Senate to take up rare bipartisan jobs bill

WASHINGTON - Senate leaders plan to pass a jobs bill next week featuring tax breaks for employers that hire unemployed workers, a rare bipartisan effort in an election-year Congress sharply divided along political lines.

"We want to work with the Republicans and it appears to me, on the jobs program, they want to work with us," Senate Majority Leader Harry Reid, D-Nev., told reporters. "We do believe very emphatically that we will be having a bipartisan bill."

The Senate will start work on the bill Monday, Reid said. If the bill is passed by the end of next week, when the Senate takes a President's Day break, it would hand President Barack Obama a badly needed political victory.

Passage of a bipartisan bill would contrast sharply with the way Congress has done business for the past year, reflecting the Democrats' diminished power since Republican Scott Brown scored a stunning victory last month in a special Senate election in Massachusetts. With Brown seated Thursday, Senate Democrats no longer have a filibuster-proof majority in the body, meaning they need at least some Republican support to pass legislation.

Democrats believe a jobs bill that includes tax breaks Republicans support is a good way to break the ice, while also reflecting Obama's renewed emphasis on creating jobs. Also, lawmakers worried about re-election in the midst of double-digit unemployment want to be seen as helping the 7 million Americans who have lost their jobs in the recession.

"We heard the message of Massachusetts," said Sen. Chuck Schumer, D-N.Y. "They said focus immediately - and don't take your focus off - jobs, the economy, helping the middle class."

In addition to the tax break for hiring unemployed workers, the bill under discussion Thursday would extend unemployment payments for those whose benefits have run out, and would renew a program that offers the jobless a subsidy for health insurance premiums under the COBRA program. About $33 billion in popular tax breaks that expired at the end of 2009, including an income tax deduction for sales and property taxes and a business tax credit for research and development, would be extended through 2010.

Reid has said he also wants to extend at least three programs for another year: funding for the highway trust fund; tax breaks for small businesses that buy new equipment; and a bond program to help state and local governments pay for infrastructure projects.

The tax break for hiring unemployed workers would exempt companies from paying the employer's share of Social Security payroll taxes for new workers hired this year, as long as those people had been unemployed at least 60 days. It would save companies 6.2 percent of the new workers' salaries that are subject to Social Security taxes, and would cost about $11 billion over 10 years.

The measure is modeled after a proposal by Schumer and Republican Sen. Orrin Hatch of Utah. It is an alternative to Obama's proposed tax cut of up to $5,000 for each new worker that employers hire.

Supporters said the Senate plan is cheaper, simpler and less vulnerable to abuse than Obama's plan, which would cost $33 billion.

Tax experts, however, question how effective either plan would be as long as consumer demand for products is down.

"There's a feeling among a number of the people that we've talked to and heard from is that this isn't really focused on the real core issue or the core concern," said Rick Klahsen, a tax expert at the accounting firm RSM McGladrey. "In a sense they are saying look, a tax credit isn't going to do me any good if I don't have the need to bring on a new employee."

Discussions continued among Senate leaders from both parties Thursday and it was unclear whether final agreement on a bill would be reached before next week, especially with most senators heading to their home states ahead of a major snowstorm expected in Washington on Friday. Several key Republicans, however, sounded hopeful about eventually striking a deal.

"We all know it's not going to be easy to put together a bill but I think we've got one that most people can support," Hatch said.

Prospects are less certain in the House, where some House Democrats are skeptical whether employers would hire workers because of a tax break. However, if the Senate passes a bipartisan jobs bill, House Democrats would be on the spot to support a top White House priority.