Senators unveil long-awaited jobs bill

A man rides his bicycle towards the Capitol Building in downtown Washington, February 8, 2010.

WASHINGTON (Reuters) - Democratic senators unveiled a limited jobs-creation bill on Thursday that relies on business tax breaks and construction projects to bring down a stubbornly high unemployment rate.

With a nervous eye on the November congressional elections, President Barack Obama and his Democratic allies on Capitol Hill have floated a wide range of job-creating proposals to help the economy recover from the deepest recession in 70 years.

But with their agenda frozen by partisan gridlock and a record-setting snowstorm, Senate Democrats opted for a relatively narrow $15 billion effort that they hope will win quick passage -- rather than a more costly measure that could get stalled.

"We feel that the American people need a message. The message that they need is that we're doing something about jobs," Senate Majority Leader Harry Reid, in a tough campaign for re-election back home in Nevada, said after a meeting with fellow Democrats.

With no votes scheduled for Thursday and a weeklong recess looming, Senate floor action on the bill was put off until the week of February 22.

Their supermajority gone after a surprise Republican victory in last month's Massachusetts Senate race, Democrats now need at least one Republican vote to pass legislation.

TWO FROM THE GOP

The bill incorporate provisions crafted with the help of two Republicans on the tax-writing Finance Committee, Charles Grassley and Orrin Hatch.

The bill would also include tax credits to encourage businesses to buy new equipment, subsidies for state and local construction bonds, and money to shore up a highway-construction fund.

The bill's $15 billion cost will be offset by closing unspecified tax loopholes, a Democratic aide said.

The Senate later will take up other proposals such as a tax break for research and development, Reid said.

"We don't have a jobs bill, we have a jobs agenda. And we're going to move forward on that jobs agenda," Reid said.

Though Democrats want to show struggling voters that they are helping boost the economy, they also face a growing voter backlash for the hundreds of billions of dollars in deficit spending they approved last year to blunt the recession's impact.

Thus the series of smaller bills could avoid the sticker shock that accompanied last year's $787 billion stimulus package, as well as the $155 billion jobs package passed by the more liberal House of Representatives in December that emphasizes construction spending and direct aid to states.

Despite its relatively narrow scope, the bill could face resistance from both the left and the right.

Republican Senator Judd Gregg has said the construction money is wasteful and its actual $19.5 billion cost is hidden by accounting gimmicks. His staff released a memo on Wednesday suggesting that he could use budget rules to defeat the bill.

Meanwhile, many liberals question the effectiveness of Hatch's tax credit for businesses that hire people who have been unemployed for at least 60 days.

That approach would cost between $56,000 and $125,000 in lost tax revenue for every full-time job created, according to the nonpartisan Congressional Budget Office.

(Editing by Philip Barbara and Jackie Frank)