Senior Democrat says US Senate will finally pass a budget this year

WASHINGTON Sun Jan 20, 2013 12:03pm EST

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WASHINGTON Jan 20 (Reuters) - A senior U.S. lawmaker said on Sunday that he and fellow Senate Democrats, for the first time more than in three years, intend to meet Republican demands to finally pass a U.S. budget.

Senator Charles Schumer, the chamber's No. 3 Democrat, said, however, that the spending plan will include proposed new revenue despite Republican warnings that they won't go along with more any tax hikes.

"We're going to do a budget this year and it is going to have revenue in it, and Republicans ought to get used to that," Schumer told NBC's "Meet the Press."

President Barack Obama's Democrats control the Senate, but haven't passed a budget since 2010 amid disagreements within the party over possible spending cuts, particularly in entitlement programs like Medicare and Social Security.

This has drawn the ire of Republicans who accuse them of a dereliction of duty that has undermined efforts to reduce spending and the U.S. debt.

Washington is expected to meet the limits of its $16.4 trillion borrowing power by early March, and lifting the debt ceiling will allow the federal government to continue its work uninterrupted.

Republican leaders in the House of Representatives, in a major concession on Friday, said they would be willing to raise the debt limit for three months and, at the same time, drop their demand that any increase in the government's borrowing power be matched in spending cuts.

Republicans said, however, they would require the Senate to finally pass a budget that could include spending reductions as well as changes in the tax code.

Republican Senator Ted Cruz, appearing on NBC with Schumer, called the House Republican plan "a step in the right direction" and accused the Democratic Senate of not doing its jobs.

Schumer called the House Republican offer "a major victory" for Obama, who has vowed to refuse to negotiate on the debt limit.

Senate Republican Leader Mitch McConnell has said he is ready to focus on spending cuts in any budget negotiations, but considers tax hikes a closed matter. The White House had said it would accept the three-month plan so long as was not conditioned on spending cuts.

After the deadline for a debt ceiling increase, Congress faces a March 1 deadline to avert automatic spending cuts, and the March 27 expiration of funding for government agencies and programs. A three-month debt limit extension would add a further deadline in April or May.

The recent, separate deal between Congress and the White House to avert "the fiscal cliff" of automatic tax increases on most Americans and broad spending cuts effectively imposed a tax hike on many of the wealthiest Americans.

It renewed most tax cuts enacted by Republican President George W. Bush for most Americans, but allowed those tax cuts on families with incomes of more than $450,000 to expire.

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