Two Democrats joined the Republican minority to block the plan in a test vote. Yesterday’s tally was 50-49, shelving the measure in its current form.
“We will not take no for an answer,” Obama said today at an American Latino Heritage Forum sponsored by the White House and the Interior Department. The president said lawmakers will hold separate votes on the stimulus portions of his proposal including spending to hire more teachers and pay for road and bridge improvements and middle-class tax cuts.
Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell today said they will start looking for specific provisions that can get enough support to pass.
McConnell has called the measure that failed yesterday a “lousy idea” that relies on proposals similar to 2009’s $825 billion stimulus, an effort he said failed to work.
“If voting against another stimulus is the only way we can get Democrats in Washington to finally abandon this failed approach to job creation, then so be it,” said McConnell, a Kentucky Republican.
Senate Democratic leaders last week revised the president’s initial proposal, partly to try to pick up more support within their party. They replaced Obama’s method of paying for the jobs plan, including higher taxes on families making more than $250,000 a year, with a 5.6 percent surtax on people making at least $1 million annually.
Even so, Democratic Senators Jon Tester of Montana and Ben Nelson of Nebraska opposed the plan. “I can’t support tax gimmicks that do little to create jobs” and don’t address the need for a bipartisan deficit-cutting plan, Tester said in a statement.
Before the Senate voted, Reid accused Republicans -- who are trying to take control of the Senate and White House in 2012 -- of attempting to hamper the economy for political benefit. He said Republicans are opposing job-creation ideas they supported in previous years.
Rooting to Fail
“Republicans oppose those ideas now because they have a proven track record of creating jobs, and Republicans think if the economy improves it might help President Obama,” said Reid, a Nevada Democrat. “So they root for the economy to fail, and oppose every effort to improve it.”
Obama said today, “A Republican minority got together as a group and blocked this jobs bill from passing the Senate. They said no to more jobs for teachers, no to more jobs for cops and firefighters, no to more jobs for construction workers and veterans, no to tax cuts for small business owners and middle- class Americans.”
The vote leaves Obama’s economic agenda in limbo because the political parties disagree about what should be done to lower the nation’s 9.1 percent unemployment rate, said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP in Washington. Republicans seek permanent tax cuts and deregulation, while Obama and congressional Democrats want more federal spending and short-term tax reductions.
End of its Life
“The president’s jobs initiative is at the end of its legislative life -- not that it really had one,” Stretch said. He said the focus likely will shift away from jobs to the work of a congressional supercommittee that is charged with recommending $1.5 trillion of cuts from the federal deficit over 10 years.
Obama proposes to create jobs by cutting payroll taxes for workers and employers by half, extending jobless benefits, providing aid to states for schools and emergency workers and boosting spending on public works projects such as roads and bridges. He also would provide tax breaks for employers to hire the unemployed.
The plan would be financed by Senate Democratic leaders’ proposed surtax, which the U.S. Congressional Budget Office said would raise $453 billion.
Obama endorsed the leaders’ plan. He had proposed capping itemized deductions for individuals earning more than $200,000 a year and couples earning more than $250,000. He also proposed raising taxes on private equity firm managers, real estate investors and venture capitalists, and ending oil and gas subsidies.
The new method of offsetting the bill’s costs still ran into Democratic opposition. Senator James Webb, a Virginia Democrat, said he would vote to let debate start, but wouldn’t support the Senate jobs legislation as it was drafted. He said a tax on millionaires that is income-based fails to address real issues of inequality in the tax code and that the best method to spread the tax burden would be to boost taxes on capital gains.
“The present proposal looks good at first glance; it sounds good on a TV bite, but in all respect to the people who put it forward, I do not believe it’s smart policy and it does not go where the real economic division lies in our country,” Webb said.
Hurdles in House
Obama’s plan also faces hurdles in the House. Republicans who hold the majority oppose the tax increases, and party leaders there have said it adds spending in many areas already bolstered in 2009’s economic-stimulus measure.
House Republican leaders say some of Obama’s ideas, such as payroll tax cuts, are worth considering.
McConnell said today that one vehicle for parts of the jobs package might be the supercommittee’s legislation, if the 12- member panel can agree to a deficit-cutting plan.
“I have some optimism we’ll be able to come together on pieces of it we think make sense,” he said.
Reid said there has been past Republican support for the payroll tax cut and other portions of what Obama proposed. He also suggested he will advance some portions on the Senate floor to put Republicans on record on Obama’s jobs agenda, saying it will be “crystal clear” where they stand.
The Senate bill is S. 1660.
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