A Senate jobs bill that includes funds to continue payment of national unemployment benefits beyond Tuesday was thrown into jeopardy yesterday by an amendment pushed by banks to prevent withholding of taxes on dividends and interest starting July 1.
Sen. Robert W. Kasten Jr. (R-Wis.) surprised colleagues at midday by proposing to amend the administration-backed jobs bill to include the withholding repealer and refused to back down despite pressure from President Reagan and Senate Republican leaders.
Conceding that Kasten probably had enough votes to add the withholding provision to the jobs bill, Finance Committee Chairman Robert J. Dole (R-Kan.), in an unusual move for a Senate leader, launched into what amounted to a filibuster to hold up action on Kasten's proposal until deadline pressure builds for passage of the legislation.
"Let the unemployed wait until the bankers have four or five days on the Senate floor," said Dole in a sarcastic attack on the intensive bank-led lobbying campaign to repeal the withholding law. Dole described it as the "most massive campaign in history to intimidate the Congress."
Early in the debate, Majority Leader Howard H. Baker Jr. (R-Tenn.) bluntly warned the Senate that Reagan authorized him to say he would "most seriously consider" vetoing the measure if it contained the withholding repealer, which Reagan has said he opposes.
Later, according to Kasten, Reagan called the freshman Wisconsin senator on the telephone to ask that he not hold up passage of the jobs bill. But Kasten held out for a vote on the withholding issue and Dole refused to go along.
Baker finally recessed the Senate at sundown, putting it on notice to prepare for a long day today and the possibility of a Saturday session.
"We've squandered this day," said Baker in disgust as, once again, a revolt within Republican ranks brought Senate work on major legislation to a halt.
The legislation includes not only $3.7 billion for job-creating programs and humanitarian aid to recession victims but also $5 billion to continue paying unemployment benefits after funding authority for them runs out on Tuesday.
As many as 28 states and the District of Columbia, including such hard-hit states as Michigan, would be affected if the bill is not passed by Tuesday.
Under the withholding law, which was passed last year as part of a general tax bill, 10 percent of income from dividends and interest will be withheld starting July 1, just as taxes on wages are withheld.
But, under heavy pressure from the banking industry, a majority of members of both houses have endorsed repeal even though it is estimated that it would add about $20 billion to federal deficits over the next five years.
In his scathing attack on the banking lobby, Dole alluded to a recent congressional report that 20 of the nation's largest banks paid only 2.7 percent on domestic income in 1981 and added, "Now you know why they have so much money to send out mail . . . to intimidate Congress."
Said Dole: "There's no way anyone can stand up here and defeat the American Bankers Association."
Kasten took issue with Dole's contention that bankers were behind his amendment and accused Senate leaders of trying to prevent a vote on what he described as a "consumers' " issue. Contending that bank customers would end up paying the cost of withholding, he said, "The issue is now a people's issue, a consumers' issue, if you will."
Kasten told reporters Reagan was noncommittal about assuring him a vote on withholding at some time soon. He quoted the president as saying something to the effect of, "Fine, I'll try to work with you on that, but don't slow up the jobs bill."
Kasten later said he wanted a vote before Congress recesses for Easter later this month. But Dole continued to hold out, apparently in hope that senators whose states stand to lose unemployment benefits next week will start having second thoughts about withholding as Tuesday approaches.
The Senate impaled itself on withholding only moments after tentatively resolving another sensitive issue: how to distribute more than $1 billion in jobs aid for states with especially high unemployment.
After the Senate defeated a formula that would have given the money to 15 states whose jobless rates exceeded the national average for all of 1982, Appropriations Committee Chairman Mark O. Hatfield (R-Ore.) reduced the requirement to six months, which included six more states and added enough votes to pass the modified version, 50 to 49.
In all, seven of the 12 affected senators--Jeff Bingaman (D-N.M.), John H. Chafee (R-R.I.), Alan Cranston (D-Calif.), Claiborne Pell (D-R.I.), David Pryor (D-Ark.) Pete Wilson (R-Calif.) and Dale Bumpers (D-Ark.)--switched and voted for the targeting formula after their states were included in the jobs windfall.
Two, Pete V. Domenici (R-N.M.) and Dennis DeConcini (D-Ariz.), declined to switch even though their states were included. Another three, Paul Laxalt (R-Nev.), Chic Hecht (R-Nev.) and Barry Goldwater (R-Ariz.), voted for the formula both times.
But the withholding issue got in the way before a final vote could be taken, leaving time for more maneuvering by Hatfield's opponents, led by senators from states that were left out of the new formula, who charged that it was still unfair.
Sen. James Abdnor (R-S.D.) served notice that he would try to get the $1 billion distributed to states according to their percentage of total unemployment, regardless of how long people have been unemployed, which is the way in which another $1 billion in the bill would be distributed.
"We may get rolled on this . . . but it's not a fair way to treat the human tragedy that's taking place in this country," complained Sen. Lloyd M. Bentsen (D-Tex.), whose state was not among the chosen.