Deal on Jobs Shows Limits of Push for Bipartisanship

By CARL HULSE and DAVID M. HERSZENHORN
Published: February 11, 2010, New York Times

WASHINGTON — Key Democrats and Republicans in the Senate reached a rare bipartisan agreement on Thursday on steps to spur job creation. But Democratic leaders said they would move ahead on only some elements as the two parties maneuvered to address both the struggling economy and voter unrest over gridlock in Washington.

Senator Harry Reid, the Nevada Democrat and majority leader, said he would take four core job-creating initiatives from the bipartisan proposal — including tax breaks for businesses that hire unemployed workers and increased public works spending — and seek to move those rapidly through the Senate.

gWe feel that the American people need a message,h Mr. Reid said. gThe message that they need is that wefre doing something about jobs.h

Yet his decision to embrace only portions of the bipartisan plan developed by Senators Max Baucus, Democrat of Montana, and Charles E. Grassley, Republican of Iowa, caught some lawmakers by surprise and threatened to undermine Republican support for the proposal even as members of Congress and the White House sought ways of working together across party lines after months of deep partisan division.

The White House projected Thursday that unemployment would fall this year by only a little, if at all, and would remain well over 6 percent until 2015.

While Mr. Reid stripped out of the bipartisan bill some tax breaks and other provisions intended to win Republican support, as well as special-interest provisions to win the backing of specific senators, the scaled-back package retained a combination of tax cuts and spending with the potential to win support from both parties.

The centerpiece is a payroll tax holiday that would waive the 6.2 percent Social Security tax for any employer who hires a worker who has been out of a job for at least 60 days. In addition, the bill would provide a $1,000 income tax credit for every new employee retained for at least 52 weeks.

It would also extend a tax break that would allow businesses to write off up to $250,000 in capital investments in 2010 rather than depreciating the costs over time, and reauthorize spending on road and transit programs through the end of the year. And it would allow state and local governments to receive a federal subsidy for a portion of the interest paid on bonds that finance public works projects.

The cost of the package laid out by Mr. Reid would be at least $15 billion over the next decade.

Hours before Mr. Reidfs announcement, Mr. Baucus, chairman of the Finance Committee, and Mr. Grassley, the senior Republican on the panel, had unveiled a broader, $85 billion agreement that also included an array of other provisions intended to generate support. They included extended unemployment benefits and health care for the unemployed as well as the renewal of an array of tax breaks that are due to expire.

That proposal had drawn backing from top Republicans and Democrats as well as the White House. Some of the authors of its provisions, including Senator Orrin G. Hatch, Republican of Utah, said they were left perplexed by Mr. Reidfs decision to scale it back and were now unsure they could support any bill.

gNeedless to say, 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,h said Antonia Ferrier, a spokeswoman for Mr. Hatch, who helped write a provision suspending the payroll tax for companies that hire out-of-work people.

Democrats said Mr. Reidfs hand was forced by objections from rank-and-file Democrats that the measure was not focused tightly enough on job creation and included too many corporate tax breaks they viewed as concessions to Republicans.

At the same time, they said, Republican leaders had made no firm commitment to support the measure and they feared they could face conservative attacks for extraneous provisions like disaster aid for Arkansas and Mississippi.

gI would prefer a jobs bill that simply focuses on some specific job-creating initiatives,h said Senator Byron L. Dorgan, Democrat of North Dakota.

The dust-up over the jobs bill reflects the difficulties the parties are finding in working together even as lawmakers from both sides realize that voters want to see more cooperation and less confrontation. And both sides are making overtures.

Also on Thursday, Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking Committee, and Senator Bob Corker, Republican of Tennessee, said they would cooperate in trying to overhaul regulation of the financial services industry after earlier bipartisan talks seemed to falter.

The administration also continues to work to find Republican support for Mr. Obamafs plan to create a bipartisan commission to rein in the budget deficit. In an interview with Bloomberg Business Week published Thursday, the president said he would set no preconditions on steps the commission might propose to bring the budget back toward balance, even if it meant consideration of tax increases on the middle class — a step Mr. Obama vowed during the 2008 presidential campaign not to support.

At the White House, Robert Gibbs, Mr. Obamafs spokesman, encouraged lawmakers to find a way to work together.

gThe American people want to see Washington put aside partisan differences and make progress on jobs,h Mr. Gibbs said.

Republicans were more receptive to the bipartisan jobs proposal than they have been to Democratic initiatives this year, but the leadership had not pledged its backing on the floor. On Thursday, before Mr. Reid pared back the bill, Senator Mitch McConnell of Kentucky, the Republican leader, called it a work in progress.

The hesitation by top Republicans and the prospect that they would want to propose politically charged amendments made Democrats question whether the opposition was serious about cooperating and reminded them of Republican overtures on health care that later fell through.

Some Democrats noted that Mr. Baucus had spent months negotiating with Mr. Grassley on health care legislation only to come away empty-handed, ultimately costing the Senate valuable time on the issue.

Mr. Reid said he still hoped to win some Republican backing for the trimmed-down jobs measure since they had professed to support the individual provisions.

gRepublicans are going to have to make a choice,h he said.

But Republicans said that it was Mr. Reid who had made a choice, the wrong one.

gThe majority leader pulled the rug out from work to build broad-based support for tax relief and other efforts to help the private sector recover from the economic crisis,h said Jill Kozeny, a spokeswoman for Mr. Grassley.

Jackie Calmes contributed reporting.

A version of this article appeared in print on February 12, 2010, on page A1 of the New York edition.