON, March 13 (Reuters) - The U.S. Senate overwhelmingly approved extending some of President George W. Bush's tax cuts on Thursday as Congress tried to complete work on a budget blueprint for fiscal 2009 that aims to end deficit spending within four years.
By a vote of 99-1, the Senate passed a Democratic amendment to permanently extend a 10 percent tax rate, mostly for low-income earners, along with a child tax credit and marriage penalty relief. These provisions are due to expire at the end of 2010. A Republican amendment that would have extended the remaining tax cuts was defeated.
The budget debate and controversy over spending priorities and taxes is expected to spill over into the presidential and congressional campaigns for the November elections.
The three senators running for president -- Democrats Hillary Clinton of New York and Barack Obama of Illinois and Republican John McCain of Arizona -- interrupted their campaigns to vote on the budget. All three voted for the Democratic tax amendment but only McCain backed the Republican proposal.
McCain, who initially opposed Bush's tax cuts, now embraces them.
Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said his measure also would create a new property tax deduction for homeowners, including those who do not currently file itemized tax returns.
The initiative, Baucus said, "would maximize the budget's help for America's working families."
The annual budget plan is nonbinding. It is up to Congress' tax-writing committees later this year to advance legislation implementing the tax changes.
With a new U.S. president taking office next January, Congress is likely to wait for the new administration before writing broad tax reform legislation.
Sen. Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee, supported the tax-cut amendment, but chided Democrats for passing something similar last year and never enacting legislation to implement it.
"Last year, the same amendment was offered ... none of those taxes were extended. It's the gift that keeps on giving ... and nothing comes from it," Gregg said.
Meanwhile, the House of Representatives was expected to pass its version of a budget blueprint for the fiscal year that begins on Oct. 1.
Like the Senate bill, it claims to erase chronic deficit-spending by 2012 and also would spend more than Bush wants for many domestic programs next year.
Many Democrats say they want some of Bush's tax cuts, mainly those aimed at the wealthy, to expire after 2010.
House Republicans accused Democrats of embracing a $683 billion tax increase, calling it the "largest tax hike in American history."
Unlike the House Democrats' plan, the Senate bill makes room for about $35 billion in new economic stimulus, if the newly enacted $152 billion package fails to invigorate the U.S. economy adequately.
While both bills, as well as Bush's February budget request, claim to balance the budget by 2012, none provide the long-term funding for the wars in Iraq and Afghanistan that likely will be needed. (Editing by Alan Elsner and David Alexander)
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