Piecemeal Plan for Obama Jobs Bill Fails First Senate Test

Democrats failed in their first attempt to salvage parts of President Barack Obama’s $447 billion jobs plan as the U.S. Senate blocked a proposal designed to keep state workers employed.

The vote last night was 50-50, falling short of the 60 needed to advance a bill Obama campaigned for this week on a mid-Atlantic bus tour. It would send cash-strapped state governments an additional $35 billion to help prevent layoffs of public-sector employees. Republicans objected to a 0.5 percent tax on millionaires that would have financed the plan.

“The American people want us to do something about the jobs crisis,” said Senate Minority Leader Mitch McConnell, a Kentucky Republican. “What Republicans have been saying is that raising taxes on business owners isn’t the way to do it.”

Following the defeat, Senate Democrats plan to push a second part of Obama’s jobs plan today. They are scheduled to announce a proposal to spend $57 billion for roads, bridges, airports and other infrastructure to be paid for by a 0.7 percent surtax on millionaires, according to a Senate Democratic leadership aide who wasn’t authorized to speak publicly.

The Senate last night also blocked a Republican counterproposal to repeal a requirement, designed to improve tax collections, that the government begin withholding 3 percent of payments to federal contractors starting in 2013.

Three Votes Short

The vote was 57-43, three short of the 60 needed to advance it. Democrats objected that the Republican proposal, which was lifted from Obama’s jobs bill, would be financed by rescinding $30 billion that has already been appropriated by Congress.

The House plans to vote next week on a proposal to repeal the 3 percent withholding, Majority Leader Eric Cantor, a Virginia Republican, said in a statement today.

“For the second time in two weeks, every single Republican in the U.S. Senate has chosen to obstruct a bill that would create jobs and get our economy going again,” Obama said in a statement after the vote. “Every American deserves an explanation as to why Republicans refuse to step up to the plate and do what’s necessary to create jobs and grow the economy right now.”

Democrats have resorted to trying to pass Obama’s jobs package in pieces after it was defeated last week in the Senate. The package would expand a payroll tax break due to expire at the end of this year, increase spending on public works projects and extend jobless benefits.

Not ‘Too Much to Ask’

Senator Dick Durbin of Illinois, the chamber’s second- ranking Democrat, defended the proposed surtax. “The money that’s brought in from that will spare hundreds of thousands of teachers, firefighters and policemen from being laid off,” he said. “I don’t think it’s too much to ask.”

Senate Majority Leader Harry Reid, a Nevada Democrat, said last night’s vote would be the first in a series of efforts to pass components of the administration’s plan.

Democrats Ben Nelson of Nebraska and Mark Pryor of Arkansas voted against the proposal last night, as did independent Joe Lieberman of Connecticut. No Republican supported the measure.

Republicans have ruled out tax increases, though with public opinion polls showing support for higher levies on the wealthy, Democrats are pressing the issue. A Bloomberg News- Washington Post national poll released last week found 68 percent in favor of raising taxes on those earning more than $250,000.

Obama went on a three-day bus tour of North Carolina and Virginia earlier this week, trying to drum up support for his plan. “I need you to give Congress a piece of your mind,” Obama said in Fletcher, North Carolina. “Tell your elected leaders to do the right thing.”

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

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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