House OKs unemployment extension, but Senate takes 10-day holiday so1.2 million jobless might lose benefits

WASHINGTON (MCT) -- The House of Representatives agreed Friday to extend expiring jobless benefits for hundreds of thousands of workers nationwide until Nov. 30, but 1.2 million out-of-work Americans still face losing their benefits next month because the Senate left for a 10-day Memorial Day recess without acting. The Senate isn't scheduled to return to Washington until June 7, five days after federal funding for the benefits is to expire.
Wire
May 31, 2010

WASHINGTON (MCT) -- The House of Representatives agreed Friday to extend expiring jobless benefits for hundreds of thousands of workers nationwide until Nov. 30, but 1.2 million out-of-work Americans still face losing their benefits next month because the Senate left for a 10-day Memorial Day recess without acting.

The Senate isn't scheduled to return to Washington until June 7, five days after federal funding for the benefits is to expire.

Even when the Senate returns, quick action could be difficult. Friday's 215-204 House vote on a package that includes tax changes for businesses sent an ominous signal about why approving the added jobless benefits has become so difficult.

Though Democratic leaders pushed the measure hard, 34 House Democrats joined 170 Republicans in voting no. One Republican, Rep. Anh "Joseph" Cao of Louisiana, and 214 Democrats voted yes.

The bill passed with no provision for continuing federal health care subsidies for unemployed workers, a provision that was cut from the legislation after Democratic moderates expressed concerns about what its cost would add to the federal budget deficit.

The House also passed, by 245-171, extending present Medicare reimbursements paid to doctors for 19 months, with small increases each year.

The measures would add a total of about $54.2 billion to the federal deficit, according to the nonpartisan Congressional Budget Office, which estimates that the deficit will reach about $1.5 trillion this fiscal year.

To keep moderates in line, Democrats also scuttled plans to provide more funding to states for Medicaid, the joint state-federal health care program for lower-income people, some elderly and those with disabilities.

Even those changes failed to move many centrists, however.

"There are different attitudes in the country about how much we should be spending on unemployment insurance," said House Speaker Nancy Pelosi, D-Calif. "Members who are from low unemployment areas are very concerned about the deficit. Members who are from high unemployment areas are very concerned about the jobs."

Republicans sent strong signals that they'd be eager to remind constituents that the measures' costs would be added to an already-ballooning federal deficit.

"Democrats literally want us to take the same failed economic policies of this administration of the last year and a half and spend another $102 billion," said House Republican Conference Chairman Mike Pence of Indiana, citing the total cost of the bills.

"This grandson of stimulus is another last-minute, patched up together, hodgepodge effort to say they're working on jobs that'll tack $54 billion onto our deficit," he added.

The legislation the House passed Friday extends a series of business tax breaks, such as a research tax credit, that were due to expire. Part of the package is paid for, notably by changing how multinational companies are taxed on foreign income, as well as "carried interest" earned by venture capitalists, hedge fund managers and others.

The influential U.S. Chamber of Commerce is trying to defeat the carried interest provision, which would end the practice of hedge fund managers and private-fund managers being taxed at the 15 percent capital gains rate instead of a rate that reflects ordinary income.

The Chamber argues that the tax change will be far more sweeping, hitting real estate partnerships especially hard, and they account for 45 percent of the firms that are granted the carried interest status. Also targeted would be venture capital and investment partnerships. The change also would penalize partners during the sale of a company, taxing them beyond their profit gains as ordinary income.

"It's clearly flawed logic," said Bruce Josten, the Chamber's legislative affairs chief.

Friday was the third time this year that Congress has failed to meet the deadline for extending benefits.

On the first two occasions, Republican senators blocked quick consideration, saying they wanted the programs paid for. This time, Republicans still objected, but it was centrist Democrats who were raising alarms. The original House plan would have spent nearly $200 billion and increased the deficit by $133.8 billion over the next 10 years.

When moderates balked, Democrats cut the plan again and again, finally settling on two votes because they thought the Medicare fix was more popular. Fifteen Democrats voted no to that and 230 voted yes, while 15 Republicans voted for the fix and 156 were against it.