House votes to allow spending increases only with cuts in other funding or higher taxes

~ Republicans said the change would imperil GOP-sponsored tax cuts that expire in four years.

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

Republicans protested the change would imperil GOP-sponsored tax cuts that expire in four years. The new rule also could 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 -- "earmarks" to Washington insiders -- to contain 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 Rep. Randy "Duke" Cunningham, R-Calif., out of Congress and into prison. The new rules replace slightly weaker ones on earmarks approved last September by Republicans.

In the Senate, both parties held private strategy meetings. The chamber's first moves next week will 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.

Eliminating 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're one of the reasons the party fared so badly in November.

The PAYGO 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 the Medicaid health care program for the poor or disabled.

The PAYGO rule, adopted 280-152, 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 the Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush'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 Paul Ryan of Wisconsin, top Republican on the Budget Committee.

And it gives lawmakers such as Rep. Charles Rangel, D-N.Y., 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. Fixing the AMT so that it doesn't engulf an additional 20 million tax filers next year would require almost $50 billion in tax increases or spending savings.

"It's not good for me, but it's good for the American people," Rangel said.

"Today, we are cutting our national credit card," said Heath Shuler, D-N.C., during floor debate Friday. To underscore the point, Shuler cut a credit card in half at a news conference held by moderate-to-conservative "Blue Dog" Democrats.

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 Friday can be waived. But Democrats say to try to do so would invite criticism -- and a revolt by the conservative Blue Dogs so crucial to the Democratic majority.

Another rule change, adopted 430-0, 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.