Feb. 7 (Bloomberg) -- The U.S. Senate blocked a $156 billion economic stimulus measure that would extend unemployment benefits and give tax rebates to more people than envisioned in a House-passed measure supported by President George W. Bush.

Democrats fell one vote short of the 60 needed to overcome Republican objections and move to final action on the legislation. Eight Republicans joined all the Democrats in supporting the Senate Finance Committee's stimulus plan.

Democratic presidential candidates Hillary Clinton of New York and Barack Obama of Illinois returned from the campaign trail for the Senate's vote. Arizona's John McCain, the frontrunner for the Republican nomination, was the only senator who didn't vote. Senate Majority Leader Harry Reid will try to persuade one more Republican to switch and allow a vote on the measure, said his spokesman, Jim Manley.

``He's working hard to pick up one or two more votes,'' Manley said.

Republicans who opposed the plan said the Senate Finance Committee last week added provisions that might bring a Bush veto.

``The president has made it clear that he doesn't want that extension of unemployment benefits,'' Republican Senator John Thune said.

Amendments

Republicans said they wanted to amend the House version to give tax rebates to senior citizens and disabled veterans who were initially left out, without adding the jobless benefits or home heating aid for the poor that were in the Finance Committee bill.

Reid, a Nevada Democrat, changed his vote at the last minute to `no,' a procedural move that allows him to seek another vote.

Reid has threatened to force lawmakers to vote on the House-passed stimulus bill without allowing amendments to give rebates to senior citizens dependent on Social Security or to disabled veterans.

Both the House and Senate bills would provide tax-rebate checks for millions of households, which lawmakers say will inject cash into the slowing economy. They also would establish tax incentives for businesses to invest in new equipment and increase the size of mortgage loans that government-chartered mortgage-finance companies Fannie Mae and Freddie Mac can buy to add capital to the housing market.

The Senate measure would provide $500 rebates to individuals earning as much as $150,000 a year and $1,000 to couples making as much as $300,000. The House measure would phase out rebates for individuals earning more than $75,000 and couples earning more than $150,000.

Unemployment Benefits

The Senate plan also extends unemployment insurance benefits for an extra 13 weeks for all workers and adds another 13 weeks for those who live in states with jobless rates over 6 percent. It allows businesses to get tax refunds for net operating losses going back five years rather than the two years allowed in the current law.

In addition, the Senate added tax credits for alternative energy investment, a payment to coal companies, more money for home energy assistance, and increased the amount of government- backed, tax-free mortgage bonds, expanding their use for mortgage refinancing and first-time homebuyers to inject capital into the housing market.

`Christmas Tree'

Senate Republican leader Mitch McConnell of Kentucky said the Democratic stimulus bill passed by the Senate Finance Committee was ``a Christmas tree of legislative goodies'' that Bush might not sign. The alternative proposal passed by the House last week could be approved quickly and would be signed, he said.

``My preference is to modify the House package to include rebate checks for seniors and disabled veterans,'' McConnell said in a statement yesterday.

Interest groups from AARP, which represents senior citizens, and the National Association of Homebuilders, are among the groups lobbying senators to retain the proposals that will help their members.

``We're having our members come in and meet with senators and principal staff people, and we're organizing a massive grassroots telephone campaign,'' said NAHB Chief Executive Officer Jerry Howard. He said his members prefer the Senate bill.

The measure that the House passed last week would send tax- rebate checks of $600 to $1,200 to about 111 million Americans who show at least $3,000 in earned income or who pay income tax. The Senate bill includes Social Security and disability payments as income, which would qualify millions of Social Security recipients for rebates who would be excluded under the House plan.

House Majority Leader Steny Hoyer of Maryland said he supports some of the Senate additions to the plan, but doesn't want to end up in a veto fight with the president on a bill that all sides agree needs to pass quickly.

``Obviously there's some that we're supportive of, but we'll see what the president wants to do,'' Hoyer said yesterday. ``Having a veto fight with the president I don't think enhances the confidence of the American public and our ability to get things done.''

To contact the reporter on this story: Alison Fitzgerald in Washington at Afitzgerald2@Bloomberg.net

Last Updated: February 7, 2008 00:17 EST