UPDATE 3-Job-creation efforts stall again in U.S. Congress

* Time pressure ahead of jobs, highway program expiration

* Bunning objection prevents passage (Adds extension failure in the Senate)

By Andy Sullivan

WASHINGTON, Feb 25 (Reuters) - Job-creation efforts stalled in the U.S. 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 even that relatively noncontroversial effort foundered in the Senate, where Republican Senator Jim Bunning blocked quick approval despite a barrage of criticism from Democrats.

Democrats said Bunning, a former baseball pitcher, was insensitive to the more than 1 million Americans who could lose payments that help them pay their bills as they look for work.

"This is a wild pitch you're throwing tonight because it is a pitch that's hitting somebody in the stands," said Democratic Senator Dick Durbin, who added that 14,000 people in Bunning's home state of Kentucky would lose their benefits next month.

Democrats are expected to continue working on Friday for an agreement to prevent the benefits from expiring this weekend.

The looming expiration 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.

TUG OF WAR OVER HIGHWAY FUNDS

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.

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 dozens of 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.

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

Representative James Oberstar, who chairs the House Transportation Committee, proposed an alternative that would allocate the $1 billion in disputed funding more equally.

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 and Doina Chiacu)