Senate back to work on yearlong business tax breaks, jobless benefits after GOP holdout folds

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Lone holdout gives in, Senate OKs jobless benefits

WASHINGTON — Putting a lone senator’s cantankerous challenge behind it, the Senate is back to work on a $100 billion-plus bill reviving popular tax breaks and extending longer and more generous jobless benefits through the end of the year.

Kentucky Republican Jim Bunning relented on Tuesday evening, freeing the Senate to approve stopgap legislation extending for another month a host of programs, including highway funding, health insurance subsidies for the unemployed and benefits for the long-term jobless. That gives Congress time to consider the far larger measure covering most of the same programs.

But the daunting price tag on the longer-term measure guarantees more complications and an even rougher path through the Senate than experienced by the bill passed Tuesday.

The full-year measure blends $66 billion for unemployment benefits for people who have been out of work longer than 26 weeks, and $29 billion for Medicaid help to state governments and health insurance subsidies for the jobless. There’s also $26 billion for expiring tax credits such as an income tax deduction for sales and property taxes and a business tax credit for research and development.

The measure closes $29 billion worth of tax loopholes to help defray its cost, including one enjoyed by paper companies that get a credit from burning “black liquor,” a pulp-making byproduct, as if it were an alternative fuel.

All told, the measure would add $107 billion to the deficit over the coming decade. Democrats have labeled most of the bill an emergency measure, exempting it from stricter budget rules enacted just last month.

Although the government faces a projected record $1.6 trillion deficit for the current budget year, many senators have an appetite for more spending. A proposal by Sen. Bernie Sanders, I-Vt., would give Social Security recipients a $250 payment at a cost of $14 billion. Sen. Patty Murray, D-Wash., wants $1.5 billion for “youth activities,” including summer jobs.

Bunning held up action for days on the one-month stopgap bill, causing the government to furlough highway workers and allowing some unemployment benefits to expire. He wanted to force Democrats to find ways to finance the bill so it wouldn’t add to the deficit. But his move sparked a political tempest that subjected Republicans to withering media coverage and cost the party politically. Bunning’s support among Republicans was dwindling, while Democrats used to being on the defensive over health care and the deficit seemed to relish the battle.

Once Bunning gave in, the stopgap bill — which passed the House last week — passed the Senate by a 78-19 vote. President Barack Obama signed it into law late Tuesday.

“During these difficult economic times, supporting American workers, their families and our small businesses must be everyone’s focus,” Obama said in a statement. “I’m grateful to the members of the Senate on both sides of the aisle who worked to end this roadblock to relief for America’s working families.”

Doctors faced the prospect of a 21 percent cut in Medicare payments, and federal flood insurance programs had also lapsed with Monday’s expiration of an earlier stopgap bill that passed late last year.

Democrats promised to retroactively restore unemployment benefits and health care subsidies for the unemployed under the COBRA program. Transportation Secretary Ray LaHood ordered furloughed employees back to work Wednesday.