By Lori Montgomery and Brady Dennis
Washington Post Staff Writer
Friday, June 18, 2010; A24
The Senate effectively rejected a slimmed-down package of jobless benefits and state aid late Thursday, rebuffing President Obama's call for urgent action to bolster the economic recovery.
Sens. Ben Nelson (D-Neb.) and Joseph I. Lieberman (I-Conn.) voted with a united Republican caucus to block the approximately $120 billion package. The measure needed 60 votes to advance, but garnered only 56.
Democratic leaders, who had predicted victory less than 24 hours earlier, vowed not to give up on the measure, but acknowledged that they have no clear path to securing the one or two Republican votes needed to push it to final passage. Though the sprawling package contains a number of must-pass provisions, Republicans have been steadfast in their opposition, insisting that the full cost of the measure be covered by cutting existing government programs.
"Americans are frustrated with the amount of spending and borrowing around here," Senate Minority Leader Mitch McConnell (R-Ky.) said after the vote. "Let's not wave on through legislation that is going to worsen the deficit and dig an even deeper hole than we are in."
With midterm elections looming this fall, conservative Democrats also had voiced opposition to the size of the package and its impact on deficits, already driven to record levels by government spending to combat the recession. But congressional leaders have struggled to pare the legislation back.
The measure would protect doctors from a steep cut in Medicare rates scheduled to take effect Friday and extend emergency unemployment benefits that support more than 5 million people. Without congressional action, an estimated 1.2 million people will stop receiving checks by the end of the month, according to independent estimates.
The package also would extend some expired tax breaks for businesses and individuals, including the hugely popular research and development tax credit. And it would raise taxes on oil companies, multinational corporations and investment partnerships.
During the past month, Democratic leaders have winnowed the overall price tag down from $200 billion and reduced its impact on the deficit by two-thirds. The House narrowly approved the package and sent it to the Senate, where Majority Leader Harry M. Reid (D-Nev.) has been trying to add $24 billion in aid to state governments, a top Obama priority designed to avert thousands of state layoffs and prevent the 9.7 percent unemployment rate from shooting even higher.
To squeeze in that extra cash, Reid has hacked away at other pieces of the package. The latest version would protect doctors from the Medicare pay cut for six months rather than the 19 months approved by the House, for example, and it would dock $25 from the checks of all 15 million people who receive unemployment benefits, repealing a boost approved in last year's stimulus legislation.
The resulting measure, unveiled late Wednesday, would add $55 billion to deficits over the next 10 years, according to the Congressional Budget Office. And with that, Democrats believed they had secured the votes of at least two Republicans: Sens. Olympia J. Snowe (Maine) and Scott Brown (Mass.).
But any deal unraveled during a long day of talks Thursday, leaving Democrats frustrated and perplexed.
"We thought we had enough votes to pass this," Reid told reporters, adding that Lieberman had been prepared to come on board. He and Senate Finance Committee Chairman Max Baucus (D-Mont.) said they would regroup Friday. But aides said the path forward would not become clear until next week at the earliest.
"The vast majority of Americans want us to create jobs, to help pull us out of this recession," Baucus said. "The bottom line is we're going to keep trying, because that's what the American people want us to do."
White House spokeswoman Amy Brundage blamed Republican obstructionism for the bill's failure. "These measures are vital to our nation's families and our economic recovery, and the President urges those opposing these measures to end this obstruction and stand on the side of the American people," Brundage said.