It wasn’t looking good for the boys in blue states as of last night. Their gentlemen’s agreement on filibusters had officially collapsed. Then Republicans reversed course, allowing votes today on competing budget plans, after they arm-twisted all their members into supporting the Republican version. Joe Manchin (D-sort of) blasted the leadership for failing to show, well, leadership. The $6.5 billion in spending cuts they put on the table as a first offer were valued at $4.7 billion by the CBO. And it looked like the country would soon slip into a government shutdown. The House readied another short-term stopgap that would probably take the $4.7 billion in cuts and then negotiate over more, so this whole shame spiral could start over.

And then a funny thing happened. Democrats did something strategic.

Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs.

Senate Majority Leader Harry Reid (D., Nev.) said that efforts to bridge the parties’ $50 billion difference in proposed budget cuts for the remainder of fiscal-year 2011 could reach beyond domestic discretionary spending and move into tax policy and programs such as farm subsidies.

“There are other places we can move to bring about some cost savings,” Mr. Reid said. “Domestic discretionary, defense, mandatories, revenues.”

Sen. Charles Schumer (D., N.Y.) is expected to echo that suggestion in a speech Wednesday and argue that tens of billions of dollars of deficit-reduction measures could be found if budget talks are broadened.

What you have to understand about this is that Republicans are frauds. They don’t want to cut the budget deficit, they want to cut programs that liberals like. Nothing we’re arguing over in this budget fight costs even 1/10th as much as the tax cut deal from last December. So Republicans will not want to broaden the conversation. That would mean they’d have to reduce subsidies to their favorite industries, or cut defense spending, or (gasp!) raise revenues.

In a political sense, this works for Democrats. They now get to say that their counterparts on the right are not serious about the budget. Because they’re not. They’re trying to balance a 40% gap with 12% of the spending. If the bluff is called, a longer-term deal at least spreads out the spending cuts over a number of years, and will be a lesser short-term shock to the economy. This also would lessen the constant hostage-taking on this or that piece of the budget as the years go by.

Obviously it matters what is involved in that over the long term. But this looks like posturing, and as posturing goes, it looks pretty effective. Furthermore, in a broader debate, the public is on the right side:

Almost 8 in 10 people say Republicans and Democrats should reach a compromise on a plan to reduce the federal budget deficit to keep the government running, a Bloomberg National Poll shows. At the same time, lopsided margins oppose cuts to Medicare, education, environmental protection, medical research and community-renewal programs.

While Americans say it’s important to improve the government’s fiscal situation, among the few deficit-reducing moves they back are cutting foreign aid, pulling U.S. troops out of Afghanistan and Iraq, and repealing the Bush-era tax cuts for households earning more than $250,000 a year.

Now that’s a budget that makes sense. And that’s the terrain Democrats seem to be moving toward.