By Richard Cowan
WASHINGTON (Reuters) - For the first time in a long, bitter fight over budget deficits and raising the U.S. debt limit, Democrats and Republicans have found a big idea they both might like: a "Gang of Six" proposal that unexpectedly burst onto the scene on Tuesday.
After two months of dormancy, the bipartisan group of six senators outlined a plan to tame annual $1.4 trillion budget deficits in a way that could put the United States onto a fiscally sound path and assuage edgy global financial markets that were heartened by the possible progress.
President Barack Obama quickly embraced it, saying it was broadly consistent with his approach on reducing debt and deficits.
"The work they have done is really extraordinary," Senate Democratic leader Harry Reid said of the framework that claims $3.75 trillion in savings over a decade, including about $1.2 trillion in new revenues and reforms that could result in a net $1.5 trillion in tax cuts.
The Senate's No. 3 Republican, Lamar Alexander threw his weight behind it. "This is a serious, bipartisan proposal that will help stop Washington from spending money we don't have," he said.
Referring to the three Republican members of the Gang of Six, Alexander said, "There are no three more conservative or better respected members."
That could go a long way toward enticing other Republicans to support the plan, but there are still some tough realities to be kept in mind:
Obama and Congress face a fast-approaching August 2 deadline for raising the $14.3 trillion limit on U.S. borrowing authority. If they fail, the United States would be unable to pay all of its bills and could plunge the country and world economies into a tailspin.
The proposals are far-reaching but lack so many details that there may not be enough time, congressional aides warned, to put them into legislation and have them analyzed by the Congressional Budget Office, a necessary step before August 2.
Furthermore, legislation that changes the tax code must originate in the House of Representatives and it is not clear that anything that raises revenues would muster enough votes in a Republican-controlled chamber populated by many fiscally conservative Tea Party supporters.
Some House Republican aides were already complaining the tax cuts weren't enough and the spending cuts would take too long to phase in.
Debt talks between the White House and congressional leaders stalled over Republican's refusal to entertain any tax increases.
Liberal Democrats have also begun attacking the framework of the plan, saying it will devastate social programs.
Still, the Group of Six framework has some attractive qualities.
For one, it aims for the $4 trillion in long-term savings that financial markets say must be set in motion now. Those savings could dovetail with a more modest plan to raise the debt limit and trim $1.5 trillion from the deficit that Reid and Senate Republican leader Mitch McConnell are working on.
The McConnell/Reid plan also would set up a new panel to look for longer-term savings. The Group of Six's ideas could be fodder for the new panel.
Senator Max Baucus, whose Senate Finance Committee would be tasked with writing the details of the tax portion of the Gang of Six initiative said any long-term deficit-reduction plan must be balanced.
Under the, Republicans would have to put up with some revenue increases but would be rewarded with overall tax cuts. Democrats could go on record in favor of spending cuts while mostly protecting the popular Medicare, Medicaid and Social Security programs so important to their core constituencies.
As with everything in Washington, it is the details that matter. Congressional aides point out that the plan, after about eight months of work, is just a framework and not even the six members of the group have agreed upon a fully developed deal.
(Additional reporting by Thomas Ferraro)