Democrats’ budget would raise taxes

WASHINGTON — Senate Democrats plan to draft a budget blueprint that calls for significantly higher taxes on top wage-earners, oil and gas companies and corporations doing business overseas, reopening a battle over taxes Republicans had hoped to lay to rest with the “fiscal cliff.”

For nearly four years, Senate leaders have ducked their legal duty to craft a comprehensive budget framework. Now, however, Democrats see the budget process as “a great opportunity” to pursue additional tax increases - and to create a fast-track process to push them through the Senate, Sen. Charles Schumer, D-N.Y., said Sunday on NBC’s Meet the Press.

“There’s going to have to be some spending cuts, and those will be negotiated,” Schumer, the No. 3 Democrat in the Senate, said in an interview after the show. “But doing a budget is the best way for us to get revenues.”

The announcement comes days after House Republicans offered to forgo a potentially damaging clash over the federal debt limit, saying they would vote this week to permit the government to continue borrowing through mid-April. In return,House leaders demanded that the Senate revive the traditional budget process, by which the two chambers adopt their own blueprints and work out differences in a conference committee.

With the offer, the GOP backed off its hard-line stance that any increase in the debt limit be paired with spending cuts of equal size - “a major victory for the president,” Schumer said.

“I think it’s a significant moment that the Republican Party now has moved off their position that the only way they’re going to pay their bills is if they get the correct kind of concessions,” said White House political adviser David Plouffe. “I think we’d all be better served to go back to a little bit more regular order in Congress so we’re not careening crisis-to crisis.”

The House also added a caveat designed to prod Senate Democrats to pass a budget:no pay for lawmakers if there again is no budget passed this year.

“All of us losing our pay if we don’t pass a budget is the right thing to do,” said Sen. Roy Blunt of Missouri, vice chairman of the Senate Republican Conference.

Sen. Ted Cruz, a Texas Republican and a favorite of Tea Partyers, said he supports the strategy from his party’s leaders in the House.

“There is no doubt the Senate hadn’t done its job,” said Cruz, who was elected to his first term in November. “It’s been nearly four years since it’s passed a budget. And the Senate should pass a budget.”

The Senate Republicans will get a budget from the Democrats, Schumer said.

“We’re going to do a budget this year and it’s going to have revenues in it. And our Republican colleagues better get used to that fact,” Schumer said.

Fresh deadlines loom in March: Sharp automatic spending cuts are due to hit the Pentagon and other federal agencies at the beginning of the month. And a temporary funding measure will expire at the end of the month, shutting down the government unless Congress acts.

But the developments of the past few days suggest that both parties are looking to continue the argument without sparking panic in financial markets and causing unnecessary harm to the broader economy.

Reviving the budget process is critical to that effort.

Because they are fraught with political pitfalls, budgets are protected from filibuster in the Senate, so Democrats could pass a budget without Republican votes. A budget blueprint is also the only way to create a fast-track process for deficit reduction, known as reconciliation, which is also protected from filibuster.

House Republicans are eager to draft a reconciliation bill to cut spending on federal health programs and to overhaul the tax code, in part by cutting rates. And Democrats are eager to draft a reconciliation bill that would raise additional revenue, in part by limiting tax breaks for upper income individuals, oil and gas companies and multinational corporations.

During the fight over the “fiscal cliff,” Congress voted this month to raise rates on income over $450,000 a year. Republican leaders, including Senate Minority Leader Mitch McConnell, R-Ky., argued that should end the fight over taxes.

But the “fiscal cliff” measure is projected to generate only about $600 billion over the next decade, well short of President Barack Obama’s goal of $1.6 trillion. On Sunday, Schumer said Democrats plan to fight on.

“We’ll have tax reform ... but’s it’s going to include revenue,” he said. “It’s a great opportunity to get us some more revenue to help” replace the automatic spending cuts, which are scheduled to slice nearly $1 trillion out of agency budgets over the next decade.

Information for this article was contributed by Lolo Montgomery of The Washington Post; and by Philip Elliott of The Associated Press.