US Democrats eye Medicare cuts in tax, jobs bill

WASHINGTON, May 26 (Reuters) - U.S. Congressional Democrats on Wednesday considered tweaks to a package of spending and tax hikes in order to ensure that it is passed before some programs expire next week.

With many lawmakers balking at the package’s $134 billion cost, Democratic leaders considered scaling back a provision that would prevent drastic pay cuts for doctors who see patients in the Medicare health-insurance program, according to congressional staffers and lobbyists.

The current bill postpones any cuts for three and a half years, adding $63 billion to the budget deficit. Scaling back that time frame to two years would bring down the total cost and ensure that it has enough support to pass the Senate, a Democratic aide said.

A flaw in Medicare’s payment system pays doctors at outdated rates, which would amount to a 21 percent pay cut, unless Congress patches it with a periodic payment update.

Some medical groups said they could live with the shorter time frame.

“If that is all we can get right now, we’ll take it,” said John Crosby, said executive director of the American Osteopathic Association.

Democratic leaders in the House of Representatives were rounding up support for the bill, with a vote possible later on Wednesday.

In the U.S. Senate, Democratic Leader Harry Reid has threatened to keep the chamber in session through the weekend to get the bill passed before June, when unemployment benefits and other safety-net provisions expire.

Reid on Wednesday said there would be enough votes to get the bill through the Senate once it passes the House.

The bill also includes construction incentives and other job-creation measures, along with a politically popular package of tax breaks such as a credit for research and development costs that expired at the end of last year.

One of the most controversial aspects of the bill would increase taxes on fund managers in private equity and other firms from the current 15 percent to at least 35 percent. The legislation also tightens tax rules for multinational companies and oil companies in particular.

Financial interests are lobbying heavily to kill that part of the bill, which would raise about $20 billion over a decade. Labor unions, concerned about the 9.9 percent unemployment rate, are pressing for its passage.

The bill’s $174 billion in new spending is offset by $40 billion in new taxes, according to the nonpartisan Congressional Budget Office. (Additional reporting by Thomas Ferraro)