House budget resolution has some unknowns

The United States Capitol Building

KAI RYSSDAL: The House passed its 2008 budget resolution today.It's the first full spending package the Democrats have had a chance to build from the ground up since they took over. And it promises boosts in spending for education, health care and national security.

But Marketplace's Hillary Wicai reports from Washington, there's a $50 billion dollar question mark the majority party's trying very hard not to talk about.


HILLARY WICAI: The Democrats tout their budget as a responsible plan that puts children and family first. Speaker of the House Nancy Pelosi was emphatic in her support.
NANCY PELOSI: It does it all in a fiscally sound way. No new deficit spending. Pay as you go.

And there's the $50 billion hitch in the giddyup: paying for every dollar spent with a dollar cut someplace else.

If the alternative minimum tax is allowed to hum along, an estimated 19 million additional American families will pay dramatically higher taxes in 2007. To spare the middle class, the Democrats will have to find $50 billion.

Maya MacGuineas is with the Committee for a Responsible Federal Budget. She predicts that'll be a tough one.

MAYA MACGUINEAS: I think the likely solution will have the pieces of increasing taxes on the well-off, and using that new revenue to offset lifting the alternative mimnum tax off of the backs of many of those in the middle class. Still, it's going to be hard to rejigger a tax package in a way that all of the costs are offset.

And truth be told, pay-as-you-go has a loophole.

Robert Bixby is the executive Director of the Concord Coalition, a nonpartisan group that backs deficit reduction.

ROBERT BIXBY: But as a practical matter, I think there are enough votes probably to waive pay-go to prevent such an increase from going into effect if they can't find the offsets.

Which means to help the middle class, more red ink will likely be added to the deficit.

So, which promise will the Democrats keep: back the middle class or balance the budget? Keeping both will surely lead to a big internal fight.

A conference committee now takes the House and Senate versions and hammers out a budget blueprint for legislators to follow. Maybe they can find the 50 billion.

In Washington, I'm Hillary Wicai for Marketplace.

RYSSDAL: Part of the premise behind any congressional budget bill is that the economy's going to keep on growing.And we got an update on fourth-quarter Gross Domestic Product this morning. It was a touch better than the last time we looked. Up three-tenths to 2.5 percent on an annual basis.

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