UPDATE 2-Tax, jobs bill blocked in U.S. Senate
* Democratic leaders regroup after bill fails
* Vote deals blow to Obama's efforts to boost economy (Adds new material throughout)
By Donna Smith
WASHINGTON, June 17 (Reuters) - A Democratic bill to extend jobless benefits and raise taxes on investment fund managers failed a key vote in the U.S. Senate on Thursday, dealing a blow to President Barack Obama's push to boost the economy.
The bill would have extended popular business tax breaks, stopped a 21 percent Medicare pay cut for doctors treating elderly patients and extended extra Medicaid money to cash-strapped states. Democratic leaders failed to muster the 60 votes needed to overcome solid Republican opposition to the bill, which would have added about $55 billion to the deficit over 10 years. The Senate voted 56-40 against the measure.
The defeat sent Democratic leaders back to the negotiating table to try to win support from a few moderate Republicans.
"We're not going to give up," said Democratic Leader Harry Reid. It was unclear when the Senate would take up the measure again.
Senate Finance Committee Chairman Max Baucus said that "everything would be on the table" in an effort to try to win support from at least a few Republicans.
Republican opponents argued that the bill would add billions to an already bloated $1.4 trillion budget deficit. Democratic leaders had scaled back the bill from a version that failed a test vote earlier this week. That version would have added about $80 billion to the deficit over 10 years.
The Senate earlier in the day had rejected a Republican alternative that would have been paid for by across-the-board spending cuts for non-defense programs and freezing pay for federal workers.
"Americans are frustrated with the amount of spending and borrowing that we're doing around here," said Senate Republican Leader Mitch McConnell.
The deficit and $13 trillion national debt are becoming major issues in the November midterm congressional elections in which Republicans hope to gain control of Congress. Obama over the weekend had urged lawmakers in a letter to move swiftly to approve new measures to "spur job creation and build momentum toward recovery."
The House of Representatives passed its version of the tax bill last month. On Thursday the House also approved a $30 billion plan to boost capital at independent community banks to encourage them to lend money to small businesses, which account for a large portion of jobs growth in the United States.
REVISIONS IN THE SENATE
Democratic leaders had scaled back their earlier bill in order to overcome growing concerns about its impact on the deficit. They removed a $25 a week unemployment insurance benefit increase that had been added in last year's economic stimulus plan.
In the midst of the devastating oil spill in the Gulf of Mexico, the bill also raised the oil spill liability trust fund tax to 49 cents a barrel from 8 cents a barrel.
Democrats had also modified the investment fund managers's tax, called carried interest, to address concerns voiced by some Senators. The provision would tax 75 percent of investment fund managers income at ordinary tax rates, with an exception for assets held at least 5 years, of which only 50 percent would be taxed at ordinary income rates.
Fund managers currently pay low 15 percent capital gains taxes on much of their earnings.
Democrats had also revised a measure dealing with small business taxes in hopes of winning support from Senator Olympia Snowe. But Snowe joined her fellow Republicans in voting against the bill. (Reporting by Donna Smith; editing by Anthony Boadle)
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The Pugs are blocking the bill?I call BS on ya!
The vote was 56-40 and tow PUGS didn’t vote!
That means 18 DEMOCRATS blocked the bill, too!
At least have some intellectual Honesty and some integrity to say what that means. But since YOU can’t, I will!
This means that 18 Democrats KNOW that the Stim bill passed last year was a farce, and are NOT going to vote on even MORE Bogus bills. And THAT is exactly what it means!
18 out of 59 is OVER 25% of Democrats KNOW any spending without PayGo WILL be brought up in Nov, and THEY don’t want their names to be attached to any more Progressive BS! The Health Bill is already killing them!
I wish it was because they actually see and understand the destruction caused by this man…but I suspect it is simply because they want to remain in office and collect the easy money.
Either way, I applaud their decision and am hopeful that we can overcome the damage done by this man.
A 55 billion dollar deficit bill requires 60 votes.
It is like saying that if you do it big enough it is fine no matter what. We have to really restrict the little people.
It is fairly easy where the funds come from:
Unemployment benefits are paid up to a certain cut off date. They are not paid until the number of budgeted weeks have been used up. The actual cost it about 30% less than budgeted.
If we do not extend unemployment benefits we must increase the funding for welfare since that is where the unemployed will end up. You will pay it one way or another.
The funding of government employees to prevent their layoffs is of course more important. One layoff prevention equals the cost of about 3 to 4 unemployment payouts.
3-4 unemployed people must suffer more to protect one government worker. Obama wants redistribution of wealth but apparently does not want equal suffering.
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