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Democrats look to new budget rules to tame deficit

WASHINGTON - Democrats are trying to toughen budget rules to make it more difficult to run up the deficit with new tax cuts or federal benefit programs, a move Republicans say is a recipe for tax increases.

The proposal by Senate Majority Leader Harry Reid (D-Nev.) would make it harder to extend permanently some tax cuts that expire at the end of this year, renew health care subsidies for laid-off workers that expire next month or offer more help to states for Medicaid for the poor.

Some middle-class tax cuts would not be affected, and extended unemployment benefits for the long-term jobless may also be exempt.

The move to stiffen budget rules is aimed at softening opposition among moderates to letting the government extend itself another $1.9 trillion into debt. President Barack Obama is expected to crack down on domestic agency spending when submitting his budget next week, but hard steps such as raising taxes and cutting benefit programs are long shots in an election year.

Reid's "pay-as-you-go" plan would attempt to curb Congressional spending that is turning voters away from Obama and lawmakers in both parties. The plan would require spending cuts or revenue increases to pay for new spending initiatives or tax cuts.

Passing it would take 60 votes in the Senate, a tall order as all but a handful of Republicans are likely to oppose it.

For example, the billions of dollars it takes to subsidize health insurance for the jobless under the so-called COBRA program would probably have to be "paid for" with a tax increase or cuts to other benefit programs. That could kill the effort, as well as plans to help states struggling with ballooning Medicaid costs.

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