By Siobhan Hughes and Gerald F. Seib

WASHINGTON -- New York Sen. Charles Schumer becomes the top Senate Democrat in January with a choice: Either find areas of common ground with Donald Trump or use the minority party's powers to stand in the way of the president-elect's agenda.

The veteran congressional deal maker and tactician appears to be planning for both.

In an interview on Friday, Mr. Schumer suggested Democrats would pick their battles, as they seek to rebuild their party in an era of Republican control.

He sees potential for deals with Republicans on some common issues but made clear that Democrats would fight if the GOP tries to push through broad tax cuts for the wealthy or shrink entitlement programs, such as Medicare.

There are some issues on which Democrats might find as much common ground with the new president as do establishment Republicans. Mr. Trump's campaign called for boosting infrastructure investments and redoing trade deals, for instance, but he would be working with a Republican conference populated with fiscal conservatives loath to increase government spending and free-traders eager for more international pacts.

"I think he won the blue-collar vote far more because of the Democratic programs he espoused than the Republican," Mr. Schumer said in the interview. "We're challenging him to work with us on those, which means he will have to tell the Republican establishment that he's not going to agree with them on those issues."

On trade policy, infrastructure spending and tax treatment of profits earned by some investment managers, the brash senator from Brooklyn sees the possibility of finding common ground with the equally brash New Yorker who will soon occupy the White House.

From his perch in the Capitol complex here, Mr. Schumer has already begun laying the groundwork for Democrats potentially to align with Mr. Trump and drive a wedge between the president and Senate Majority Leader Mitch McConnell (R., Ky.) and House Speaker Paul Ryan (R., Wis.), who have their own agendas.

On infrastructure spending, Mr. Schumer says he wants "a large bill" that doesn't rely simply on tax breaks but includes government spending.

He is sympathetic to Mr. Trump's call to tax carried interest, or a share of a partnership's profits, as ordinary income or business income, not as capital gains.

And he says he would like to see dramatic changes in U.S. trade law, in keeping with Mr. Trump's campaign promises to crack down on unfair trade.

"I will tell you one thing that burns me up," Mr. Schumer said, mentioning Wang Jianlin, China's richest man, and Hollywood. "You have this Chinese billionaire buying up parts of the American entertainment industry, where we dominate the world, and at the same time, China will only let 25 American films be shown in China a year. I would make it very reciprocal, and I wonder if Trump would. I would propose that to him."

Mr. Schumer's strategy of finding common ground with Mr. Trump will be complicated by the new president's likely order of battle. His aides and congressional Republicans have said their priorities will be repealing and replacing the Affordable Care Act, cutting tax rates and tightening border security -- all areas where they are likely to clash with Democrats. If that is the case, Democrats would start out the year in the role of obstructionists and could later find it harder to work with the Republican president.

Mr. Schumer is ready for that possibility. On the 2010 health law, "they will rue the day they tried to repeal it," Mr. Schumer said, pointing out that Mr. Trump already has said he would try to keep parts of the law, such as keeping a prohibition against insurers denying coverage because of patients' pre-existing conditions.

One early test will be Mr. Trump's key nominees. Republicans are expected to control 52 seats in the Senate, which must clear the appointments, compared with 48 for Democrats, enough to approve Mr. Trump's picks to fill his cabinet on a strict party-line vote but too few to provide a significant cushion against Republican defections.

Mr. Schumer says the White House should expect Sen. Jeff Sessions (R., Ala.) to receive tough questions at confirmation hearings for his appointment to the role of U.S. Attorney General. He said he was particularly concerned about what Mr. Sessions would do with the division in the Justice Department that enforces civil rights laws.

Bigger questions loom over Mr. Trump's pick tofill the vacancy on the Supreme Court left from the death of Justice Antonin Scalia in February.

While keeping one eye on the Republicans, Mr. Schumer, who has a reputation as a centrist, would also have to deal with tensions within his own caucus, where left-leaning lawmakers such as Sens. Elizabeth Warren (D., Mass.) and Bernie Sanders (I., Vt.) are on the rise. This week, Mr. Schumer brought both into his leadership, while also including centrists such as Sen. Joe Manchin of West Virginia, who is up for re-election in 2018 in a state that voted for Mr. Trump.

In a rhetorical nod to the influence of the liberal wing of his party, Mr. Schumer has begun adopting some of their rhetoric. "We didn't have a bold enough, strong enough economic agenda and message," Mr. Schumer said, explaining why Democrats took just two Republican Senate seats in the elections. "And even though the average blue-collar worker was closer to our beliefs thanRepublican beliefs, Donald Trump came off as the change agent."

Mr. Schumer said he has already spoken with Mr. Trump two or three times since the Nov. 8 elections. He is waiting to see how their relationship would develop. "He's called. He's friendly," Mr. Schumer said. "The word is that he thinks he can work with me, but we'll see. The jury's out."

Write to Siobhan Hughes at siobhan.hughes@wsj.com and Gerald F. Seib at jerry.seib@wsj.com

(END) Dow Jones Newswires

November 19, 2016 12:14 ET (17:14 GMT)

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