Highway, jobless aid halt; Congress talks jobs

WASHINGTON (Reuters) - Unemployment benefits for hundreds of thousands of jobless people ran out on Monday and highway programs across the United States suspended work after a Republican lawmaker prevented their renewal.

As Democrats in Congress sought to bring down the 9.7 percent unemployment rate, favored methods such as highway construction and jobless aid faced disruption after Republican Senator Jim Bunning blocked a short-term extension on the grounds that it would add to the deficit.

Democrats vowed to renew the provisions to minimize bureaucratic disruption and resume jobless payments to the 400,000 people who would otherwise lose them this month.

They also used the delay to criticize other Republican procedural roadblocks that have disrupted Democratic initiatives.

"It is a stark example of the kind of abuse we're seeing from Republicans," said Representative Chris Van Hollen, a member of House of Representatives Democratic leadership.

In the Senate, Democrats took up a job-creation package that would extend unemployment benefits for a year, help states cover spiraling healthcare costs, and renew a popular package of tax breaks that expired at the end of 2009.

A vote on the package, which likely will cost more than $100 billion, could take place this week.

House Democrats struggled to round up enough votes to pass a $15 billion package of tax cuts and highway spending that has cleared the Senate.

"I think we'll get the votes," House Majority Leader Steny Hoyer told Reuters in a telephone interview.

MODIFICATION POSSIBLE

Hoyer must win over black lawmakers who say the Senate bill is too paltry, and fiscal conservatives who say it violates budget rules. He suggested that it may be modified to satisfy those concerns.

Democrats say job creation is their top legislative priority this year as they nervously eye the November elections that could imperil their control of Congress.

Their effort has so far been hampered by Republican tactics, a record-setting snowstorm and tensions between the two chambers of Congress.

Bunning was the lone lawmaker of either party to object to a temporary extension while lawmakers work on more permanent solutions. Senate rules permit any member to hold up legislation.

His objection means that some 400,000 jobless people could lose their unemployment benefits this month and thousands of families could lose the federal health-insurance subsidies, according to the Labor Department.

It furloughs 2,000 federal highway workers without pay and shuts down construction projects across the country, according to the Transportation Department.

It also slashes pay to doctors who see patients under Medicare, the federal health program for the elderly.

Bunning said he supported all these programs but insisted that their costs be covered by redirecting funds from last year's $787 billion economic stimulus package.

"If we can't find 10 billion dollars to pay for something that we all support, we will never pay for anything on the floor of this U.S. Senate," he said.

Democrats pointed out that Bunning had previously backed tax cuts and other provisions that have helped drive up the U.S. budget deficit to a level not seen since World War Two.

(Editing by Mohammad Zargham)