Amid deficit worries, unemployment bill dealt Senate defeat

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Unemployment bill dealt Senate defeat

WASHINGTON — Republicans and a dozen Democratic defectors in the Senate dealt a defeat to President Barack Obama Wednesday, just days after he pressed Congress to renew pieces of last year’s economic stimulus bill.

A catchall measure combining jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks for businesses and individuals failed to muster even a majority in a test vote, much less the 60 votes that would be required to defeat a GOP filibuster.

Now, Obama’s Democratic allies have been forced back to the drawing board in their efforts to pass the measure, which also would protect doctors from a looming cut in Medicare payments and raise taxes on investment fund managers. A new, scaled back version of the measure is likely to be revealed Wednesday afternoon.

Finance Committee Chairman Max Baucus, D-Mont., said after the vote that “Plan B” is to do some “shuffling, rearranging of some of the provisions” of the bill but not making wholesale changes.

Just on Saturday, Obama made a plea for the measure, including $24 billion in aid to cash-strapped state governments to help avoid tens of thousands of layoffs and ensure the economy doesn’t slip back into a recession.

To try to revive the bill, top Democrats are expected to roll back last year’s $25 a week increase in unemployment checks and give doctors just a short reprieve from scheduled cuts in their Medicare payments instead of relief until the end of next year. Democratic leaders promise to restore the $24 billion in state aid that was struck by Wednesday’s vote.

Wednesday’s defeat of the measure was unexpectedly lopsided as Democratic moderates — who almost uniformly voted for an earlier version just three months ago — joined with every Republican against the pending version on a 45-52 tally.

The vote reflected rising voter anger over deficits and the nation’s $13 trillion debt. And it’s by no means certain the measure can be revived to win moderate Democrats back and garner the handful of GOP votes needed to eventually pass it.

“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.”

The likely cuts mean that people on unemployment insurance are likely to see their benefits reduced by $25 a week. Doctors are likely to win only a seven-month reprieve from a 21 percent cut in their Medicare payments that’s set to take effect Friday. Those steps would appear to cut about $20 billion from the measure.

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 fivefold increase in the per barrel tax on oil drilled offshore and a new tax on investment fund managers.

Nine Republicans supported the earlier version of the bill against a GOP filibuster, as did every Democrat but Ben Nelson of Nebraska. Now, a lot of that support has eroded.

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