Job-creation efforts stall again in Congress

WASHINGTON (Reuters) - Job-creation efforts stalled in the Congress on Thursday as Democrats, who want to show they are doing all they can to bring down the unemployment rate, disagreed over how highway money should be spent.

Lawmakers in the House of Representatives sought to buy more time to work out their differences with the Senate as they voted unanimously to extend the highway fund, unemployment benefits and several other soon-to-expire programs for several weeks.

But it was not clear whether the Senate would agree to those extensions to programs scheduled to expire on Sunday, after Republican Senator Jim Bunning blocked action on Wednesday night.

The looming expiration of both programs added urgency to Democrats' efforts to advance their top legislative priority of bringing down the nation's 9.7 percent unemployment rate before the November 2010 congressional elections.

Though Republicans have largely opposed Democratic jobs proposals, the delay on Thursday came from within the party.

House leaders struggled to round up enough votes to pass a $15 billion jobs bill passed earlier by the Senate, after dozens of members objected that it did not distribute highway money fairly among the states.

Tensions have been growing between Democrats in the House, who enjoy a substantial majority that allows them to pass legislation with relative ease, and those in the Senate, where Republicans have much greater power to obstruct.

Democrats in both chambers have passed jobs bills, but they differ both in scale and approach.

The Senate bill, which passed on Wednesday, relies on business tax breaks and highway spending. The House passed a $155 billion package in December centered on highway spending, state aid and enhanced safety-net benefits.

TUG OF WAR OVER HIGHWAY FUNDS

Democrats face a voter backlash over the hundreds of billions of dollars they have authorized to fight the worst recession in 70 years, and Senate Democrats plan to advance a series of smaller bills to avoid the sticker shock of the House's approach.

Observers had expected the House to quickly approve the Senate bill to avoid extended negotiations that could imperil jobless benefits, highway funding and other programs due to expire on Sunday.

But rank-and-file House members have objected the Senate bill unfairly allocates much of the highway money to just four states rather than distributing it on a competitive basis.

"We believe the Senate's method of allocating these funds is inequitable," Democratic Representative Heath Shuler and seven other North Carolina lawmakers wrote to House leaders.

A Democratic House aide said several dozen lawmakers have objected on similar grounds -- enough to imperil the bill's chance of passage.

"There's enough serious objections that it'll take some real hustling to get enough Democrats in line," the aide said.

The fiscally conservative Blue Dog Democrats, meanwhile, are concerned the bill might violate budget rules, another Democratic aide said.

The short-term extension passed by the House would give lawmakers time to resolve the difference -- if it clears the Senate.

The bill also extends COBRA healthcare subsidies for the jobless through the end of March, keeps a highway-construction fund running and postpones a scheduled pay cut for doctors who see patients under the Medicare health-insurance plan.

Aides from both parties in the Senate said they were working to get it passed despite Bunning's objection and hoped to pass the extensions later in the day.

(Editing by Todd Eastham)