Jobless benefits extension stalls in Senate

Tribune Washington BureauUnder escalating pressure to reduce federal deficit spending, congressional Democrats on Wednesday were forced for the second time in a month to scale back the scope of legislation extending benefits for the long-term unemployed.

The move to retrench came after the Senate voted, 45 to 52, to block a $140-billion bill that would link the extension of jobless benefits to a hodgepodge of other proposals — a delay in Medicare fee cuts for doctors, continuation of an array of business tax cuts, and aid to states to help them cover healthcare costs for the poor under Medicaid.

Resolving the impasse that has pitted deficit concerns against traditional social safety net programs provides an object lesson on how hard it is for Congress to legislate at a time when public anger over government spending is growing but the appetite and need for government programs has not waned.

Late Wednesday, Senate Finance Committee Chairman Max Baucus (D-Mont.) moved to break the impasse by proposing to reduce costs in the bill by cutting $25 a week from the benefits paid to jobless workers and providing a more limited reprieve for doctors who treat Medicare patients. Senate Democratic aides said they hoped that change — once approved — would clear the way for a final vote on the bill by the end of the week.

House leaders last month also faced a rebellion among conservative Democrats and were forced to scale back their version of the bill from its original $200-billion price tag. In the Senate, leaders stumbled Wednesday on a procedural vote that saw 11 Democrats and one independent, Joe Lieberman of Connecticut, defect — mostly because of the bill’s price tag.

In other action, the Senate approved an amendment to the bill that would help homebuyers qualify for federal tax breaks by extending the deadline for finishing sales paperwork from June 30 to Sept. 30. The homebuyers credit, which applied only to sales contracts signed before April 30, helped boost sales this spring, but many who have signed purchase agreements need more time to complete the sale because of backlogs in mortgage processing.

The underlying bill would provide six more months of unemployment benefits for the long-term unemployed, a special anti-recession benefit that expired at the end of May. It also would postpone until 2012 a scheduled cut in Medicare payments to doctors and extend dozens of business tax cuts, including a major one to spur research and development, that are expiring this year.

Those provisions have enjoyed bipartisan support. But the unwieldy bill’s progress has been slowed by growing Democratic anxiety about cost, as the deficit has become an increasingly potent issue in the midterm elections and the economy has begun to improve.

“Borrowing and deficit spending at the point of an economic crisis — and we were in a severe one in late 2008 and early 2009 — is one thing,” said Sen. Ben Nelson (D-Neb.), one of the 11 who voted with Republicans. “But when you’re in an economic recovery, as we are today, borrowing and deficit spending is another thing.”

Nelson was among the Democrats who voted with Republicans on the procedural motion that essentially declared the bill in violation of budget rules. That did not kill the bill, but it forced leaders back to the drawing board to scale back its cost.

Republican savored the moment, having argued for months for Democrats to twin spending increases with offsetting cuts in other areas.

“This was a victory for all Americans who are fed up with Congress’ reckless spending and who believe that like all American households and businesses, the federal government must learn to live within its own budget,” said Sen. Judd Gregg (R-N.H.).

But it is unclear whether many Republicans will be swayed to back the bill because of the changes proposed by Baucus. His new version would drop rather than extend a $25-a-week increase in unemployment benefits that had been included in last year’s economic stimulus bill and provide doctors a reprieve from the Medicare fee cut only through the end of 2011.

janet.hook@latimes.com