The Senate in March passed a budget (by a vote of 50-49) that included $100 billion in infrastructure spending to be implemented right away, along with a plan to reform the tax code in ways that would raise $975 billion in new revenue over ten years, largely by closing loopholes in the tax code that benefit the wealthiest. Over the next ten years, this plan would result in a reduction of $1.85 trillion in deficits, with a roughly even split between increased tax revenue and cuts in spending. The Senate and House budgets both replace the sequester, albeit with highly different approaches.

The president's budget, also issued in the spring, offered an attempt at a "Grand Bargain." That budget included a Republican-proposed change in how inflation is calculated ("chained CPI") that would have cut benefits to Social Security recipients and others receiving non-means tested benefits (in other words, those benefits aimed specifically at low-income Americans would not be affected). The White House budget also included measures to offset the chained CPI cuts for low income seniors. Additionally, their budget contained increased infrastructure spending, funding for universal pre-kindergarten, and tax increases on the wealthy.

President Obama thought that by offering to accept chained CPI he could entice Republicans to make similar compromises on taxes as part of a larger package to repeal the sequester completely (it remains in force through 2021). This is clearly not happening, as seen in the recent statement by House Budget Committee Chair Rep. Paul Ryan (R-WI). Ryan simply said, sure, we'll take chained CPI, thank you very much, but no thanks on the tax increases. Thankfully, the shutdown/debt ceiling fight offered a lesson to Democrats about the benefits of standing together, and of not negotiating with themselves.

There have been some signs of discord recently within the Democratic camp, with the White House seeming open to a deal that would replace the sequester for 2014 without any additional tax revenues, while Majority Leader Sen. Harry Reid (D-NV) declared that revenues must be a part of the deal. On the Republican side, Deputy House Whip Tom Cole (R-OK) expressed openness to changing the tax code (i.e., closing loopholes) in a way that generates some increased revenues, which is promising.

It's easy to get lost in the weeds of the negotiations, but from where I sit, here's what is clear: President Obama and Senator Reid must agree on a position and stick to it. There can be no daylight between the White House and Congressional Democrats. None. Some recent reporting indicates that there may still be some divergence between them. If there is, Republicans will exploit it. No question about that.

Republicans insist that they are okay with the status quo, which would mean just leaving the sequester in place for the 2014 budget. They would cut spending even further from the reduced 2013 levels, despite the fact that our annual budget deficit, as a percentage of Gross Domestic Product (GDP), is less than half what it was four years ago and has shrunk faster than in any period since the immediate post-World War II years when we demobilized our military. The focus on continuing to cut spending is even more ridiculous given that non-defense discretionary spending is lower as a share of GDP than at any point since Dwight David Eisenhower was president.



The big question for Democrats is this: what kind of deal is worse than the sequester, which Paul Ryan has said is the Republicans' fallback position. In other words, what would make Democrats throw up their hands and say: "You want it? You got it." And mean it.

Now, the sequester is a serious drain on our economy, no question about it. But, it's very important to remember that the 2014 sequester actually includes a $1 billion increase (!) in non-defense discretionary spending, alongside an approximately $20 billion cut (!!) in the military budget—amounting to about four percent in new cuts. This means that Democrats do have some real leverage here.

On the one hand, yes, I want the sequester to be replaced by something saner. However, Republicans are coming off a shutdown crisis where they badly overplayed their hand and are suffering in the polls for it. Their House majority is vulnerable in 2014.

Paul Ryan has said the status quo of the sequester is okay with him. Frankly, I don't believe him. I don't think he and his fellow Republicans want to crow about passing a budget for 2014 that cuts defense by four percent while increasing the rest of the budget, no matter by how little.

The Republicans' problem during the shutdown—from a strategic perspective—was that they needed Democrats to blink. Democrats called their bluff, and Republicans folded—their caucus in tatters. In these budget negotiations, by contrast, Democrats should stand firm and united around their demands for a budget that replaces the sequester. The conference report's budget must include some new tax revenues, coming from corporations and/or wealthy individuals, and it must not cut entitlements, or cut spending on the most vulnerable among us.

If not, then defense gets whacked and the rest of the budget gets a slight increase. I wouldn't call it ideal, but if it's either that or an outcome where Democrats sell out their priorities and values, I'll take it every day of the week and twice on Sunday.

Democrats will not get the budget they passed this spring—one that contained an equal mix of spending cuts and tax increases on the wealthy along with increased infrastructure spending—but neither can Republicans get the budget they passed (the White House budget no longer has any bearing here, thankfully, with the rejection of the Grand Bargain). Each side has to give some off their ideal positions, which means that the sequester replacement cannot include zero when it comes to tax increases. That would be another one-sided surrender.

We can absolutely sell such a stance as reasonable, especially after the shutdown. Democrats could easily paint the Republicans as extreme and unyielding in their demands on taxes. Why should they get 100 percent of what they want, when they have only one of two houses of Congress and they lost the presidential election? Democrats can and must make that case. But it can only work if they remain united.

Patrick Henry, in his final public remarks, condemned the idea of nullification, fittingly embraced most recently by Ron Paul who, campaigning for Ken Cuccinelli in the one-time Confederate capital of Richmond, urged states to "ignore the feds" and nullify Obamacare. Henry uttered the famous words: "United we stand. Divided we fall."

As the fight over the 2014 budget moves forward, Democrats must remember Henry's words, and remember how they won the shutdown battle.