Economic Stimulus Bill Quashed by Senate GOP

Senate Republicans on Wednesday blocked a Democratic bill to shore up the economy and increase spending on domestic security, creating an impasse expected to force both parties and the White House into high-level negotiations to craft a compromise measure.

In party-line votes, both 51 to 47, the Senate invoked procedural objections to the Democratic bill, which would provide a total of $73 billion for health insurance subsidies and other benefits for the unemployed, tax cuts for individuals and businesses and new spending for homeland security.

The votes were a victory for Republicans who want to force Democrats to write a bill more in line with President Bush’s priorities, which put more emphasis on tax cuts and less on new spending. But Republicans acknowledged that they too lacked the votes to pass their preferred bill in the narrowly divided Senate.

“None of this is going to pass,” Senate Minority Leader Trent Lott (R-Miss.) said. “We’re stalled. . . . Let’s go right to the endgame. Let’s put the right people in the room and say get this job done.”

Vice President Dick Cheney, in a speech to the U.S. Chamber of Commerce on Wednesday, stepped up pressure on Congress to break the impasse.

“The key message for Congress today is that it’s absolutely essential to get on with the business of moving an economic stimulus plan now,” Cheney said.

On a related front, Bush faced a tough test Wednesday when a House committee considered a proposal to provide an additional $10 billion to help rebuild New York City. The measure, backed by New York Republicans on the panel as well as Democrats, was pushed despite a pointed threat by Bush last week to veto any such measure as fiscally irresponsible.

Cheney tried Wednesday to dissuade the New York Republicans from supporting the plan. Enough other Republicans stood with Bush, however, and the appropriations committee rejected the amendment, 33 to 31.

The tense standoff underscored the powerful political pressures on Congress to address the nation’s needs after the Sept. 11 terrorist attacks--especially on lawmakers from New York and other regions directly affected.

The Bush administration has said the $40 billion that Congress appropriated in September was enough to take care of immediate needs and aid New York and has warned against using the national crisis as an excuse for a government spending spree. Bush officials say if more money is required, they will seek it later.

Democrats say the administration underestimated the costs of repairing New York and addressing other problems stemming from the attacks. On Wednesday, Rep. David R. Obey (D-Wis.) proposed that the appropriations committee provide $7.1 billion for homeland security measures, including money to counter bioterrorism and increase transportation security. But that measure also lost on a 33-31 vote.

The dispute over homeland security funding was also part of the Senate debate over economic stimulus legislation. The Senate bill includes a provision, backed by Sen. Robert C. Byrd (D-W.Va.), to provide $15 billion over 10 years for homeland security measures, including stepped-up law enforcement efforts, improved transportation security and more food safety protections.

“We cannot wait for another year and another Congress to convene before we come to grips with the horrible reality of another disaster,” Byrd said.

During debate, Democrats warned that Republicans would suffer politically for opposing the Senate version of the economic stimulus bill. “They will be remembered by the people of this country come the next election,” Byrd said.

But Republicans argued that the bill included too much spending and not enough tax cuts to be an effective stimulus to the economy.

The Senate votes to derail the Democratic bill were based on procedural technicalities because the extra spending and tax cuts in the measure would violate the Congressional Balanced Budget Act, which puts firm limits on spending except in cases of emergency.

Senate and House leaders of both parties are now expected to work behind the scenes with administration officials to craft a compromise, which could clear the House and Senate by early December.

The compromise is likely to include cash payments for people who did not receive tax rebates earlier this year; proposals to allow businesses to write off more quickly their capital investments; an extension of unemployment benefits; and some kind of aid to help the unemployed pay for health insurance.

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Times staff writer Edwin Chen contributed to this report.