Democrats struggle to advance jobs bill

A man waits to have his resume critiqued for free at the NYCHires Job Fair in New York February 24, 2010.

WASHINGTON (Reuters) - Democrats in the Congress on Friday struggled to make headway on their top legislative priority -- job creation -- as the government prepared to shut off funding for many of the measures they hope will bring down the unemployment rate.

Unemployment aid, highway funding and a host of other programs were due to expire on Sunday after Republican Senator Jim Bunning prevented them from being extended on the grounds that they would add to the government's budget deficit.

Democrats vowed to renew the provisions next week to minimize disruption for more than 1 million jobless people who would otherwise begin to exhaust their benefits.

"The most vulnerable families in America are going to suffer because of this political decision by one senator," said Senator Dick Durbin, the chamber's No. 2 Democrat. "We will be back, we will try to get this done. And to those families: Hang in there."

Meanwhile, leaders in the House of Representatives struggled to round up support for a $15 billion package of tax credits and highway spending that had passed the Senate.

Speaker Nancy Pelosi said she believed that the House would pass the bill next week, but other Democratic leaders said they did not have the votes yet.

"Our goal is to move a jobs bill as soon as possible, but we have to work through these issues," said Representative Chris Van Hollen, a member of Democratic leadership.

Pelosi faces an insurrection from black lawmakers, who say the Senate bill is too paltry, and fiscal conservatives who say it violates budget rules.

That could prevent the bill from even coming up for a vote, said Democratic Representative Stephanie Herseth Sandlin, a leader of the centrist Blue Dogs Coalition.

"The bill won't make it to the floor if Blue Dogs continue to have reservations," Herseth Sandlin said.

DELAY ADDS PRESSURE

The delay heaped further pressure on Democrats to show voters they can bring down the 9.7 unemployment rate before many of them stand for reelection in November.

Obama and his fellow Democrats say jobs are their top priority this year, but so far their efforts have been hampered by Republican tactics, a record-setting snowstorm, and tensions between the two chambers of Congress.

The House of Representatives passed a sweeping $155 billion jobs bill in December, but Senate Democrats have opted to move a series of smaller bills to avoid further angering voters who object to the aggressive spending measures they took last year to blunt the impact of the worst recession in 70 years.

The Senate bill relies on business tax breaks and highway spending, while the House package includes a much larger chunk of money for highways, along with aid to states and enhanced safety-net benefits.

Democratic Representative Peter DeFazio said that dozens of lawmakers who had objected to the Senate formula for handing out highway money had decided to back the Senate bill and fix it later.

But Barbara Lee, chairwoman of the Congressional Black Caucus, said she preferred to change the Senate bill because it does not do enough to help the unemployed, despite the delays that might entail.

"To many of us, that makes a lot of sense," she said.

Even as the fate of the current effort remained uncertain, Democrats laid plans for a second round.

The Senate could take up a bill next week that extends unemployment benefits through the end of the year, renews a popular package of tax credits and helps states cover their spiraling health-insurance costs. That would be partially offset by closing several tax loopholes, which could conflict with White House plans to use them to pay for other programs.

In the House, lawmakers are considering a package of aid to cash-strapped states to help them avoid layoffs of police, teachers and other public employees, Democratic Representative George Miller said.

(Additional reporting by Thomas Ferraro and Donna Smith; Editing by Eric Walsh)