WASHINGTON (AP) -- The Democratic-controlled Congress began debate Wednesday on a stand-pat, election-year fiscal blueprint that relies on automatic tax increases to claim a balanced budget while boosting spending on defense, education and many other programs.

The House-Senate compromise aims to demonstrate that it's possible to balance the budget in the short term while adding money for domestic programs popular with lawmakers -- and still spare benefit programs such as Medicare from cuts.

But to do so, the $3.1 trillion Democratic plan for the 2009 budget year and projecting forward four more years relies on almost $400 billion over three years in tax revenues that appear after President Bush's tax cuts expire at the end of 2010. The 2009 budget year begins Oct. 1.

The Democratic plan explicitly calls for the renewal of tax cuts aimed at the middle class, including the $1,000-per-child credit, relief from the marriage penalty, estate tax cuts and the 10 percent tax rate on the first $7,825 of income for individuals.

But there's not enough money to extend cuts on income tax rates, capital gains and dividend income and still produce a surplus under the Democratic plan, which rejects Bush's proposed cuts to domestic programs.

The Democratic blueprint effectively allows for almost $25 billion more than requested by Bush for non-defense agency budgets passed each year by Congress through annual appropriations bills, an approximately 5 percent increase. Veterans programs, energy research and transportation spending would go up even more, while the defense budget would get a $36 billion, 7 percent increase as requested by Bush.

By itself, the Congress' nonbinding annual budget resolution does very little. Instead, it sets the parameters for subsequent bills raising or lowering taxes and revising benefit programs such as Medicare.

The Democratic plan, worked out by Senate Budget Committee Chairman Kent Conrad, D-N.D., and his House counterpart John Spratt Jr., D-S.C., leaves difficult trade-offs involving deficits and taxes to the next administration and Congress.

The biggest decision facing future policymakers is what to do about whether to extend the expiring Bush tax cuts and whether to let some of them lapse. That debate is likely to prompt lawmakers to address other pressing budget issues, such as the rapid growth in federal retirement programs.

The most important feature of this year's budget resolution is to set a cap for the 12 annual appropriations bills. Even there, a standoff with Bush means Democrats are unlikely to pass many of them.

The House-Senate compromise, more than a month overdue, contains a host of questionable assumptions, starting with its predictions of just a $340 billion budget deficit next year. That deficit would be achieved only by understating likely war costs and the $50 billion-plus cost of making sure more than 20 million middle-class taxpayers aren't hit by the alternative minimum tax, or AMT.

The same assumptions call into question Democrats' promises to produce small surpluses by 2012.

Both the House and Senate began debate on the measure Wednesday afternoon. The House is set to approve the plan Wednesday; a Senate vote is likely Thursday.

Republicans also faulted the Democratic plan for doing nothing to address the unsustainable growth of federal benefit programs such as Medicare and Social Security -- especially as the baby boom generation retires -- growth that virtually everyone agrees must be tackled in future years to prevent the government from drowning in debt.

Meanwhile, Rep. Paul Ryan of Wisconsin, the top Republican on the Budget panel unveiled a sweeping plan to tackle the nation's looming budget crisis. The plan combines offers market-based solutions to curb out-of-control entitlement programs such as Medicare.

Ryan proposed offering private accounts within Social Security and wants to eventually convert Medicare to a grant program in which seniors would buy private health insurance. The conservative GOP plan also would eliminate the AMT, taxes on capital gains and dividends, and corporate income taxes, while offering a much simplified parallel income tax system with a 25 percent maximum rate.

Ryan acknowledged his plan has little chance of passing, but said it lays out a marker for when lawmakers in both parties get serious about tackling the bleak U.S. budget picture.