Jan. 29 (Bloomberg) -- Senate Democrats will consider revenue-generating alternatives that could be used to offset automatic spending cuts set to take effect March 1, Majority Leader Harry Reid said today.
Reid, a Nevada Democrat, said Democrats will view options at their policy retreat next week for limiting the automatic cuts, known as sequestration.
The spending reductions, to take place over nine years, would be split evenly between defense and non-defense programs. The Republican-controlled House has voted to replace cuts in defense programs with other spending cuts. Democrats say new revenue should be used to head off some of the reductions.
Reid told reporters he wants to “move forward and, on short increments, pay for the sequestration.” Later, Reid said in an interview that he meant “maybe three months at a time, six months at a time, a year at a time.”
“There are many low-hanging pieces of fruit out there that Republicans have said they agreed on previously,” the majority leader told reporters. “I’m not going to go into detail, but one of them, of course, is deal with oil companies.”
President Barack Obama has called repeatedly on Congress to curb tax breaks for oil companies. His most recent budget plan would raise more than $27 billion over the next decade from changes to oil and gas tax policy. The proposals include repealing companies’ ability to deduct certain drilling costs immediately rather than over several years.
Also today, Deputy Defense Secretary Ashton Carter said “we are serious about being ready” in case automatic defense cuts of as much as $45 billion start taking effect March 1.
“From what I hear, I have to conclude that it is more likely than unlikely that we’ll actually have to do this,” Carter said in an interview at the Pentagon.
In one indication of a spending slowdown, Pentagon contracts slumped 23 percent in the first three weeks of January. Defense Department awards fell to $10.1 billion in the period compared with $13.1 billion during the same weeks in 2012, according to data compiled by Bloomberg.
The spending reductions had been scheduled to start this month, though Congress enacted a two-month delay as part of the Jan. 1 legislation that averted the so-called fiscal cliff.
Congressional Democrats and Vice President Joe Biden had sought a longer delay in the automatic spending cuts during fiscal negotiations.
“There’s a lot of things we can do out there, and we’re going to make an effort to make sure” that action on the spending cuts “involves revenue,” Reid said.
Republicans have said they oppose new revenue beyond the tax increases in the Jan. 1 legislation.
Senate Democrats will hold their annual retreat Feb. 5-6 in Annapolis, Maryland.
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