Senate passes jobless aid, business tax breaks

The Senate voted Wednesday to extend key pieces of last year's economic stimulus measure, including help for the jobless and money to help financially strapped states pay for health care for the poor.

The 62-36 vote came over protests from conservatives who say the bill adds too much to the $12.5 trillion national debt. Six Republicans joined all but one Democrat, Ben Nelson of Nebraska, in voting for the bill.

The plight of the jobless and the political power of an annual package of tax breaks powered the measure through the Senate, even though it would add about $130 billion to the budget deficit over the next year and a half.

"The bill is not a second stimulus, but it's going to deliver badly needed relief to Americans who are hurting," said Sen. Chuck Schumer, D-N.Y. "It would be cruel, even inhumane, to tell these people that their unemployment benefits expire."

The measure is the second piece of the Democrats' much-touted "jobs agenda" to pass the Senate this year, with more elements promised, such as help for small businesses suffering from a credit crunch. Concern over out-of-control budget deficits are a big challenge to the success of the agenda.

In fact, the bill chiefly resurrects elements of the stimulus bill that expired at the end of last year, including more generous unemployment benefits, health care subsidies for the jobless, and Medicaid aid to cash-starved states. They have been temporarily extended twice but would again expire at the end of this month.

"This bill helps small businesses get the loans they need to grow and hire, provides tax relief that companies need to support new research and development jobs of the future, and extends relief to Americans looking for work," President Barack Obama said in a statement Wednesday evening.

The vote sends the measure into talks with the House, which is wary about some Senate provisions included to defray the measure's impact on the deficit since they may want to use such "offsets" to help finance an overhaul of the health care system.

Democrats had also hoped to finish work this week on a far smaller job-creation measure blending additional highway spending with new tax breaks for companies that hire the unemployed. Now, it's looking like a final vote won't come until next week.

Wednesday's larger bill would provide unemployment benefits of up to 99 weeks in many states for people mired in joblessness as the economy slowly recovers from the worst recession in decades.

The measure illustrates the great extent to which direct help for the jobless and the poor makes up a large portion of Democrats' election-year agenda on jobs - and threatens to squeeze out other items amid concerns about a budget deficit.

The sweeping bill cleans up a host of unfinished congressional business from last year that languished as the Senate focused on health care. It would also prevent doctors from absorbing a 21 percent cut in Medicare payments and extends through December a generous 65 percent subsidy of health insurance premiums for the unemployed under the COBRA program, at a cost of $10 billion.

Wednesday's larger bill also provides the annual extension of $26 billion worth of tax breaks for businesses and individuals that are popular with senators in both parties and swung support from business lobbyists behind the legislation.

The $59 billion cost of providing additional months of unemployment checks - the core benefit is 26 weeks - is added directly to a budget deficit expected to hit $1.6 trillion this year. Unemployment insurance typically provides recipients with about one-third of their lost wages.

But Democrats said it would be heartless to cut off unemployment benefits to the long-term jobless and contended that the benefits inject demand into the economy, helping to lift it.

Federal cash to help states with Medicaid adds about $25 billion more to the legislation, with the money helping states not only keep poor people on the program but in many cases free up resources to forestall layoffs of teachers, police and other public employees.

The tax breaks include a property tax deduction for people who don't itemize, lucrative credits that help businesses finance research and development and a sales tax deduction that mainly helps people in the nine states without income taxes.

To defray the impact on the deficit, the measure helps the Internal Revenue Service crack down on abusive tax shelters and would block paper companies from claiming a tax credit from burning "black liquor," a pulp-making byproduct, as if it were an alternative fuel.

Other tax breaks include a deduction for college tuition for couples making less than $160,000 a year, and one for teachers who use their own money to buy school supplies. There is a tax credit for community development agencies that invest in low-income neighborhoods, as well as a tax break for restaurant owners and retailers who remodel their stores.

There are several energy-related credits, including one for installing energy-efficiency improvements to new homes and a $1 per gallon credit for the production of biodiesel.