Senate Democrats have proposed a $110 billion mix of tax increases and spending cuts to put off $85 billion in automatic spending cuts set to hit March 1. But Republicans, who are against any new taxes, say it's a waste of time.
The plan, which was unveiled Thursday, would revoke the across-the-board spending cuts – known as a sequester – through the year-end, and the cuts would be revived next January unless replaced as part of a more comprehensive deficit reduction deal.
The proposal would put off all of the new military spending cuts due to begin on March 1 until fiscal 2015, when the war in Afghanistan is expected to draw to a close, according to Reuters.
The plan seeks to raise about $54 billion over 10 years by establishing a 30-percent minimum tax rate on incomes over $1 million, and an additional $1 billion by introducing tax on tar sands oil and ending a business tax deduction for the cost of moving equipment overseas. To raise the remaining $55 billion, it proposes $27.5 billion in defense cuts from 2015 to 2021 and $27.5 billion in farm-subsidy cuts.
"I think our caucus is very supportive of replacing the sequester with a fair and balanced approach," Senate Budget Committee Patty Murray was quoted as saying. "It will be a balanced approach of 50 percent revenue, 50 percent cuts."
White House Press Secretary Jay Carney also called the Senate Democrats' proposal a "balanced plan to avoid across-the-board budget cuts that will hurt kids, seniors, and our men and women in uniform." He said, "Republicans in Congress face a simple choice. Do they protect investments in education, health care and national defense, or do they continue to prioritize and protect tax loopholes that benefit the very few at the expense of middle- and working-class Americans?"
However, Senate Republican leader Mitch McConnell has said the measure is merely "a political stunt" and "a total waste of time." "This is not a solution – even they know it can't pass; that's the idea," he said. His aide told CNN, "I would respectfully disagree that the American people are going to suddenly demand more tax hikes."
While Republicans had to agree to higher taxes on top income earners as part of the fiscal cliff deal last month, the sequester-replacement package faces grim prospects given their opposition to increasing any taxes. Republicans maintain the nation needs to reduce the cost of government.
If the sequester is not averted, half of the cuts would be shouldered by the Defense Department and the other half would be scattered among many other government agencies. The Congressional Budget Office has estimated 750,000 jobs would be lost this year alone.
Murray, Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) and Finance Committee Chairman Max Baucus (D-Mont.) worked with Senate Majority Leader Harry Reid (D-Nev.) to prepare the plan.