WASHINGTON -- Senate Democrats will produce a bill next week to stave off the sequester-related spending cuts until the end of December, multiple Senate sources tell The Huffington Post.
The bill would cut the deficit by $120 billion over 10 years to help replace roughly 10 months' worth of sequestration cuts. Approximately $55 billion would come from revenue hikes and a slightly larger amount than that would come from spending cuts. The rest would be made up of interest savings.
The goal, said one aide, is to introduce the bill by Thursday so that it can be presented to the full caucus, who will be able to discuss it back home in their districts during the congressional recess. That date, however, is "flexible."
The contours of the bill are still fluid but two sources agreed to detail the current state of discussions on condition of anonymity.
The revenue raisers would be derived from the implementation of the so-called Buffett rule, which sets a minimum tax threshold on millionaire income. That would raise an estimated $47 billion over 10 years.
Revenue would also come from instituting new rules ensuring that IRA accounts remain retirement funds for middle class earners and not defacto tax havens for the wealthy. The details of that provision are still being hammered out, but one aide said the idea was to discourage wealthy Americans from using loopholes to balloon their IRA accounts so that they can park funds and avoid taxation. Former Massachusetts Gov. Mitt Romney was accused of doing just that during the 2012 presidential campaign.
Notably absent from the revenue component of the bill is a hike in the tax rate on carried interest, the income stream for financial managers. Democrats have long targeted a change in that rate but top officials in the party have been wary of tackling it in the context of sequestration negotiations. That said, an aide did not rule out the possibility of it being brought up in future discussions.
On the spending side, Democrats will split the cuts evenly between defense and domestic spending. The details of these cuts are still vague, but an aide said that the non-defense component would revolve primarily around "agriculture savings."
"Everything is still fluid," said an aide, cautioning that the details of the Senate Democratic offer could change. "But the idea is to go into the recess at the end of next week with our position staked out and our caucus behind it."
The senators putting together the Democratic offer include Majority Leader Harry Reid (D-Nev.), Budget Committee Chair Patty Murray (D-Wash.), Finance Committee Chair Max Baucus (D-Mont.) and Appropriations Committee Chair Barbara Mikulski (D-Md.).
Absent action from Congress, sequestration would begin on March 1, 2013. According to the Obama administration, over the next year, the triggered cuts would result in a roughly 9 percent reduction in spending on domestic programs and 13 percent reduction in defense spending.
The cuts "would be very damaging and very severe," said Jason Furman, principal deputy director of the National Economic Council.
House Republicans passed bills during the last Congress that would replace the defense cuts with further reductions to social programs. Because of those bills they have been able to argue that they've presented the only legislative vehicle that can avoid the economic ramifications of sequestration.
Senate Democrats must find five Republican members to support their plan if they want to overcome a likely filibuster and pass it into law. Still, the mere introduction of the proposal allows them to say that they've presented an alternative to the GOP approach as the sequester deadline nears.