The move contains financing and projects higher than President George W. Bush's spending calculations, so could lead to another clash with the White House, as the two branches of government are already at odds over Iraq.

"Our budget rejects the President's plan to cut domestic priorities and invests in working Americans, education and health care for our children, and our troops, active and retired." said Senate Majority leader Harry Reid.

"After running up trillions in additional debt, last year's Republican led-Congress left town without even trying to pass a budget. Democrats said we could do better, and this budget proves it."

Under the budget resolution, expected to be put to the vote in both the House of Representatives and Senate on Thursday, spending as a share of the economy falls each year after 2008 and gross debt as a share of the economy will drop annually after 2010, Democrats said.

The deal has already drawn the ire of Republicans however. Former Massachusetts governor Mitt Romney, vying for his party's 2008 presidential nomination, warned Democrats were actually raising taxes.

"Democrats in Congress have agreed on a plan that balances the budget on the backs of hard-working American taxpayers," he said in a statement.