House Democrats have come up with a budget plan that is half good for when they take charge (as opposed to the "all bad" Republican one.) These things matter a lot, though how much they'll be able to get through with Bush in the White House is a question.. The most important pledge in many ways is to introduce PayGo rules - to legislate that all new spending must also explicitly say how it will be paid for, either by cuts or tax increases. Let's run through this:

The plan would allocate billions of dollars to build up the military, subsidize student loans and bolster port security. It would raise the minimum wage, make college tuition payments tax-deductible, repeal oil-company tax breaks and expand incentives for personal savings accounts, among many other provisions.

All of this is decent. There's no choice but to raise military spending given the US is in a war and military readiness levels are the lowest they've been since the Vietnam war (probably worse than that given the extent to which the national guard has been depleted.)

However, the Democrats are backing away from some key issues:

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In putting the agenda together, Democrats dropped several proposals that proved too controversial or costly, such as broad and expensive relief from the alternative minimum tax, which threatens to raise taxes on middle-income earners; filling a major gap, or "doughnut hole," in prescription-drug coverage under Medicare, which would cost $427 billion over 10 years; and rolling back Bush's tax cuts for wealthy Americans.

The alternative minimum tax has to be handled. The way to do it as at the same time as you not only repeal tax cuts on the rich, but you raise taxes on the them with a significant increase in estate taxes and increasing the rate you tax capital gains. This allows you to turn to many Americans and say that either their taxes are staying the same, or being reduced. Something which seems to escape most politicians, perhaps because they spend most of their lives with them, is that the rich are a minority in the country. Sure, they have the money, but they don't have the votes. And they've done just fine over the last 30 years, while normal Americans have had stagnant wages. Taxing them to hold taxes steady on other people isn't a losing proposition, elect orally.

As far as the Medicare "doughnut hole" the entire plan needs to be rewritten, which is a big job. But it was built explicitly to give money to drug companies and insurers, not to make drugs affordable for seniors, or to keep the cost for government reasonable. Just allowing the Feds to actually negotiate drug prices will not be sufficient.

...if Special Forces double through additions to the military and not through a reshuffling of personnel, that would mean 35,000 new active-duty troops and 15,000 reservists, at a minimum cost of about $5.8 billion a year, said Steven M. Kosiak, director of budget studies at the Center for Strategic and Budgetary Assessments.

To fortify the Army, several Democrats have proposed increasing troop levels by 40,000 at a five-year cost of $20 billion, the Congressional Budget Office said.

Not to put too fine a point on it, but $28.8 billion isn't that huge. The dirty secret of the military is that so much of the money goes to things other than personnel and direct equipment procurement (i.e. not all the R&D stuff) and not to the "troops". The US has tended to rely on having the best (and most expensive) equipment. It's a policy that works fine for short sharp battlefield supremacy wars, but what you need in an occupation scenario is boots on the ground, the more, the better.

There are a series of other changes - such as 25 billion for first responders, about 60 billion for interest relief on Pell Grants (why are they called Grants if they're loans?) and a number of other programs.

Let's go to the "how are we going to pay for this" side of the equation:

Other pieces of the agenda appear to be paid for, and Democrats are proposing policy changes that would raise substantial revenue. They would couple a minimum-wage increase to ending tax breaks that they say reward companies for sending jobs overseas. Under a plan set out by Democratic presidential nominee John F. Kerry in 2004, U.S.-based companies would be forced to pay taxes immediately on virtually all foreign profits that are not taxed by another country, raising $12 billion a year.

The Six for '06 plan would promote renewable energy sources and would fund the effort by cutting tax subsidies to oil and gas companies. According to Bush's budget, $1.83 billion in tax breaks will go to oil and gas companies next year to subsidize energy exploration and development.

The biggest savings in the Democrats' plan would be a pledge to give the federal government the authority to negotiate lower drug prices for Medicare. Sen. Edward M. Kennedy (D-Mass.) and Rep. Henry A. Waxman (D-Calif.) have estimated that Medicare could save $190 billion over the next decade if the seniors' program adopted the price-negotiating model of the Department of Veterans Affairs.

To finance any remaining budget shortfall created by the agenda, Crider said Democrats would tap the vast amount of tax revenue owed to, but uncollected by, the government -- the "tax gap," which has been projected at $300 billion a year. Crider was not specific about how that money would be brought in except to say that the Internal Revenue Service would be given more manpower.

The foreign profits tax should be set up to reduce tax arbitrage (going to other countries for lower taxes) by taxing even profits already taxed if they were taxed at too low a rate (how low? I'd probably make it anything below 5% less than the US rate.)

Ending oil subsidies is just plain common sense and good politics. Companies getting record profits don't need subsidies. Likewise with negotiating for drug prices, though note it comes in at 19 billion a year - nice, but it isn't going to make that big a difference. The Medicare plan needs to be redesigned from bottom up, not tinkered with.

The "tax gap" means hiring auditors and going after cheats - and it means going after rich cheats primarily. (Why? Because the return is best there, and because you don't spread the misery to large numbers of people.)

Let's move on to the "Blue Dogs"...

Some Democrats acknowledge that compromises are likely to be needed on the spending side of Six for '06 to make good on its pledge to restore strict budget rules -- the "pay as you go," or "paygo," requirement for offsetting tax cuts or spending hikes.

"The Blue Dogs are very strong on paygo," said John S. Tanner (Tenn.), a leader of the conservative "Blue Dog" Democrats. "If you have to cut spending, you have to cut spending."

There are places where spending cuts are needed. But the truth of the US budget deficit is this - you could shut down the entire government other than entitlements and the military and you still wouldn't have balanced the budget.

Whether the "Blue Dogs" or "Reagan Democrats" or any other group of "we can spend and borrow forever!" types like it the options are simple

1) You can cut entitlements massively. Gut Social Security or Medicare (preferably Medicare) while keeping those payroll taxes going (there are plenty of easy ways to do this over a period of years).

2) You can reduce military spending massively. Personally, since military spending has almost no return, and is also an awful demand pump, and since the US is vastly outspending any possible combination of military enemies and controls the majority of military naval tonnage in the world, this would be my choice. But Americans would rather starve and have big shiny tanks and planes than cut military spending, and the military and its hangers on would make the lives of any politician who dared to even think of such a thing completely miserable. So, this isn't going to happen. Once the military is rebuilt from Iraq, the best that can be done is hold spending more or less even and let it inflate down. A smart politician will make sure this is done in ways that don't reduce the number of troops, or their spending, which is simple enough to do given the massive expenditures on everything else the military engages in. It would, however, be a fight, since Generals and Admirals know that their future after service depends on making sure that certain defense contractors are taken care of. A really radical approach would be to bring R&D into the government, which also has significant advantages in terms of security, but that's highly unlikely, though it would be wise.

3) You can raise taxes. There are ways you can weight this heavily so the rich get hit disproportionately and the majority of Americans don't have their taxes raised, but the bottom line is this - if you want to keep Medicare, Social Security and an overly expensive largely ineffective military, you're going to have to raise taxes.

Those are the choices, and I wish people like the Blue Dogs would stop pretending there is some mystical fourth choice, or that they can make minor cuts here and there and avoid the hard choices.

Concluding RemarksThis is a good plan for the current situation. Democrats aren't going to be in charge of the White House, and probably not in charge of the Senate. The House has only so much power under such a circumstance and sweeping changes would probably just be vetoed anyway (though there's nothing wrong with making the President veto things). And such marginal changes are going to have to be changed, and fail to make a huge difference, before people realize that they're going to have to make the big, hard, changes.