Senate Democrats are proposing $3.5 trillion in new spending over the next ten years.
The Senate Budget Committee, chaired by Sen. Bernie Sanders (I-VT), reached the agreement late Tuesday night.
The deal includes expanding Medicare, childcare, college tuition assistance, and major investments in programs to fight climate change.
"We are very proud of this plan," Senate Majority Leader Chuck Schumer, D-N.Y., told reporters. "We know we have a long road to go. We're going to get this done for the sake of making average Americans' lives a whole lot better."
Democrats are pledging to pay for it all without borrowing money, reportedly by increasing taxes on corporations and wealthy Americans.
With the plan unlikely to gain enough Republican support, Democrats plan to bypass the opposition and use the budget reconciliation process to get it passed.
On Tuesday, Senate Minority Leader Mitch McConnell said the American people don't want more big spending out of Washington.
"The country didn't elect a 50-50 Senate and a president who claimed to be a moderate so that Chairman Sanders could turn America into a socialist country. Working Americans know that's not what they voted for."
This new plan is in addition to $600 billion in funding to upgrade basic infrastructures like roads, bridges, and broadband, bringing the spending total to more than $4 trillion.
The Democrats' goal is to push a budget resolution reflecting Tuesday's agreement through the House and the Senate before lawmakers leave for their August recess. The resolution sets only broad spending and revenue parameters, leaving the actual funding and specific decisions about which programs are affected — and by how much — for later legislation.
The resolution contains language that would let Democrats move the follow-up spending measure through the 50-50 Senate with just a simple majority, not the 60 votes Republicans could demand by using a bill-killing filibuster.
The actual spending legislation will likely not start moving through Congress until the fall.