By Alexander Bolton and Erik Wasson - 02/14/13 01:51 PM ET
Senate Democratic leaders unveiled a $110 billion sequester-replacement bill at a closed-door caucus meeting Thursday that would replace $85 billion in automatic spending cuts set to hit March 1.
The Senate Democratic package is split evenly between spending cuts and provisions raising new tax revenues, according to a Democratic source.
It would raise nearly $55 billion in taxes by implementing the Buffett Rule, setting a minimum effective tax rate for wealthy individuals and families. It would raise additional revenues by changing the tax treatment of oil extraction from tar sands.
The $55 billion in spending cuts are evenly divided between defense and non-defense programs. It would save $27.5 billion by eliminating agricultural subsidies and another $27.5 billion though defense cuts.
If passed, the package would stop the sequester through the end of 2013. It would cost $85 billion to halt the automatic cuts through the end of the fiscal year, which ends in October.
The bill would appear to have little chance of reaching President Obama’s desk, however, given opposition from House and Senate Republicans to increasing any taxes to replace the sequester.
Opposition in the Senate also came Thursday from liberals, who said it should have been tilted more to tax hikes.
Liberals voiced concern about the 1-to-1 ratio of spending cuts to tax revenues in the package. By their estimation, Congress has already cut $1.7 trillion in spending and raised taxes by $700 billion since 2010, they note.
“We’ve let it be really lopsided,” said Sen. Tom Udall (D-N.M.). “I’m going to support a more balanced approach than what we have now.”
Senate Budget Committee Chairwoman Patty Murray (D-Wash.), 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 craft the package.
They presented it to Democratic colleagues at a Thursday lunch.
Walking into the meeting, Sen. Tom Harkin (D-Iowa) said he and other liberals would instead propose raising $157 billion in new revenues through changes to the tax code to pay for the sequester. He said the liberal counteroffer would reform tax breaks for private jets, S corporations and foreign subsidiaries.
Democratic aides predicted there would not be a large number of defections, however.
Sen. Carl Levin (D-Mich.), who has co-sponsored legislation to raise tax revenues by ending an array of niche tax breaks, said he would vote for Reid’s sequester package even though no parts of his bill were included.
And another Senate liberal, Sen. Barbara Boxer (D-Calif.), indicated her support.
“I would prefer doing all tax loophole closing, but I can do this,” Boxer said.