Democrats are proposing up to $3 trillion in measures to slash the U.S. budget deficit, including revenue increases and significant cuts to the Medicare health insurance program for the elderly.
The plan was unveiled on Tuesday at a closed-door meeting of a 12-member congressional panel -- the so-called super committee that is assigned the task of finding at least $1.2 trillion in deficit reduction over 10 years, congressional aides told Reuters.
It was the first formal proposal by Democrats on the committee and is aimed at galvanizing closed-door talks that are quickly running up against a November 23 deadline.
The plan proposes cutting the deficit by $2.5 trillion to $3 trillion through a roughly equal mix of spending cuts and revenue increases.
It calls for between $200 billion and $300 billion in new economic stimulus spending that would be paid for with lower interest payments from reducing deficits.
It also seeks around $400 billion in Medicare savings, with half coming in benefit cuts and the other half in cuts to healthcare providers. Details of that proposal were scant but tackling the popular Medicare program is always politically risky for politicians.
The congressional aides were not immediately able to say how the revenue increases would be achieved.
One of the congressional aides noted that parts of the Democrats' proposal are similar to long-term spending cuts that President Barack Obama discussed with House of Representatives Speaker John Boehner, the top Republican in Congress, a few months ago when they were struggling to get a grand bargain to raise the U.S. debt ceiling.
Those talks faltered and the White House and Congress ended up agreeing to a smaller, $917 billion deficit-reduction package that also raised the U.S. borrowing authority and averted a government default on its debt.
One of the congressional sources said Republicans on the committee did not react favorably to the new Democratic plan.
Republicans have long been opposed to more economic stimulus spending and increasing revenues in deficit-reduction efforts.
RATING AGENCIES WATCHING CLOSELY
But with U.S. budget deficits topping $1 trillion annually, ratings agencies are watching closely for how the committee advances toward a credible long-term solution to restore the U.S. fiscal health.
Standard & Poor's cut the U.S. AAA rating by one notch in August after the fractious negotiations between Republicans and Democrats on raising the debt ceiling failed to agree on a comprehensive deal.
Rating agencies say Washington needs to find a total of about $4 trillion in savings, including the amount agreed to in August. That total is far beyond the $1.2 trillion minimum the super committee must find by November 23.
The congressional aides did not say why Democrats were proposing such a big deal, but Democratic congressional leaders have repeatedly called on the committee to go beyond its mandate to fix the country's fiscal mess.
While sources portrayed the proposal as a Democratic plan, they also noted that at least one Democrat on the super committee, Representative James Clyburn, had reservations about the move to cut Medicare spending.