Senate approves budget, backs tobacco tax hike
By Donna Smith Fri Mar 23, 3:41 PM ET
WASHINGTON (Reuters) - The U.S. Senate on Friday approved a $2.9 trillion fiscal 2008 budget that calls for an increase in the federal tobacco tax and gives popular middle class tax breaks priority for future tax cuts.
The Senate passed the Democratic-written budget blueprint on a 52-47 vote that was largely along party lines. Republicans called it a big tax and spend document while Democrats said it was fiscally responsible and puts the budget on track toward balance in five years.
"This budget resolution will lead to more spending, more tax increases and increased debt," Republican Sen. Trent Lott (news, bio, voting record) of Mississippi said, adding that "the budget is kind of a joke."
Budget Committee Chairman Kent Conrad (news, bio, voting record), a North Dakota Democrat, argued in the Senate that the budget "takes us in a new direction. It takes us back to fiscal responsibility. It takes us toward a balanced budget by 2012."
The budget blueprint for fiscal 2008, which begins October 1, sets up overall spending and revenue goals and it will be up to individual committees to determine where the money goes.
Democrats resisted efforts by Republicans to force spending cuts for the Medicare health program for the elderly and other entitlement programs.
Conrad and Sen. Judd Gregg (news, bio, voting record), a New Hampshire Republican, have been trying to form a bipartisan plan to address the financial strains to Medicare and
Social Security posed by an aging baby boom generation and rapidly escalating health care costs.
The Senate embraced a Democratic amendment that gave children's health care and the child tax credit and other popular middle class tax cuts top priority for surplus revenues that might be generated in the future.
But Democrats resisted Republican efforts to add estate tax cuts and capital gains and dividend tax breaks to the list of priorities.
President George W. Bush's tax cuts expire at the end of 2010 and Republicans are pushing to make them permanent.
The Senate agreed to amendment by Sen. Gordon Smith (news, bio, voting record), an Oregon Republican, that calls for increasing the 39 cent a pack tobacco tax to finance and expansion of the State Children's Health Insurance Program, which provides health care coverage for poor children.
"It is inexcusable in the United States of America that millions of children go without health care coverage," Smith said in a statement.
A 61-cent increase would generate an estimated $35 billion for the health care program, Smith said.
The U.S. House of Representatives is expected to consider its version of the budget next week and the two chambers would have to work out their differences.