By David Clarke, CQ Staff

House Democrats released a budget blueprint Wednesday that reprises fights with Republicans over taxes and spending and showcases tensions with the Senate over how to deal with the alternative minimum tax.

The House Budget Committee is marking up its fiscal 2009 budget resolution. The Senate panel was later to begin a two-day markup of its version.

The House markup also serves as a venue for the continuing fight over earmarks as House Democratic leaders consider a ban on the practice in the face of election-year criticism from Republicans. House Republicans offered an amendment at the markup to impose a moratorium on earmarks until the process can be reviewed, but it was rejected on a 16-21 vote.

Democrats consider Republicans’ hypocrites on the earmark issue, noting earmarks grew dramatically when they controlled Congress. Nonetheless, House Democrats have become frustrated by the GOP drawing constant attention to the issue.

House Appropriations Chairman David R. Obey , D-Wis., is circulating a “dear colleague” letter, asking members to inform his committee whether they want to bar the practice or keep providing “responsible earmarks.” Obey wants all members on the record and ends his letter with: “I will assume that any member not returning this form [by March 19] wishes to see congressional earmarks discontinued and will therefore be submitting no requests for fiscal 2009.”

Divisions Over AMT

The panel’s fiscal 2009 budget resolution calls for Congress to pass a fully offset “patch” to curtail the reach of the AMT through the filibuster protections afforded by the budget process, known as reconciliation, to prevent Senate Republicans from blocking the bill. Because the AMT is not indexed to inflation more middle-income taxpayers will continue to pay it unless Congress acts, which it has done routinely in recent years with a patch.

Last year House Democrats pushed hard to offset the cost of the patch but the Senate could not pass such a bill because Republicans opposed the proposed offsets. The House Blue Dogs, the conservative wing of the caucus, were particularly upset that Congress eventually passed a non-offset “patch” (HR 3996), which violated the spirit of the pay-as-you-go rules Democrats heralded as a sign of their fiscal responsibility.

This year House Democrats want to push President Bush into vetoing a fully offset AMT patch rather than letting it become bogged down in the Senate. But Senate Democrats are not eager to reprise the fight this year and decided not to include a similar reconciliation instruction in their budget for AMT.

Senate Budget Chairman Kent Conrad , D-N.D., said his budget blueprint assumes Congress will pass a patch this year that will not be offset and will cost $62 billion.

Technically, the House Budget resolution instructs the Ways and Means Committee to produce a bill that reduces revenues by $70 billion in fiscal 2009, about the cost of an AMT patch, but also includes $70 billion in offsets over six years.

The House budget resolution also contains a reconciliation instruction for Ways and Means to produce a bill that reduces mandatory spending by $750 million over six years. The panel could use this to do a variety of things, including to advance a bill through reconciliation that would prevent a scheduled 10 percent cut in Medicare payments to physicians this year. In the end, the only requirement would be that the bill produce a net reduction in the deficit of $750 million.

Republicans denounced the budget plans, arguing they pave the way for the expiration of the president’s signature 2001 an 2003 tax cuts (PL 107-16, PL 108-27) because the five-year tax numbers included in the blueprint are in line with $683 billion in extra revenue that the government would collect over five years if the tax cuts expire.

“This budget increases taxes and you can’t spin your way out of it,” said Rep. Paul D. Ryan of Wisconsin, the ranking Republican on the committee.

Rep. John M. Spratt Jr. , D-S.C., the committee’s chairman, argued Democrats are assuming that if the tax cuts are extended they will be offset and that because they do not expire until 2010 that decision is two years away.

“When they do expire, if the budget is still deep in deficit, both parties will have to decide which tax cuts to extend,” Spratt said. “We cannot add infinitely to our national debt.”

The budget resolution is non-binding but sets the parameters for consideration of tax and spending bills. Congress almost surely will not advance legislation addressing the 2001 and 2003 tax cuts this year so the debate is over future policy decisions.

The House and Senate budget blueprints both produce surpluses in fiscal 2012 and fiscal 2013. Conrad said his party will offer an amendment on the floor that will propose dedicating those surpluses to extending tax cuts aimed at the middle class — such as the 10 percent tax bracket and the child tax credit — at a cost of about $300 billion over five years.

Democrats have criticized President Bush for including only $70 billion in war funding for next year in his fiscal 2009 budget proposal, and administration officials have acknowledged that number is probably about $100 billion too low. Still, the House and Senate budgets make room for the same amount as in the president’s budget.

The Democrats’ budget blueprints also set up another showdown with the president over how much to spend on the 12 annual appropriations bills. The Senate resolution would allow $18 billion more in spending than the president requested while the House resolution includes $22 billion more than he requested.

President Bush has already threatened to veto spending bills that exceed his request and Democrats have said if he won’t compromise they are prepared to wait until after the November election to finish work on fiscal 2009 domestic spending measures.

Liriel Higa and Edward Epstein contributed to this report

First posted March 5, 2008 1:47 p.m.