Dems balk on budget, warn of tax hikes to come 

As Senate Democrats were forced to consider scaling back their massive federal aid and stimulus package, House Democrats threw up the white flag on passing a budget this year, announcing instead they would consider a short-term proposal that cuts spending but does nothing to tackle future deficits.

Lawmakers in both parties are increasingly wary of adding to the nation's $1.3 trillion deficit, which has forced Democratic leaders in both chambers to shrink spending bills and show concern about runaway costs.

In the House, that means not skipping the budget process altogether, which Democrats were considering because it would have been impossible to come up with enough support within their divided caucus to produce what would have amounted to a five-year blueprint on spending and taxation.

Instead, House Majority Leader Steny Hoyer, D-Md., announced Tuesday the House will duck the mounting deficit and consider a "budget enforcement resolution" that will make cuts in spending and set limits for 2011 only. Longer-term decisions, Hoyer said, would have to wait until the newly formed presidential debt commission issues its first report in December.

"It isn't possible to debate and pass a realistic, long-term budget until we've considered the bipartisan commission's deficit reduction plan," Hoyer said in a speech delivered Tuesday to Third Way, a liberal think tank. Hoyer also warned of looming middle-class tax increases after this year.

Republicans quickly fired back.

"That is the ideology of Washington Democrats -- just keep spending taxpayers' money with no plan, no discipline, and no accountability," said House Minority Leader John Boehner, R-Ohio.

The Senate has been unable to pass a budget plan, and on Tuesday Democrats discussed the House's short-term budget proposal in a closed-door meeting.

"But we really didn't come to any conclusion about what we would do," Sen. Bob Casey, D-Pa., said after the meeting.

Both the House and Senate are grappling with problems passing two major spending bills. In the House, Democrats are having difficulty rounding up support for a $58 billion war supplemental measure with additional domestic spending attached to it.

In the Senate, Democratic leaders have taken a scalpel to a bill that would provide billions in aid to states and would extend unemployment insurance as well as tax breaks for small businesses. Senate Majority Leader Harry Reid, D-Nev., is hoping a reduced bill will attract the support of a couple of moderate Republicans needed to reach a 60-vote threshold after a weeks-long stalemate on the legislation. Democrat Ben Nelson, D-Neb., and Joe Lieberman, I-Conn., oppose the bill because it adds to the deficit.

"There is discussion about dividing it up, having more standalone provisions that people would have to vote up or down on, and there is an effort to scale back even further," said Sen. Claire McCaskill, D-Mo..

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