Sen. Reid pares down job-creation bill

WASHINGTON — The Senate's top leader Thursday scaled back the size of a job-creation bill from $85 billion to $15 billion, fearing that even with emerging bipartisan support, the larger bill could get bogged down in questions about the kind of legislative favors that hurt the health-care overhaul.

Majority Leader Harry Reid, D-Nev., said his reduced proposal would be the first in a series of job-related measures. His decision came as a surprise, since only hours earlier the $85 billion job bill was presented by Senate Finance Committee leaders with pledges of bipartisan support and praise from the White House.

Reid's decision reflected a desire to move as quickly as possible with four provisions that would have the most direct impact on job creation: payroll-tax breaks for hiring unemployed workers; expanded tax breaks for small businesses; a one-year extension of federal highway-construction funding; and federal subsidies for state and local government infrastructure bonds.

He jettisoned — at least for now — a variety of unrelated provisions, such as disaster relief for Arkansas and Mississippi, an extension of the USA Patriot Act, a delay in a cut in Medicare payments to doctors and an extension of some recently expired business-tax credits.

Several of those features — particularly the business-tax credits — were important to winning support from senior Finance Committee Republicans, including Sen. Orrin Hatch of Utah. Hatch did not react favorably to Reid's shift.

"Senator Hatch is deeply disappointed that the majority leader has abandoned a genuine bipartisan compromise only hours after it was unveiled in favor of business-as-usual, partisan gamesmanship," said Antonia Ferrier, a Hatch spokeswoman.

An aide to Sen. Charles Grassley, R-Iowa, architect of the bipartisan bill, said, "The Reid announcement ... throws sand in the gears of bipartisan negotiation."

Reid's change in strategy on a bill President Obama and many members of Congress consider the nation's most pressing issue illustrated the growing political sensitivity to Congress' tendency to lace must-pass legislation with unrelated provisions. That was a particularly sore point in the Senate's handling of the health-care bill, which drew fire for including parochial provisions to sway individual senators.

In describing the stripped-down jobs bill Thursday, Reid bristled at published suggestions that some provisions of the broader bill — such as the proposal to delay a cut in Medicare payments to doctors — were written by lobbyists for special interest.

"No one's written this downtown," he snapped.

Even provisions of the stripped-down version have critics. Some Democrats believe the job-creation tax credit is not the best way to reduce unemployment, arguing that direct lending to small businesses or spending on infrastructure would do more to expand the work force.

"Our experience is that tax credits only go to people who make money — and then they keep it," said Sen. Dianne Feinstein, D-Calif.

Action on the legislation is not expected for more than a week because Congress has been snowbound this week and is on recess next week. Reid promised quick action on the $15 billion bill as soon as Congress reconvenes.

The Senate will also have to move quickly to extend jobless benefits, which for many long-term unemployed people will run out at the end of February. The extension was part of the larger bill but was not included in Reid's smaller version.

A key question is whether the abrupt change in strategy will jeopardize Republican support.

The urgency of the job issue was underscored by a report issued Thursday by Obama's Council of Economic Advisers.

With the economy continuing to recover slowly, unemployment is likely to remain at or near double digits for the rest of the year, the council said in its annual report to Congress.

"Indeed, it is possible that the rate will rise for a while as some discouraged workers return to the labor force before starting to generally decline," the report says.

As a result, the millions of jobs lost during the past two years are not likely to be replaced before 2013 and it will probably not be until 2016 that the unemployment rate falls to the 5.5 percent that economists consider full employment, the Council of Economic Advisers' report says.