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Senate Democrats offer budget plan with tax increases and spending cuts

In an opening bid for possible negotiations with House Republicans that might lead to a compromise budget resolution this summer, Senate Democrats on Wednesday formally unveiled their budget blueprint for the new fiscal year that starts Oct. 1.

The Democratic entry into the budget fray will help shape the same kind of battle in Washington over taxes and spending that has become a familiar sight in recent years.

The plan, offered by Senate Budget Committee Chairman Patty Murray, D-Wash., would seek $975 billion in spending reductions over the next 10 years as well as $975 billion in new tax revenue, which she said would be raised by “closing loopholes and cutting unfair spending in the tax code for those who need it the least,” according to Murray’s prepared remarks opening her committee’s consideration of the plan.

According to the Congressional Budget Office’s projections, from 2014 to 2023, the federal government will spend $47 trillion.

The Daily Rundown's Chuck Todd shares a preview of the budget.

So Murray’s $975 billion in spending reductions, if enacted, would amount to about a 2 percent cut over the full 10-year period.

The CBO estimates that federal revenues will amount to $40.2 trillion over the 2014-2023 period, so Murray’s tax increases would be about a 2.4 percent increase on that CBO forecast.

Echoing some of President Barack Obama’s ideas from a 2010 infrastructure investment proposal, from his 2011 American Jobs Act, and from his budget proposal for Fiscal Year 2013, Murray’s blueprint also calls for a $100 billion stimulus package that would include hiring workers to repair the “highest priority deteriorating infrastructure, and fixing crumbling schools and installing critical educational technology, like broadband, that our students need to succeed.”

As Obama did in 2010, Murray calls for the creation of a public-private infrastructure bank which would raise capital to pay for the building of highways, transit projects, and other public facilities.

The House Republicans’ budget plan offered Tuesday by Budget Committee chairman Rep. Paul Ryan of Wisconsin, calls for a redesign of the Medicare system beginning in 2024, a cut in the growth of future spending on the Medicaid health insurance program for the poor, and cuts in the national debt.

Ryan’s plan aims to lower the ratio of publicly held debt to gross domestic product (GDP), to 55 percent by 2023, down from its current level, 76 percent of GDP.

Ryan’s plan seeks no tax increases.

Sen. Pat Toomey, R-Pa., expresses his concern over a $1.5 trillion tax increase that he says is included in Senate Democrats' fiscal plan.

In response to Ryan, Murray said, “We reject calls to dismantle or privatize Medicare by voucherizing it.”

Murray also rebuffed Republican calls in the House GOP budget plan for repealing the 2010 Affordable Care Act.

The Murray plan also would scrap the automatic spending cuts, also known as the sequester, which are required by the 2011 Budget Control Act, and replace the money from the sequester with a mix of tax increases and spending cuts different from the ones required by the sequester.

The Senate Budget Committee is scheduled to vote on her plan Thursday, followed by a floor debate next week.

“I am hopeful that the House of Representatives will join us at the bargaining table and we can work together toward the responsible and bipartisan budget deal the American people expect and deserve,” Murray said.

But she added, in a slap at Ryan, the 2012 GOP vice presidential candidate, that

His fiscal approach “was on the ballot last November, and voters across the country rejected it.”

Senate Democrats and House Republicans at this point appear so far apart in their budget plans that the chances of them devising a compromise budget plan seem minimal.

Under a budget process known as “reconciliation,” tax increases and changes in entitlement programs could be approved with a simple majority vote in the Senate, rather than the usual 60 vote requirement needed to advance legislation.

Most federal spending is mandatory and is on a kind of automatic pilot and isn’t subject to annual appropriations decisions by Congress since the benefits in the entitlement programs such as Social Security and Medicare go to anyone who meets the eligibility criteria.

But nonetheless the congressional budget resolution is a statement of policy goals and principles for each party. And a budget resolution can sometimes serve as a device for raising or lowering spending levels on discretionary spending items such as the National Park Service.