Congressional Democrats have decided to pare back the increase in their domestic spending bills by half in their latest effort to break an impasse with the White House over appropriations bills.

Senate Majority Leader Harry Reid (D-Nev.) said Thursday afternoon that Senate Appropriations Chairman Robert Byrd (D-W.Va.) and House Appropriations Chairman David Obey (D-Wis.) already were working to craft an omnibus appropriations bill that would cut $11 billion from the $22 billion President Bush has demanded they shave.

Reid said the omnibus measure would come up after Thanksgiving but would not give a more specific timeline other than to say it would be voted on before the Christmas holiday.

“We’re going to send [Bush] another piece of legislation. This one likely will be to split the difference. And it has some tremendously difficult cuts in it,” Reid said at a press conference.

Bush already has vetoed a Labor, Health and Human Services, Education and related agencies appropriations bill that would have spent nearly $10 billion more than he asked for. He has threatened to veto nine of the 12 annual appropriations bills, but he has signed the $460 billion Defense Department spending measure. Bush also has indicated he would sign military construction-Veterans Affairs funding that would cost almost $4 billion more than his budget request.

Reid also threatened to keep the Senate in session until Sunday in order to vote on a $50 billion stopgap-spending bill for the Iraq War that also would call for a significant drawdown of U.S. troops in Iraq by the end of next year.

“We’ll either do it the easy way or the hard way. It’s up to the Republicans,” Reid said. “We will have a Sunday vote scheduled. … If they want to give us consent to have a vote earlier, we’ll do that. But if they don’t, we’re not only going to be here, we’re going to be here working.”

Reid said he would file a motion to limit debate, or invoke cloture, on the House-passed bill on Friday. If Republicans insist on using all the time available to them to debate the cloture motion, the vote would occur Sunday.

Reid also hinted that he would schedule a series of quorum call votes to make sure Senators stay in town through Sunday for the vote.

“There will be some votes,” Reid said. “If people think they can leave town and avoid missing votes, they can’t. There will be votes during the day [this weekend]. I have the right to call those votes and I will do that.”

Meanwhile, Reid also left open the possibility that the Senate would act this week on a bill to prevent the alternative minimum tax from hitting millions of middle-income Americans it was never intended to affect.

One Senate GOP source said talks were revolving around taking up as many as four separate AMT plans, including a proposal by Senate Minority Whip Trent Lott (R-Miss.) to permanently repeal the tax. Other proposals include a recently passed House measure that would pay for the temporary repeal through taxes on hedge fund managers and private equity partnerships, as well as a Senate bill that would not offset the cost of the “AMT patch.” The fourth plan had yet to be determined but would likely be a proposal by Senate Minority Leader Mitch McConnell (R-Ky.), the source said.

Action on AMT could come as early as Thursday evening if a deal is reached, sources said.