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Congressional Democrats downshift on spending, cut provisions to jobs bill

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The package would raise nearly $58 billion in new taxes, including a new spill liability tax on oil companies. But it would nonetheless have added nearly $150 billion to budget deficits already driven to record levels by a deep recession and federal efforts to bail out the banking industry and prevent a global depression.

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In the Senate, moderate Democrats quickly expressed their reservations. In the House, moderate Democrats rebelled.

House leaders responded by paring back the "doc fix," but rank-and-file Democrats wanted deeper cuts. Some called for a more rigorous examination of all emergency spending on the economy, saying 99 weeks of unemployment benefits may no longer be justified after four consecutive months of job growth.

"We've hit the wall. We've come to the tipping point where we're not going to do anymore," said Rep. Jason Altmire (D-Pa.), who said voters in his suburban Pittsburgh district are growing impatient with extra subsidies for the unemployed. "I think the case can be made that there are still more people who need jobs than there are jobs available. . . . But what's the limit? It can't be a permanent program."

In the end, House leaders trimmed a month from the income support program and scrapped subsidies for COBRA health insurance premiums. They also jettisoned $24 billion in state aid and cut the "doc fix" to 19 months.

House estimates put the cost of the final bill at $116 billion, and the Congressional Budget Office projected that it would add $54 billion to budget deficits over the next decade. Republicans, who have made the deficit a major campaign issue, derided it as "pork barrel spending wrapped in tax increases," in the words of Rep. Kevin Brady (R-Tex.). But the bill passed, 215 to 204, with every Republican but Rep. Anh "Joseph" Cao (La.) voting no.

In the Senate, the bill hasn't moved an inch. Aides to Senate Majority Leader Harry M. Reid (D-Nev.) had told reporters that he would try to extend unemployment benefits by voice vote Thursday night, but he never made such a move. Reid was noncommittal about when -- and if -- the Senate would consider extending the tax provisions once Congress returns June 7.

"We have so many things to do, and we are going to do our best to get the extenders done," Reid said.

For years, Congress has routinely renewed expiring tax breaks, even though the list of temporary provisions has grown ever longer and often benefits narrow special interests. Like the earmarks found in spending bills, these breaks seem small on their own and deliver important benefits to constituents -- helping to keep open a textile plant, for instance, or encourage the purchase of energy-efficient appliances.

But together they cost taxpayers billions every year. Alarmed by the shifting sentiment, some senators sought to rescue favorite tax breaks by seeking separate votes on the provisions. Sen. Charles E. Grassley (R-Iowa), who faces a tough reelection battle this year, sought a one-year extension of a biodiesel tax credit that expired Jan. 1, leading to an estimated 2,000 layoffs in Iowa.

Grassley was foiled by Baucus, who blocked a vote on the $854 million provision, arguing that the Senate couldn't play favorites when a Montana-friendly property-tax deduction -- worth $1.5 billion -- was also at stake.

"We have to do it together as a package," Baucus said on the Senate floor Thursday. "We can't do it singly, separately, tonight."


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