Senate Dems haggle over jobs agenda

Senate Democrats are haggling over the cost and scope of a jobs-creation package they hope to begin unveiling next week.

Senate Majority Leader Harry Reid (D-Nev.) told reporters Thursday that he would announce the first installment of the jobs agenda next week.

{mosads}A Senate Democratic aide said that committee chairmen are beginning to coalesce around a proposal that is expected to be significantly smaller than the $80 billion number floated earlier this week.

Yet significant differences remain among Senate negotiators.

Sen. Tom Harkin (D-Iowa), chairman of Health, Education, Labor and Pensions (HELP) Committee, said he wants the package to exceed $80 billion and he has panned a proposal to give tax credits to businesses that hire new employees.

“I think it’s going to have to be a bigger package than that,” said Harkin.

Harkin said Senate Democrats met with economists who have told them “$80 billion won’t make a difference.”

The controversy over paying for the package may be an incentive to move a smaller package in the next two weeks.

Even an $80 billion package would be significantly smaller than the $154 billion jobs legislation the House passed in December.

Senate Finance Committee Chairman Max Baucus (D-Mont.) is pushing tax cuts for small businesses and Senate Majority Whip Dick Durbin (D-Ill.) said the tax credit for new hires is still on the table.

Harkin said he “totally disagreed” with estimates that small-business tax credits would spur significant job growth.

“If you give a small business a tax break for hiring someone that is unemployed, how do you know they wouldn’t have hired that person anyway?” Harkin said.

Sen. Jay Rockefeller (D-W. Va.), chairman of the Commerce Committee, said he was advocating for the jobs package to include an increase in federal Medicaid assistance to states. But some of his colleagues are skeptical of his proposal, arguing the funds would not be used directly to create jobs.

Another question among Senate Democrats is whether to pay for the jobs package using unspent money from the Troubled Asset Relief Program (TARP).

Republicans have said they would oppose any jobs legislation that spent federal money originally appropriated to buy toxic assets from troubled financial institutions.

“That’s a loser,” said Sen. John Cornyn (R-Texas). “It’s a breach of our fiduciary responsibility. When the TARP was created it was for specific purpose and now it has turned into an omnibus grab bag.”

Cornyn, however, said Republicans would otherwise consider supporting various job-creation proposals Democrats have considered, such as small-business tax credits and builders’ bonds.

A Democratic aide said that if TARP funds were taken off the table, there are $30 billion to $50 billion in offsets available to fund a jobs package.

“I think it will be less than $80 billion,” said a second Democratic aide, who predicted that Democratic leaders may break up jobs-creation legislation into several packages that could be moved during each work period in between congressional recesses.

Reid said he would advance packages to stimulate job growth both in the short term and the long term.

“The Congressional Budget Office has given us half a dozen things that will create jobs now, not a year from now, but right now,” Reid said. “We’re going to have a long-term employment package and a short-term employment package.”

Democrats have also focused on directing spending and tax incentives to the “clean-energy” and public sectors, as well as to infrastructure projects.

One proposal would be to provide tax incentives for people who improve the energy efficiency of their homes, the so-called “cash-for-caulkers” program.

Negotiators have also discussed making more funding available through the Small Business Administration to improve the flow of credit to small businesses.

Durbin said negotiators “haven’t really settled in on what the long-term is going to be.”

But some lawmakers and aides suggested infrastructure projects would likely make up a significant portion of that later package.

Democrats have tackled the nation’s 10-percent unemployment rate with new urgency since Republicans scored a stunning victory last week in a special election to replace the late Sen. Edward Kennedy (D) in Massachusetts.

President Barack Obama emphasized the importance of job creation during his first State of the Union address on Wednesday.

Senate Democrats took up his call with gusto on Thursday.

“We couldn’t agree more. In fact, the three top issues on our agenda this year are jobs, jobs and jobs,” said Sen. Charles Schumer (N.Y.), the third-ranking member of the Senate Democratic leadership.

But economists have cast doubt on Democratic initiatives having a significant impact on the unemployment rate in time for the mid-term elections in November.

Former Federal Reserve vice chairman Alan Blinder, who met with Senate Democrats on Thursday, said lawmakers should expect only modest improvement.

“I think the best you can expect for this year’s unemployment would be a program that knocked a half percent or three-quarters (of a percent) off the unemployment rate,” Blinder said.

Walter Alarkon and Tony Romm contributed to this report