WASHINGTON – Senate Democrats will draft a budget blueprint for the first time in four years and use it to fast-track an overhaul of the tax code that is intended to raise significant revenue over the next decade, Senator Charles E. Schumer of New York said on Sunday.
Mr. Schumer’s appearance on NBC’s “Meet the Press” was the Senate Democrats’ answer to the announcement by House Republicans on Friday that they will vote this week to raise the government’s statutory borrowing limit for three months, along with a provision demanding that senators pass a budget this year or lose their pay.
“This was a major victory for the president,” said Mr. Schumer, the third-ranking Democrat in the Senate. “Republicans now have twice lost out on fiscal issues in the last month: first the fiscal cliff and now this.”
President Obama had vowed not to negotiate over the debt ceiling as he had in 2011, and that stance served to isolate House Republicans even from many members of their own party.
But after consultations with Senator Harry Reid of Nevada, the majority leader, and Senator Patty Murray of Washington, the Budget Committee chairwoman, Mr. Schumer went further, laying out a path that he says could get Congress through the next budget deadline, March 1, when across-the-board cuts in defense and domestic spending are set to begin.
Mr. Schumer said Democrats had intended to draft a budget anyway. That is because the 2011 Budget Control Act, negotiated to defuse the last showdown over the debt limit, had placed firm statutory caps on spending through fiscal year 2013, after which the caps are not binding. The senator said a new budget this year was needed to set spending levels going forward.
Moreover, Democrats plan to use a procedure in the budget called reconciliation to give the Congressional tax-writing committees fast-track instructions to work out a broad overhaul and simplification of the tax code, with a 10-year revenue target included. Under reconciliation, the resulting tax legislation could pass the Senate with 51 votes, not subject to a filibuster.
Reconciliation is “a tactic we need to go on offense,” Mr. Schumer said in an interview after the show.
Drafting a budget is something of a concession to Republicans and a political gamble. After the 2009 budget draft, Mr. Reid shied away from doing another nonbinding blueprint on spending and tax policy. The party in the minority has traditionally used the budget debate to score political points with amendments that mean little but are intended to put senators on record on contentious political issues. Republican aides said this year would be no different, especially since Democratic senators from Republican-leaning states such as North Carolina, Arkansas, Louisiana and North Dakota will be running for re-election next year.
But Mr. Schumer said such votes have never cost senators their seats, and Senate Democrats see the risk as worth it. Democratic aides say they expect the House to provide similar tax-overhaul instructions to the Ways and Means Committee, but the Republican instructions would mandate that the tax deal raise no more revenue than the current tax code.
If both chambers can pass their budgets, negotiations over the final revenue and spending targets of reconciliation instructions would effectively become the next round of budget talks – and if both sides can agree to enough deficit reduction, the talks could serve to shut off automatic, across-the-board spending cuts set to begin in March.
Mr. Schumer’s path forward actually fits in with the thinking of some House Republicans. A senior Republican tax aide confirmed that Representative Dave Camp of Michigan, the Ways and Means chairman, planned to push forward this year with “revenue-neutral” tax reform, with the revenue target adjusted upward to the amount raised by the higher tax rates on the wealthy approved this month to resolve most of the so-called fiscal cliff.
The Republican aide said if the Senate can approve tax changes that raise revenues, it is possible that difficult negotiations between the two chambers could produce a final deal that would produce more tax revenue – but not as much as the Senate wants.
But many House Republicans and Senate Democrats are leery of tackling the tax code when they see overhauling the nation’s immigration and gun laws as more pressing.
“It’s not going to be easy. It’s certainly not, that’s for sure,” Mr. Schumer conceded, even as he predicted all three would advance.
Follow Jonathan Weisman on Twitter at @jonathanweisman.