March 14 (Bloomberg) -- The U.S. Senate rejected a proposal by Republican presidential candidate John McCain to place new restrictions on the congressional pet projects known as earmarks.

The vote came as the House and Senate passed separate $3 trillion budget blueprints for the fiscal year beginning Oct. 1 that clash on whether to raise taxes to pay for giving millions of families a one-year reprieve from the alternative minimum tax. The Senate version, approved 51 to 44 early today, includes a nonbinding amendment calling for the extension of some of President George W. Bush's tax cuts that are slated to expire in coming years. The House plan doesn't.

The Senate's 71 to 29 vote to reject the earmark proposal was a setback for McCain, an Arizona senator who has made the fight against such spending an issue in his presidential bid. McCain, campaigning in Pennsylvania today after casting votes on the budget yesterday in Washington, criticized the Senate's action on earmarks.

Anyone who watched the Senate ``will know how hard it is trying to do the Lord's work in the city of Satan,'' McCain told a townhall meeting in Springfield, Pennsylvania.

He had sought to change Senate rules to require two-thirds votes on legislation including the projects.

The proposal ran into opposition from senators in both parties as lawmakers said it would merely shift authority to make spending decisions to anonymous bureaucrats in the executive branch. Earmarks are line items in budgets directing federal agencies to provide given sums to specific organizations.

Obama, Clinton Back McCain

Six Democrats, including Hillary Clinton of New York and Barack Obama of Illinois, and fewer than half of Senate Republicans backed McCain's plan. Obama said earlier this week that he wouldn't request any earmarks this year regardless of whether McCain's amendment passed.

Hours before the Senate completed work on its budget blueprint, the House approved its own budget plan. The House version proposes raising some taxes to ensure that any cuts this year in the alternative minimum tax don't add to the deficit.

The House plan also calls for using a parliamentary procedure that would allow Democrats to push Medicare changes through Congress over Republican opposition. The plan proposes spending about $25 billion more than Bush says he can accept for domestic programs.

The Senate plan differs on all three scores, forgoing tax increases to pay for an alternative minimum tax cut. It also rejects proposals to expedite Medicare changes while calling for less domestic spending.

Next Month

Lawmakers probably won't take up a compromise plan, which would set the rules of this year's fiscal policy debate on Capitol Hill, until next month. Congress is about to begin a two- week recess.

While Bush can't veto whatever budget plan Congress eventually approves, he may reject the subsequent tax and appropriations bills needed to implement it. Bush has threatened to reject any bills that raise taxes or increase spending by more than he proposed in his February budget request.

The Senate earmark vote may dampen support among House members for a proposed earmark moratorium being considered by Speaker Nancy Pelosi, a California Democrat. Before the Senate took up the matter yesterday, she tempered earlier remarks about an earmark ban.

``I don't know that that is an alternative, not putting earmarks in,'' she told reporters. ``Hopefully, the conduct of our legislative business, as Congress works its will, will be such that we can have some legislative discretion.''

Campaign Promises

The Senate vote hints at the trouble McCain might face making good on campaign promises that, if elected president, he would stamp out earmarks.

``The first earmark pork-barrel bill that comes across my desk, I'll veto it,'' McCain said.

The practice enjoys broad support among lawmakers with almost every member of Congress producing earmarks for the home district or state. Senators brought home an average of $180 million each, while House members typically produced $28 million for their constituents, according to a report by the Washington- based watchdog Taxpayers for Common Sense. Party leaders and members of the House and Senate Appropriations Committees tended to receive more, the report said.

The group counted 16 members of Congress, including McCain, who didn't sponsor earmarks last year. It said Clinton received full or partial credit for $342 million in earmarks while Obama accounted for $98 million in projects.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: March 14, 2008 10:58 EDT