WASHINGTON (Reuters) - Democrats in the Senate on Thursday rallied around a $110 billion tax increase and spending cut plan that would postpone more severe automatic spending cuts set to begin on March 1.
The proposal, which is expected to get shot down by Republicans who oppose raising taxes any further to reduce budget deficits, might never come to a Senate vote. But some of its components could be included in future budget negotiations.
Before the plan was formally unveiled, Senate Republican leader Mitch McConnell called it "a political stunt" and "a total waste of time."
The Senate Democrats' plan would cancel the across-the-board spending cuts, known as a sequester, through December 31. The cuts would be revived in January 2014 unless replaced as part of a more comprehensive deficit reduction deal.
Under the Senate Democrats' plan unveiled on Thursday, all of the new military spending cuts due to begin on March 1 would be put off until fiscal 2015, when the war in Afghanistan is expected to draw to a close.
About $27.5 billion in replacement military cuts would start in 2015 and be spread over seven years, according to a summary of the Democrats' plan.
Another $31 billion in spending cuts over 10 years would be achieved by ending direct farm subsidy payments.
"I think our caucus is very supportive of replacing the sequester with a fair and balanced approach," Senate Budget Committee Patty Murray told reporters.
If Congress fails to act, about $85 billion in across-the-board spending cuts begin on March 1 and continue through September 30 as part of a decade-long $1.2 trillion budget savings plan. Half of the cuts would be shouldered by the Defense Department and the other half would be scattered among many other government agencies.
The non-partisan Congressional Budget Office has estimated that if fully implemented, these budget cuts would hold back U.S. growth and prevent the creation of about 750,000 jobs this year.
But with Democrats and Republicans far apart on how to replace the automatic cuts, they are widely expected to go into effect on March 1. In subsequent weeks a replacement measure could be negotiated at the same time Congress works on a deal to fund government agencies that run out of money on March 27.
On the tax side, Senate Democrats say they would raise $54 billion over a decade by setting a new minimum 30 percent tax rate for the wealthy. Known as the "Buffett Rule," it would be applied to taxpayers with adjusted gross incomes over $1 million, after subtracting charitable contributions.
It would be aimed at those who pay less than a 30 percent average tax rate in combined income tax, alternative minimum tax and the employee's portion of the payroll tax. The Buffett Rule, named after billionaire Warren Buffett, who has promoted it, would be phased in for those with annual incomes of $1 million to $2 million.
Two other tax hikes would eliminate a break that Democrats say encourages companies to move jobs overseas and a tax loophole enjoyed by the oil industry.
The latter would include oil from tar sands among the petroleum products that are subject to taxes that support an oil spill liability trust fund, according to the Democrats' summary.
In the House of Representatives, Democrat Chris Van Hollen has introduced similar legislation to replace the automatic sequester cuts through December 31. But Republicans who control the chamber have rejected four of his attempts to attach the proposal to other legislation.