Oct. 21 (Bloomberg) -- Legislation to extend unemployment benefits is stalled in the U.S. Senate amid a partisan dispute over how to finance the plan, among other issues.

Republicans are blocking the measure that would extend benefits by as much as 20 weeks because they want votes on several amendments, including on how to pay for the $2.4 billion measure so it doesn’t add to the federal budget deficit. Democrats plan to finance the aid by extending an employer payroll surtax due to expire at the end of this year.

“We have wanted to do this for weeks and they won’t let us,” Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters yesterday. “We talk about doing something for economic recovery to stimulate the economy -- who is going to spend the money more quickly than somebody who is out of a job, doesn’t have income? That’s what the unemployment check’s about.”

Reid late today took the first procedural steps aimed at forcing a vote on the unemployment bill.

House Speaker Nancy Pelosi said today lawmakers are considering extending elements of the stimulus package approved in February, including a tax credit for first-time homebuyers. That provision might be expanded to all homebuyers, she said.

Senator Dick Durbin of Illinois, the chamber’s second- ranking Democrat, said the unemployment benefit extension is being delayed because Republicans are demanding votes on unrelated issues such as immigration.

‘Pertains to the Subject’

Arizona Senator Jon Kyl, the No. 2 Republican, said his side wants amendments on “stuff that pertains to the subject - -how do you pay for it, for example.” He said the measure has been further delayed by Democrats’ decision to take up a measure that would scrap scheduled cuts in Medicare reimbursements to doctors.

Pelosi, a California Democrat, met behind closed doors today for four hours with economists Mark Zandi, Alan Blinder and others to discuss possible measures to boost the economy.

She said proposals under consideration include expanded subsidies to help the jobless buy health insurance, tax breaks for money-losing companies and increased funding for food stamps.

She said the measures won’t be compiled into a second stimulus package. Instead, lawmakers plan to attach them to other pieces of legislation moving through Congress such as the annual appropriations bills funding government agencies, she told reporters.

No New Stimulus Package

“We do not have plans for an additional stimulus package, but we do have plans to stimulate the economy in the work that we are doing,” said Pelosi.

The House approved legislation in September that would extend benefits for 13 weeks in 27 states with unemployment rates topping 8.5 percent. Democrats said they had hoped to forward the bill to President Barack Obama by the end of last month, before an estimated 400,000 Americans exhausted their benefits.

At first, the Senate vote was delayed by 17 Democrats who objected their states would be excluded under the House plan. They agreed to accept a revised Senate plan extending benefits by 14 weeks in all states, with an additional six weeks for states with jobless rates of at least 8.5 percent.

Democrats are divided over what to do about the $8,000 tax credit for first-time homebuyers set to expire at the end of next month.

Expanded Tax Credit

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, has proposed a $17 billion plan that would extend and expand the plan until June 2010. Dodd’s proposal, cosponsored by Georgia Republican Senator Johnny Isakson, would expand the credit to all homebuyers and increase those eligible to couples earning as much as $300,000. Isakson is pushing to attach the plan to the Democrats’ unemployment aid bill.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat and the chamber’s chief tax writer, said today he opposes the Dodd-Isakson proposal, saying any extension should continue to be limited to first-time buyers. He said the break should be extended until mid-2010 and financed with offsetting savings so it doesn’t add to the government’s $1.4 trillion deficit.

“We are going to pay for things around here,” said Baucus.

House Majority Leader Steny Hoyer, a Maryland Democrat, favors a one-month extension of the tax credit to be financed with offsetting savings, said spokeswoman Katie Grant.

Cost Billions

Extending such provisions would cost billions, while letting them lapse may be difficult because the unemployment rate is higher than when the stimulus plan was approved. The national unemployment rate last month was 9.8 percent, the highest since 1983, while the share of unemployed who have been jobless for at least six months reached the highest level in at least a half- century. More than 5.4 million people have been unemployed for at least 27 weeks, according to the Labor Department.

About 1.3 million people will exhaust their benefits by the end of the year, according to the National Employment Law Project.

Federal Reserve Chairman Ben Bernanke said earlier this month that economic growth next year probably won’t be strong enough to “substantially” bring down the unemployment rate, which may remain above 9 percent through the end of next year.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net.

Last Updated: October 21, 2009 21:13 EDT