Senate Democrats unveil jobs package

[February 10, 2010]  WASHINGTON (AP) -- Senate Democrats circulated a jobs bill Tuesday that's light on new initiatives on boosting hiring and heavy with provisions sought by lobbyists for business groups, doctors and the satellite broadcasting industry.

Senate Democrats were working to round up Republican support, but more snow in the nation's capital made it unlikely the Senate could pass it this week and hand President Barack Obama a quick, badly needed political victory. Republicans are willing partners because much of the bill is made up of tax breaks they support, though many GOP senators said they were still waiting to see the details.

The 362-page measure is still in draft form and has not been officially released. The draft has very few new ideas for creating jobs, other than a $10 billion plan to exempt companies from paying the employer's share of Social Security payroll taxes for new hires if they are unemployed and hired this year.

The idea, by Sens. Chuck Schumer, D-N.Y., and Orrin Hatch, R-Utah, is regarded as more workable than President Barack Obama's plan for tax credits of up to $5,000 for new hires because it is simpler and gets the tax breaks to businesses faster.

The plan does give employers, however, a scaled-back credit of $1,000 for new hires kept on payroll for at least a year.

The rest of the measure is mostly comprised of last year's unfinished business, including renewal of business tax breaks that have expired, an extension of unemployment benefits and health insurance subsidies and forestalling a cut in Medicare payments for doctors.

The jobs bill is politically important for Democrats seeking to respond to public anxiety about the economy. But the measure also has a lot of pull with an assortment of lobbying groups seeking to extend a raft of tax breaks and other benefits that expire at the end of the month.

The measure ignores some of Obama's ideas, including a $250 payment to Social Security recipients and $25 billion in help for cash-strapped states.

Instead, the cornerstone of the plan would exempt companies from paying the employer's share of Social Security payroll taxes for new hires -- as long as those people had been unemployed at least 60 days.

A recent Congressional Budget Office report estimates that cutting payroll taxes for employers is a more efficient way to boost hiring than most provisions in last year's $862 billion economic stimulus bill.

The overall measure would cost roughly $80 billion, said Minority Leader Mitch McConnell, R-Ky. Many elements would be financed by a variety of provisions closing tax loopholes such as one enjoyed by paper companies that get a credit from burning a dirty pulp-making byproduct known "black liquor" as if it were an alternative fuel.

The bill would also raise about $7 billion from a crackdown on international tax cheats, an issue the Internal Revenue Service and the Obama administration have embraced.

Senate Majority Leader Harry Reid, D-Nev., said he hopes to pass the measure this week, despite a second major snowstorm in less than a week hitting the Washington area Tuesday.

Reid said he expected the bill to get bipartisan support. But McConnell said he could not sign off on the package because many of his members had not yet seen the details.

Sen. Richard Burr, R-N.C., said he is unhappy that the bill would add to the budget deficit -- the tax provisions and a few spending cuts would cover only about $50 billion of the $80 billion cost of the bill.

The powerful physicians' lobby is behind a plan to prevent them from absorbing a 21 percent cut in Medicare payments -- but only wins relief through Sept. 30 at the most. Small businesses would continue to be able to write off equipment purchases as a business expense.

The small business "expensing" plan, however, has only a modest effect in boosting jobs creation, the CBO says. Additional unemployment benefits for the long-term jobless are far more effective in pumping money into the economy to create jobs, it says.

About $33 billion in popular tax breaks, including an income tax deduction for sales and property taxes and a business tax credit for research and development, would be extended through 2010.

The tax breaks, more than 40 in all, expired at the end of 2009. They are routinely extended each year -- the House voted to extend them in December -- but the Senate never addressed them because senators were consumed by the health care debate.

The tax breaks are important to a wide group of constituencies, including Midwestern producers of biodiesel fuel. When the $1 per gallon tax credit for biodiesel expired at the start of the year, the retail price increased by $1 a gallon, making it less competitive with regular diesel fuel, said Michael Frohlich of the National Biodiesel Board.

There's still disagreement over some ideas, GOP aides said, including whether to add $20 billion in general Treasury funds to highway accounts for jobs-creating highway and bridge projects. The aides spoke on condition of anonymity due to the delicacy of the talks.

The measure includes a major update of the law governing the satellite television industry. It also extends the Build America Bonds program to subsidize interest costs for state and local governments for infrastructure bond issues.

[Associated Press; By ANDREW TAYLOR and STEPHEN OHLEMACHER]

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