Despite earlier support, aid to states, jobless and doctors’ Medicare pay faces Senate hurdles

Aid to states, the jobless faces Senate hurdles

WASHINGTON — A bill providing jobless benefits and tens of billions of dollars in new aid for states and Medicare payments for doctors hangs by a thread in Congress despite lingering worries of another recession without it.

The measure has been months in the making, and an earlier version passed the Senate fairly easily just three months ago. Now, with voter anger over deficits rising, the measure appears certain to lose a crucial test vote in the Senate on Wednesday, which means Democrats will have to pull out the shears and cut the measure back to have any hope of passing it.

As a result, people on unemployment insurance are likely to see their benefits cut by $25 a week. Doctors are likely to only win a seven month reprieve from a 21 percent cut in their Medicare payments that’s set to take effect Friday as top Democrats try to reduce the measure’s deficit cost below $80 billion.

And it’s not even clear that those steps will be enough to attract enough GOP votes to reach the 60-vote threshhold needed to advance an as-yet unseen, scaled-back version of the measure.

“They’ve laid the straw that broke the camel’s back as far as I’m concerned,” said Sen. George Voinovich, R-Ohio, who provided a critical vote to advance an earlier version of the measure in March. “We’re talking $50 billion in new taxes, $80 billion in new borrowing. … I’ve gotten to the point where I’ve had it.”

Over the weekend, President Barack Obama renewed his push for the measure, warning that “hundreds of thousands” of state and local government jobs could be lost without $24 billion in Medicaid money to help states balance their budgets and $23 billion more to prevent layoffs at local school districts.

The pending bill is a catchall measure anchored by a six-month extension of jobless benefits for people who have been out of work for more than six months. It also includes the $24 billion in help for cash-starved state governments, dozens of expired tax breaks for individuals and businesses, a five-fold increase in the per barrel tax on oil drilled offshore and a new tax on investment fund managers.

Eight Republicans supported the earlier version of the bill, as did every Democrat. Now, a lot of that support has eroded.

“I’m very concerned about the cost of the bill,” said Susan Collins, R-Maine.

Lawmakers say angry voters and the debt crisis in Europe are responsible for the turnaround. Deficits and debt, said Sen. John Thune, R-S.D., is a much bigger issue than it was when the earlier version passed.

“People are very tuned into that issue, way more so than ever before,” Thune said.

Democrats say that despite rising anxiety over the deficit, now is not the time to step off of the stimulus gas pedal.

“There’s spending fatigue, not only on Capitol Hill, but around the country,” Rep. Steny Hoyer, D-Md., said on ABC’s “This Week” on Sunday. “But clearly, you cannot not continue to stimulate an economy that is still struggling to get out of the deep ditch that we found it in about 18 months ago.”

Democrats say unemployment benefits and aid to state governments are two of the most effective ways to stimulate the economy and create jobs.

“They’re at the top of the food chain in terms of the biggest bang for the bucks,” White House economist Jared Bernstein said.

“At this critical moment, we cannot afford to slide backwards just as our recovery is taking hold,” Obama said in Saturday’s letter to congressional leaders.

Without the state aid, governors like Pennsylvania Democrat Ed Rendell say they will will have to lay off thousands of workers.

“The effect on the economy of not doing this … would be disastrous,” Rendell told reporters Tuesday.

There’s also tension between the White House and top Democrats, who feel the administration hasn’t weighed in strongly enough behind proposals like renewed help for local school districts to help them avoid laying off teachers.

Democrats in the House are trimming the teacher funding proposal and seeking ways to pay for it with unused money from last year’s economic stimulus bill. The White House recently rejected a batch of offsetting stimulus cuts proposed by House Appropriations Committee Chairman David Obey, D-Wis., who’s angling to attach the teacher money to Obama’s war funding request.

“They want the program,” said Rep. George Miller, D-Calif. “They just haven’t agreed to the offsets.”