Yesterday, the Senate nixed two budget-cutting proposals — the House GOP budget bill and the Senate Democratic alternative — and exposed “the fault lines within the Republican and Democratic parties over fiscal issues.” Three Tea Party Republicans “who want deeper cuts” joined all Democrats in a 44-56 vote against the GOP bill. But 11 Democrats joined all Republicans in a 42-58 vote the Democratic plan, with some arguing it cut too little and others arguing it cut too much. The government is currently funded until March 18, after which most federal services will cease if a new funding bill for the remaining six months isn’t passed. White House budget director Jacob Lew said the rejection of the two bills “made it abundantly clear that we are going to need to work together on a bipartisan basis.” But a look at the GOP’s idea of compromise reveals an aggressive need to balance the budget on the backs of the disadvantaged while simultaneously impairing economic recovery. At the Center for American Progress yesterday, Democratic leader Sen. Chuck Schumer (NY) advocated an “all of the above” approach that “incorporate[s] mandatory cuts and revenue raisers into the mix” rather than “continuing the fixation on domestic discretionary cuts” in order to reign in the deficit responsibly. While recognizing there are tough decisions ahead to reach budgetary goals, Americans are signaling support for a progressive proposal that can responsibly avoid stymieing economic growth and hurting middle-class families at the same time.

THE SLASH AND BURN: Intent on fulfilling their pledge, House Republicans plowed through the federal budget to reach $57 billion in spending cuts in H.R. 1, their continuing resolution to fund the government through 2011. Bypassing pragmatic cuts to outdated programs and subsidies, the House GOP took their ax to vital public investments and our nation’s most vulnerable populations. It would leave 10,000 low-income military veterans and 10,000 long-term disabled people without housing assistance, nearly one million low-income students without academic support, numerous pregnant women and mothers without food and health care assistance, 11 million patients without health care received at Community Health Centers, and at least 5 million children without access to anti-poverty services when the number of children in poverty is at a record high. While leaving the Pentagon’s record-high budget request intact, Republicans still jeopardized national safety by cutting funding to food safety regulators, local law enforcement, and air transportation safety. And despite making job creation their top priority, the House GOP turned H.R. 1 into a job-killer out to kneecap economic competitiveness by drastically reducing investment in public infrastructure, cutting nearly 50 percent of federal job training funding and potentially driving the unemployment rate “up to 9.7-10 percent.” Federal Reserve Chairman Ben Bernanke and numerous economists have stated that the GOP bill could “cost about 700,000 jobs through 2012.” H.R. 1 ended up being so detrimental to “the drivers of long-term economic growth and job creation” that President Obama promised to veto the bill if passed. “This is a highly politicized slash-and-burn budget,” Sen. Patty Murray (D-WA) said after it failed. “This debate is about more than dollars and sense. It’s about real people with real lives.”

THE RESET: The Democratic budget proposal “coalesced around a spending bill that cuts government funding by $6 billion in 2011” — a far less damaging alternative. However, as The Washington Post’s Ezra Klein indicates, the Democratic baseline still fails to “accelerate our economy” because it focuses solely on deficit reduction without offering any spending on economic investments. In a speech at the Center for American Progress yesterday, Schumer called on Congress to “reset” its approach to deficit reduction. “We need to stop falling into the trap of measuring fiscal responsibility in terms of willingness to cut government, and instead focus on what matters — reining in the deficit,” he said and proceeded to offer a more responsible way to do so. First, Schumer revived his proposal from last year to institute a surtax on millionaires and billionaires — a proposal, he noted, that was “the most popular proposal” among Americans in a recent poll. He also advocated for closing the tax gap by going after tax dodging and income sheltering by big corporations, a gap that “has gotten as high as over $300 billion a year this past decade.” Pointing to mandatory spending as “the largest contributor to the deficit,” Schumer also suggested Congress reduce unnecessary subsidies handed out to industries that don’t need them every year. In an interview with ThinkProgress‘s Pat Garofalo, Schumer said oil and gas subsidies “stick[] out like a sore thumb” because “the entire rationale for it is gone.” With the price of oil at $100 a barrel, “the subsidy, in economic terms, doesn’t mean anything other than to make some people wealthy who are already wealthy,” he said. Sen. Bernie Sanders (I-VT) agreed, advocating similar millionaire surtaxes and elimination of tax breaks for oil companies to address the deficit. Schumer pushed back hard against cuts to Social Security. “Social Security doesn’t have any problems until 20 years from now,” he said, adding that the deficit needs to be reduced long before then.

THE MAIN STREET VIEW: While House Speaker John Boehner (R-OH) might think “Americans don’t have a clue” about the problems facing our economy, the perspective from outside the beltway is pretty clear. Most Americans want to see a compromise on the federal budget to avoid a government shutdown, but 56 percent of Americans chose creating jobs over cutting spending as the more important government priority. Fifty-nine percent of Americans favored repealing the Bush tax cuts, and 49 percent thought defense spending should be a top priority for cuts, “even if it means eliminating programs that bring jobs to your state.” However, Americans “across all ages groups and ideologies said by large margins that it was ‘unacceptable’ to make significant cuts to entitlement programs in order to reduce the federal deficit.” What’s more, a sizable majority supported making wealthier Americans share more of the sacrifice — be it through reduced Social Security and Medicare payments or, the most popular option, a surtax on millionaires. Overall, Americans overwhelmingly rejected cuts to social programs. The progressive plan outlined by the Center For American Progress’s Michael Ettlinger, Michael Linden, and Reece Rushing “brings the budget into primary balance by 2015 and brings our deficits to sustainable levels” through pragmatic cuts in 2015, including “eliminating roughly $35 billion in corporate subsidies” and “targeting $60 billion in specific defense cuts for a 7 percent overall reduction.” Coupling responsible cuts at a more economically viable time while raising revenues — such as “applying a new 2 percent surtax to adjusted gross income above $1 million” — will help achieve important budget goals “while protecting middle-class families, continuing vital economic investments, and adequately funding other national priorities.” While tough choices must be made, “proposing to balance the budget only on tax increases or only on spending cuts” while the economy is still fragile “is both unrealistic and bad public policy.” Any feasible deficit reduction plan will balance both the budget and the sacrifice to avoid crippling the economy and hurting struggling middle-class families.