(Bloomberg) -- The Senate rejected a pair of partisan proposals to replace $85 billion in automatic spending spending cuts set to begin Friday.
Senators turned back a Democratic proposal, 51-49, and a Republican plan, 38-62, with 60 votes required for each measure.
No additional congressional action is planned before the start of the cuts, to be split between defense and non-defense spending. The across-the-board reductions will total $1.2 trillion over nine years, with $85 billion set to take effect in the remaining seven months of this fiscal year.
President Barack Obama has summoned congressional leaders to the White House Friday to discuss the next step.
Thursday's votes in Washington were symbolic, designed to give Democrats and Republicans political cover when the spending reductions, known as sequestration, take effect.
The Republicans want the sequester to go forward, Majority Leader Harry Reid, a Nevada Democrat, said at a news conference before the vote. Theyve said so, and any efforts at a reasonable approach to this, they wont let us do it.
The parties are far apart on how to replace the cuts, which were enacted in 2011 and designed to be so onerous that Congress would find a way to replace them. Democrats say tax increases must be part of any new plan, which Republican leaders oppose. Democrats say they expect the public to place more blame on Republicans, rather than Obama, for reduced federal services.
House Speaker John Boehner, an Ohio Republican, reiterated his opposition to new tax revenue in a spending-cut plan.
Cards on Table
How much more money do we want to steal from the American people to fund more government? Boehner said. Im for no more. He said House Republicans have laid our cards on the table; weve showed we can pass bills to replace the sequester, referring to bills passed by the House last year that have since expired.
Tomorrows White House meeting is scheduled for 10 a.m. Washington time, said a congressional aide who sought anonymity. Attending the meeting will be Republicans Boehner and Mitch McConnell, the Senate minority leader, and Democrats Reid and Nancy Pelosi, the House minority leader.
Senate Democrats replacement plan would have replaced this years part of the spending reduction with a smaller cut to defense programs, a halt in direct payments to farmers, and a tax increase that would impose a minimum 30 percent rate on top earners. The bill, S.388, was supported by the White House.
The tax provision is known as the Buffett Rule, after one of its leading proponents, billionaire Warren Buffett. It would apply fully to annual income exceeding $5 million.
Senate Republicans proposal would have retained the $85 billion in cuts while requiring Obama to submit a proposal by March 15 on how to allocate them. The measure would have let Congress vote within a week to reject the presidents plan and keep the original, across-the-board cuts in place. The measure, S.16, was opposed by the Obama administration.
Reid told reporters today that a stopgap government funding measure needed next month will provide the next opportunity for Democrats to press a spending-cut replacement plan that includes tax increases. Current funding for government operations expires on March 27.
Get it all done at once, Reid said. It would be so easy to do.
Democrats will keep contrasting their fiscal vision with Republicans, starting with their fiscal 2014 budget proposal, said Senator Charles Schumer of New York, the chambers third- ranking Democrat.
These votes will not be the last word on the issue, Schumer said. The debate is just beginning.
Senate Democrats budget blueprint, scheduled to come to the floor in March, will replace the sequestration with responsible deficit reduction, said Budget Committee Chairwoman Patty Murray, a Washington Democrat.
Boehner told fellow House Republicans during a closed caucus yesterday that he considers the meeting a listening session and doesnt intend to negotiate, said Representative Lynn Westmoreland of Georgia.
Investors have signaled they arent concerned about the effect of the spending reductions on the worlds largest economy. The Standard & Poors 500 Index rose 0.5 percent to 1,523.32 at 1:49 p.m. in New York. The Dow Jones Industrial Average added added 48.58 points, or 0.4 percent, to 14,123.95.
The Treasury 10-year note yield was little changed at 1.9 percent at 1:57 p.m. New York time, according to Bloomberg Bond Trader prices.
Obama has until 11:59 p.m. tomorrow to issue the order officially putting the cuts into effect.
Administration officials have said the across-the-board cuts will lead to forced days off for government workers and may affect commercial airline flights and functions such as border security.
Unless theres a resolution in coming weeks, the nonpartisan Congressional Budget Office estimates that budget reductions will cause a 0.6 percentage-point reduction in economic growth this year. Federal Reserve Chairman Ben S. Bernanke told the Senate Banking Committee on Feb. 26 that this additional near-term burden on the recovery is significant.
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