(Updates with House passage, new throughout)

By Richard Cowan and Donna Smith

WASHINGTON, March 13 (Reuters) - With the three major presidential candidates on hand, Democrats in the U.S. Congress on Thursday pushed ahead with a budget plan to eliminate the federal deficit while spending more than President George W. Bush wants on domestic efforts like schools and roads.

The Democratic-led House of Representatives, voted 212-207 to approve its version of the nonbinding $3 trillion budget blueprint for the year beginning Oct. 1. No Republicans supported the measure.

Much of the House debate centered around Republican charges that the bill eventually would bring a record tax increase. Democrats countered that it would protect middle-class tax cuts now in place that are set to expire at the end of 2010.

On the other side of the Capitol, the Senate worked late to try to pass a similar Democratic budget, which like the House version would end deficit-spending by 2012. This year's budget deficit is forecast to hit about $400 billion.

"Our first priority is to strengthen the economy and create jobs," Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said, noting increased investments in energy, education, health care and other domestic programs.

The three main presidential candidates -- Democratic Sens. Barack Obama of Illinois and Hillary Clinton of New York and Republican Sen. John McCain of Arizona -- interrupted their campaigns to cast votes.

By a vote of 99-1, with all three presidential candidates voting yes, the Senate approved an amendment to extend some of Bush's tax cuts, including one for low-income earners, a child tax credit and marriage penalty relief.

But the Senate rejected a Republican attempt to extend the remaining Bush tax cuts, many of which help the wealthy. Of the three senators trying to succeed Bush in the White House in January when his term ends, only McCain backed the Republican amendment.

McCain, who is in position to claim his party's nomination for president later this year, initially opposed Bush's tax cuts but now embraces them.

ALTERNATIVE MINIMUM TAX

The House and Senate bills would extend for this year relief to middle-class taxpayers who otherwise would get pulled into paying more taxes under an "alternative minimum tax" originally intended only for the wealthiest.

The budget legislation that Congress debates each year provides guidance and overall spending levels for congressional committees as they consider individual spending and tax bills.

While the House and Senate Democratic budgets, as well as Bush's February spending request, claim to end chronic budget deficits by 2012, they all leave out long-term war costs and firm decisions on tax policy, which complicate budget-balancing efforts.

Thursday's votes are certain to be fodder for a spirited debate on government taxes and spending in the presidential and congressional campaigns leading up to November elections.

With a new U.S. president taking office in January, Congress is likely to wait for the new administration before writing broad tax reform legislation.

Rep. Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee, previewed the election-year debate, saying the Democrats' budget "raises taxes; $683 billion on everybody, not just rich people."

The Democrats' budgets also put off revamping massive government-backed retirement and health care programs that are eating up more and more tax dollars as a large group of Americans reach retirement age.

But they would spend $18 billion to $22 billion more next year than Bush sought for a range of domestic programs, including education, road building and law enforcement.

Unlike the House Democrats' plan, the Senate bill makes room for about $35 billion in new economic stimulus, if the newly enacted $152 billion package fails to invigorate the U.S. economy adequately. (Editing by Mohammad Zargham)

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