Senate Dems' budget cuts deficit by 70 percent, calls for jobs bill

The proposed budget's two major priorities of deficit reduction and job creation appear aimed at winning over Democratic lawmakers facing stiff challenges from Republicans in November's midterm elections. The economy and the budget deficit were the top two issues for independent voters in a Gallup poll earlier this month.

The deficit would go from a level equal to 9.8 percent of the gross domestic product this year to 3 percent by 2015 under the budget draft, according to a Senate Budget Committee summary. President Barack ObamaBarack Hussein ObamaReport: FCC chair to push for complete repeal of net neutrality Right way and wrong way Keystone XL pipeline clears major hurdle despite recent leak MORE's budget proposal called for a deficit that bottomed out at roughly 4 percent of GDP by the middle of the decade.

The budget draft written by Sen. Kent Conrad (D-N.D.) projects a slightly smaller deficit this year than the Congressional Budget Office (CBO), which has said the deficit will reach 10.3 percent of GDP. 

Reports this month by CBO and the Treasury Department had found the deficit on pace to be slightly smaller this year than they expected, due to bank bailout money that may not be used.

Like Obama's budget, Conrad's finds savings by allowing the Bush-era tax cuts for the wealthy to expire next year and through a three-year freeze on non-security discretionary spending. Conrad, the Senate Budget Committee chairman, reduces the deficit further by allowing the Alternative Minimum Tax to hit taxpayers after 2012.

The Senate Budget Committee will mark up Conrad's draft Wednesday and Thursday.

House Democratic leaders have shown some reluctance to move ahead with a budget resolution this year, wary of forcing vulnerable members to vote for a budget that would lead to large deficits. Aides to House leaders said they would wait to see what the Senate produces before deciding how to move forward on their budget.

Conrad's draft allows the use of the reconciliation process for jobs legislation, but it doesn't specify what will be included in that measure. 

Democrats used the reconciliation maneuver, which allows legislation that cuts deficits to advance with a simple Senate majority instead 60 votes, earlier this year to move parts of the healthcare bill and student loan reforms. Republicans criticized Democrats with misusing the reconciliation process for a healthcare overhaul that would affect a sixth of the economy. 

The reconciliation process has been used 22 times by Republicans and nine times by Democrats since 1981, according to the Congressional Research Service.