Jobless Benefits Extension Falls Vote Short in Senate : Economy: Majority leader Mitchell keeps bill alive in hopes of compromise. Dole and GOP see it as adding to record federal deficit.

In an unexpected setback for the Clinton Administration, a deficit-conscious Senate Tuesday fell one vote short of approving a $1-billion extension of unemployment funds for jobless workers who have exhausted their state benefits.

Although caught by surprise, Senate Majority Leader George J. Mitchell (D-Me.) kept the bill alive by scheduling a vote today to reconsider the action. Mitchell hopes that a compromise over a disputed financing provision could change the outcome and extend benefits for an estimated 1 million long-term unemployed workers.

Senate Minority Leader Bob Dole (R-Kan.) joined a Republican-led attack on the measure, contending that it would add to the record deficit because it relies on “gimmickry” to offset its costs.

The Senate voted, 59 to 38, to approve the extension, but the count was one vote short of the 60 needed to waive provisions of the 1990 Budget Enforcement Act that requires Congress to make cuts or find new sources of revenue to pay for any new spending. Among those refusing to vote for the measure were three Democrats, any one of whom could have provided the clinching vote.

The bill, approved earlier by the House, would extend jobless benefits for the next four months for workers whose 26 weeks of eligibility is expiring.

In another act of rebellion, 10 Democrats broke party ranks to join with Republicans trying unsuccessfully to nullify retroactive tax increases on upper-income Americans. The retroactive increases were approved as part of the President’s budget reconciliation measure last summer.

The Senate voted, 50 to 44, not to backdate the increase to Jan. 1, 1993, but the measure failed because it lacked the 60 votes needed to waive the Budget Enforcement Act provisions.

The 10 Democrats who deserted the White House and congressional leadership included Sen. Jim Sasser (D-Tenn.), chairman of the Senate Budget Committee and usually a strong Clinton supporter.

In the vote on jobless benefits, Republicans caught Democratic leaders unaware with their argument that the bill violated the Budget Enforcement Act by raising the deficit by $1 billion in the current fiscal year.

“We want people who deserve the benefits to have the benefits,” Dole said. “We ought to find a way to pay for it and do it quickly.”

The bill had also run into early trouble in the House, where members of the Hispanic Caucus heatedly protested one of its financing provisions. But the House later passed it easily on a vote of 301 to 95.

In the Senate, the debate focused on a proposal to introduce a “worker profile” system designed to speed the process of finding jobs or retraining the unemployed to shorten the period of time they receive jobless benefits.

Under the proposal, the federal government would provide benefits through Feb. 5 for workers who exhaust their regular state jobless payments. Workers in California and four other states with the worst unemployment would be eligible for 13 extra weeks of benefits, while the unemployed in all other states would receive seven more weeks of compensation.

Sen. Daniel Patrick Moynihan (D-N.Y.), chairman of the Senate Finance Committee, described the bill as a “routine extension” of extra jobless benefits.

But Democratic Sens. David L. Boren of Oklahoma and Bob Kerrey and J. James Exon of Nebraska broke ranks to vote against the bill. Two other Democrats considered likely to support it were absent.

Across the aisle, eight Republicans switched sides to vote with 51 Democrats in support of the legislation. At first, Sen. Nancy Landon Kassebaum (R-Kan.) voted for the measure, providing the 60th vote necessary for passage but she switched her vote at the end of the roll-call when it became decisive.

“My sympathies were with approving the unemployment benefits extension,” she said in a statement. “However, I also believe that we must use honest accounting to pay for these benefits. When I realized that passage came down to just one vote, I changed my vote in the hope that we could work out a way to be more accountable for the cost.”

In a separate development Tuesday, Clinton released a package of budget cuts totaling $15 billion over the next five years. About $10 billion of the savings would go to deficit reduction. The other $5 billion would go toward the pending anti-crime initiative.