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Democrats plan next step for Obama's jobs package

The Senate blocks the president's $447-billion measure. Lawmakers will likely see it again divided into more palatable pieces: a tax break for workers, money to prevent teacher layoffs, spending on road construction and other items.

By Lisa Mascaro and Christi Parsons, Washington Bureau

9:23 PM PDT, October 11, 2011

Reporting from Washington

The Senate blocked President Obama's jobs plan Tuesday night, prompting Democratic leaders to begin laying plans to divide the $447-billion package into pieces they hope will be too politically popular to oppose.

The legislation, which is the centerpiece of Obama's latest effort to boost the economy and avoid what economists warn could be a double-dip recession, failed to attract the votes needed to overcome a filibuster. Sixty were needed, and it received 50 — with all 46 Republicans present voting against.

Now, Democrats will bring up individual elements of the bill that have widespread appeal in opinion polls. They are likely to include a tax break for workers and money to prevent teacher layoffs, as well as new spending on road construction and school modernization. Other provisions include tax credits for companies that expand their payrolls and hire veterans looking for jobs.

One of the most controversial provisions was a 5.6% surtax on income exceeding $1 million, starting in 2013, that was designed to pay for the legislation.

Even before the vote, President Obama acknowledged the bill faced certain defeat and conceded the White House would have to take a new approach. "We're going to have to break it up," he said shortly after meeting with a group of business and labor leaders in Pittsburgh.

"Folks should ask their senators, 'Why would you consider voting against putting teachers and police officers back to work?' Ask them what's wrong with having folks who have made millions or billions of dollars to pay a little more," Obama said after meeting with his jobs council. The unemployment rate for September was 9.1 %.

The GOP-led House has refused to consider Obama's proposal. Majority Leader Eric Cantor (R-Va.) said he welcomed a breakup of the bill, but dismissed the proposed tax increase on the wealthy as a "nonstarter."

"Hopefully this says this is the end of the political games," Cantor said. "Our message is we do have some potential to agree on some things."

Unemployed workers converged on the Capitol on Tuesday to hold protests and a prayer vigil to press for passage. The demonstration recalled the Occupy Wall Street protests occurring across the country.

Republicans have stood en masse against additional federal spending to spur the economy. And even some Democrats oppose the "millionaires tax."

"You can't tax your way out of an economic downturn," said Sen. Jim Webb (D-Va.), who opposes the bill even though he voted to end the filibuster.

Two Democrats facing difficult reelections voted to block the legislation — Sen. Ben Nelson of Nebraska and Sen. Jon Tester of Montana. Majority Leader Harry Reid (D-Nev.) initially voted to halt the filibuster, but later switched his vote under a procedural rule that will allow him to bring up the bill again in the future.

One senator, Tom Coburn (R-Okla.), missed the vote while undergoing treatment for prostate cancer.

Sen. Charles E. Schumer of New York, the architect of the Democratic message operation in the Senate, was to argue at a Washington forum Wednesday that the proposals are desperately needed to help the country avoid a double-dip recession.

The payroll tax break would provide workers with an average of $1,500 annually. An existing payroll tax reduction, which is worth about an average of $1,000 a year, is set to expire in December. Obama has proposed extending and increasing that tax break for 2012.

"We are struggling now to avoid a recession," said Mark Zandi, chief economist of Moodys.com, who has estimated Obama's jobs package would shave a percentage point off the unemployment rate. "If we allow that to expire … we face a significant risk of going back into recession."

Other elements of Obama's measure are expected to come before the Senate, including ones that would provide $35 billion to states to prevent layoffs of teachers, firefighters and first responders and $25 billion for school modernization.

Schumer is preparing legislation that would combine Obama's proposal for a $10-billion infrastructure bank to spur road and highway improvements with a GOP-backed proposal for a tax break for companies that repatriate overseas profits. He hopes the matchup would generate bipartisan support.

Advisors to the president argue that Americans are rallying around his call to pass the job-creation plan. The more he talks about it, they say, the more support swells.

In a memo to campaign staff Tuesday, Obama strategist David Axelrod said "support has grown by nearly 10%" over the last three weeks as the president has barnstormed for the bill.

When Obama travels to Michigan on Friday, he will slightly adjust his message. Rather than urge crowds to tell Congress to "pass this bill," as he has done for the last month, he will talk about passing it piece by piece, according to one senior administration official who expects that the payroll tax is likely to be the first provision to come before Congress.

lisa.mascaro@latimes.com

cparsons@latimes.com

Copyright © 2011, Los Angeles Times