Sen. Reid kills Baucus bill, narrows focus of jobs legislation after complaints

Senate Majority Leader Harry Reid (D-Nev.) is rewriting a jobs bill after Democrats complained of too many concessions to Republicans.

Reid announced Thursday that he would cut drastically back on the jobs bill Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced only hours earlier, essentially overruling the powerful chairman.

{mosads}The Finance Committee estimated that Reid’s proposal would cost approximately $15 billion.

The Baucus bill, which was estimated at $85 billion, included $31 billion in tax extenders that Reid has decided to leave out. A Senate Democratic leadership aide said Reid decided to drop the tax extenders after Senate Minority Leader Mitch McConnell (R-Ky.) declined to endorse the Baucus package.

“We’re going to move this afternoon to a smaller package than talked about in the press,” Reid said.

A spokesperson for Sen. Chuck Grassley (Iowa), the ranking Republican on the Finance Committee and the co-sponsor of the Baucus bill, said Reid’s move risks turning a bipartisan bill into another partisan vote.

“Senator Reid’s announcement sends a message that he wants to go partisan and blame Republicans when Senator Grassley and others were trying to find common ground on solutions to help get the economy back on track and people back to work,” said Grassley’s spokesperson Jill Kozeny. “Senator Reid did this just as Republican senators were saying they liked things in the Baucus-Grassley draft, which would have prevented billions of dollars in tax increases and offset any spending.  The 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.”

The Democratic leadership aide disputed the notion that Reid had yanked the rug out from under Baucus, noting that Reid has decided to keep the four core provisions of Baucus’s legislation.

The aide said Reid decided to simplify the legislation to “short-circuit potential criticism from one side or the other,” referring to potential Democratic and Republican critics.

Reid’s bill also does not extend unemployment and COBRA benefits that many in both parties want; an aide to the majority leader said those extensions would be handled in a separate bill.

Reid heard loud complaints of dissatisfaction over Baucus’s bill during a Democratic Conference meeting held Thursday afternoon, according to a senator who attended.

But Reid said he decided to overhaul the legislation even before listening to his fellow Democrats vent their anger.

“I made the decision before I came to the caucus; I just wanted to make sure they were supportive of what I was doing and they’re very supportive,” Reid said.

The bill now includes four components: tax credits for employers who hire new workers; a provision allowing businesses to write off the cost of capital investments; Build America Bonds, which allow state and local governments to lower their borrowing costs; and a one-year extension of funding for transportation programs in the Surface Transportation Act.

Reid said the Senate would take up the revised jobs bill when lawmakers return to Washington after the Presidents’ Day recess.

Baucus had stuffed the bill with many provisions that Democratic senators thought went beyond the goal of creating jobs, such as $31 billion in extensions to expiring tax provisions, including the research and development tax credit. That and other tax cuts were included to win GOP votes.


Going into Thursday’s meeting, Democrats complained the bill did not focus enough on job creation.


“I would prefer a jobs bill that simply focused on job-creating initiatives, this bill has become something more than that,” said Sen. Byron Dorgan (D-N.D.), who led early negotiations to produce a jobs bill, said before the meeting. “Maybe that’s what has to be done in order to get some bipartisan support.”


Reid said he decided to rewrite the legislation to send a clear message to people struggling financially in the midst of the biggest national recession since the Great Depression.



“The message is so watered-down with people wanting other things in this big package,” said Reid.

But some Democratic senators still have concerns.

Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, said the jobs bill should include a yearlong extension of unemployment insurance benefits.

Harkin noted the Congressional Budget Office (CBO) estimates the impact of extending unemployment insurance would create more jobs then providing tax credits to employers who hire new workers.

Richard Kirsch, National Campaign Director of Health Care for America Now, a coalition of labor unions and liberal advocacy groups, said Congress needs to act on COBRA subsidies and Medicaid assistance.

“I think they both need to get done and putting them in the jobs bill would be a good way to do it,” said Kirsch.

Some Democrats and labor officials are also pressing Reid to include federal Medicaid assistance to states.

Sen. Jay Rockefeller (D-W.Va.), one of the most outspoken proponents of increased federal Medicaid assistance, said he promised colleagues to refrain from criticizing the bill in public.

The new jobs will not include extensions of unemployment insurance, COBRA subsidies or Medicaid assistance to states, known as FMAP.

Reid’s decision to drop a multi-month extension of expiring provisions in the Patriot Act averts a dispute with liberals such as Sen. Judiciary Committee Chairman Pat Leahy (D-Vt.) and Sen. Russ Feingold (D-Wis.). Baucus included the Patriot Act extension in his proposal.

Leahy said Thursday that he would favor acting on legislation amending the Patriot Act that he has introduced in his committee. Feingold said earlier in the day that he was reviewing Baucus’s proposal.

Reid’s decision to jettison the tax relief extensions, such as the research and development tax credit, and other provisions sought to win GOP support raises the question of whether the jobs bill can pass the upper chamber.

Rockefeller predicted the Republicans would not support Reid’s revised proposal.

“Why would the Republicans vote for something?” Rockefeller said.

Jay Heflin contributed to this article