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House Democrats take aim at tax cuts, pet projects

'Pay-as-you-go' was a cornerstone of election gains

Senate Democrats gathered at the Library of Congress in Washington yesterday to highlight their plans for the 110th Congress, with their party now holding a majority in both chambers. (Win McNamee/Getty Images)

WASHINGTON -- Resurgent House Democrats voted yesterday -- their second day back in control -- to block future tax cuts or benefit hikes from being financed with dollars that increase the national deficit.

Republicans protested that the change would imperil GOP-sponsored tax cuts that expire in four years. The new rule could also make it more difficult for the Democrats to fulfill campaign promises to cut student loan rates and extend tax cuts for the middle class.

The drive to restore the "pay as you go" rule has long been a priority for moderate-to-conservative Democrats, whose House ranks swelled on Election Day.

The House also voted, this time with no dissent, for a rule requiring legislation containing pet projects and narrowly targeted tax breaks -- known as "earmarks" -- to include the names of the lawmakers who requested them.

The idea is that openness will help prevent abuses like the earmark bribery scandal that forced former Representative Randy "Duke" Cunningham, a Republican from California, out of Congress and into prison. The new rules replace slightly weaker ones on earmarks approved in September by Republicans.

In the Senate, both parties held private strategy meetings. The chamber's first moves next week are expected to largely mirror House steps to ban lawmakers from accepting gifts and free trips from lobbyists. The bipartisan Senate ethics and lobbying reform bill, the first legislation to reach floor debate under Democratic control, also requires disclosure of senators' earmarks.

Democrats have promised to eliminate earmarks in a catchall spending bill that will clear away budget work left over from last year -- and say that the upcoming round of appropriations bills will contain far fewer home-state projects, criticized as wasteful "pork" by taxpayer advocates.

Earmarks such as the "bridge to nowhere," a much-mocked proposal to build a $223 million span in Alaska to link Ketchikan and lightly populated Gravina Island, have captured the attention of voters, and Republicans say they are among the reasons the party fared so badly in November.

The pay-as-you-go rule, if strictly enforced, promises to have a far bigger impact on the deficit. It would make it difficult for Democrats to pass increases in federal benefit programs, such as Medicare or Medicaid.

The PAYGO rule, adopted with a 280-to-152 vote, requires that tax cuts have corresponding cuts in government spending or increases in taxes elsewhere to pay for them. Likewise, any increase in entitlement programs like Medicare would have to have corresponding tax increases or equal cuts in other government programs.

In the near term, PAYGO means that a proposal to reduce federal student loan rates will be less generous than Democrats would like.

The rule would also threaten efforts to extend the Bush administration's tax cuts, most of which expire at the end of 2010.

"This is putting the American taxpayer on a collision course with higher taxes," said Representative Paul Ryan of Wisconsin, top Republican on the House Budget Committee.

Also, it gives lawmakers such as Representative Charles Rangel, a Democrat from New York and chairman of the tax-writing Ways and Means Committee, an enormous headache as he tries to stop the alternative minimum tax from hitting more and more middle-class taxpayers next year.

Democratic budget hawks say that restoring the PAYGO rule is crucial to curbing the budget deficit. Various forms of the rule were in place from 1990-2002, however, and Congress often found ways around it.

The version adopted yesterday can be waived. But Democrats say to do so would invite criticism.

Another rule change, adopted 430-to-0, would curb past abuses in which GOP leaders held votes open for hours and excluded Democratic lawmakers from House-Senate negotiations on the language of final bills sent to the White House for enactment.

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