Senate Democrats basked in their surprise budget victory Wednesday, but said the remaining Republican-sponsored tax-cut is still too large.

“We cut $350 billion yesterday, but there still is $852 billion of tax cuts incorporated in this budget,” Minority Leader Thomas Daschle (D-S.D.) said. “We still think that’s way too much, given the need for sacrifice in this country, given the need to ensure that we have the funds, the resources to provide the many needs that we have in fighting the war in Iraq and our homeland security needs as well.”

The adoption of an amendment offered by Sen. John Breaux (D-La.) on Tuesday shifts $396 billion from President Bush’s proposed tax-cut package into a Social Security reserve fund. However, the money is taken away from the $726 billion in tax cuts the budget resolution seeks to protect from a filibuster by including it in reconciliation instructions, not the overall $1.3 trillion tax cut Republicans have offered.

Daschle said Democrats were “reasonably confident” that the vote would hold despite Republican efforts to overturn Tuesday’s action before the Senate votes on the overall resolution Wednesday evening.

To maintain their victory, Democrats will need the continued support of the three Republican Senators who joined them to pass the Breaux amendment: Lincoln Chafee (R.I.), Olympia Snowe (Maine) and George Voinovich (Ohio). Democratic Sen. Zell Miller (Ga.) didn’t vote.

But Daschle was not satisfied with just reducing the tax cut’s size.

“I still intend to vote against this resolution, and I think a large number of our colleagues will, in part because we can’t afford a tax cut of the magnitude that is still incorporated here,” he said.

The Senate’s unexpected vote may alter the House schedule.

Ways and Means Chairman Bill Thomas (R-Calif.) had intended to mark up the president’s tax-cut package next week. However, after passage of the Breaux amendment, he said he would decide whether to press ahead after the Senate votes on final passage of the budget resolution.

The House adopted a budget outline, including the full tax-cut package, last week. But House Minority Leader Nancy Pelosi (D-Calif.) continued to call that outline “reckless” Wednesday.

Citing the recent Congressional Budget Office analysis of Bush’s budget, Pelosi said it would be a “drag” on the economy and would fail as a stimulus.

“The overall macroeconomic effect of the proposals in the president’s budget is not obvious,” she said, quoting the CBO’s report.