WASHINGTON – United against President Barack Obama, Senate Republicans voted Tuesday night to kill the jobs package the president had spent weeks campaigning for across the country, a stinging loss at the hands of lawmakers opposed to stimulus-style spending and a tax increase on the very wealthy.
Forty-six Republicans joined with two Democrats to filibuster the $447 billion plan. Fifty Democrats had voted for it, but the vote was not final. The roll call was kept open to allow Sen. Jeanne Shaheen, D-N.H., to vote. The likely 51-48 eventual tally would be far short of the 60 votes needed to keep the bill alive in the 100-member Senate.
The demise of Obama’s $447 billion jobs package was expected, despite his campaign-style efforts to swing the public behind it. The White House and leaders in Congress were already moving on to alternative ways to address the nation’s painful 9.1 percent unemployment, including breaking the legislation into smaller, more digestible pieces and approving long-stalled trade bills.
The White House appears most confident that it will be able to continue a 2-percentage-point Social Security payroll tax cut through 2012 and to extend emergency unemployment benefits to millions of people – if only because, in the White House view, Republicans won’t want to accept the political harm of letting those provisions expire.
White House officials are also hopeful of ultimately garnering votes for the approval of infrastructure spending and tax credits for businesses that hire unemployed veterans.
Democrats Ben Nelson of Nebraska and Jon Tester of Montana – both up for re-election next year in states where Obama figures to lose – broke with their party in Tuesday night’s vote. Every Republican present opposed the plan.
Earlier in the day, Obama capped his weekslong campaign for the measure in an appearance typical of the effort – a tough-talking speech in a swing state crucial to his re-election. In fact, it seemed aimed more at rallying his core political supporters heading into the election than changing minds on Capitol Hill.
“Any senator who votes no should have to look you in the eye and tell you what exactly they’re opposed to,” Obama said to a union audience in Pittsburgh. “I think they’ll have a hard time explaining why they voted no on this bill – other than the fact that I proposed it.”
Democrats were not wholly united behind the measure. In addition to Nelson and Tester, Sens. Jim Webb, D-Va., Joe Manchin, D-W.Va., and Joe Lieberman, a Connecticut independent who aligns with Democrats, said they oppose the underlying measure despite voting to choke off the filibuster.
Obama’s plan would combine Social Security payroll tax cuts for workers and businesses and other tax relief totaling about $270 billion with $175 billion in new spending on roads, school repairs and other infrastructure, as well as unemployment assistance and help to local governments to avoid layoffs of teachers, firefighters and police officers.
Obama said that the plan – more than half the size of his 2009 economic stimulus measure – would be an insurance policy against a double-dip recession and that continued economic intervention was essential given slower-than-hoped job growth.
“Right now, our economy needs a jolt,” Obama said. “Right now.”
Unlike the 2009 legislation, the current plan would be paid for with a 5.6 percent surcharge on income exceeding $1 million. That would be expected to raise about $450 billion over the coming decade.
“Democrats’ sole proposal is to keep doing what hasn’t worked – along with a massive tax hike that we know won’t create jobs,” Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday, saying there are 1.5 million fewer jobs than when Obama’s 2009 economic package became law. “Why on earth would you support an approach that we already know won’t work?” McConnell said.
The White House and Democratic leaders, however, were pleased that the great majority of Democrats voted for the plan. Support among Democrats was shored up by replacing Obama’s tax increases – particularly a proposal to limit the value of itemized deductions for families making more than $250,000 – with the surcharge on millionaires.
That millionaires proposal would hit about 392,000 households, according to an analysis by the Tax Policy Center, a Washington think tank. In 2013, the first year the tax would take effect, those wealthy households would see their taxes increase by an average of $110,500, according to the analysis.
Just before the vote on Obama’s jobs plan, the Senate passed legislation aimed at punishing China for keeping its currency undervalued against the dollar. Lower-valued currency helps Chinese exports at the expense, bill supporters say, of American jobs.
Next, both the House and Senate will turn Wednesday to approving trade agreements with Colombia, Panama and South Korea that could create tens of thousands of jobs, one of the few areas of agreement between Republicans and the administration on boosting the economy.
In coming weeks and months, Democrats promise further votes on jobs. But it remains to be seen how much of that effort will involve more campaign-stoked battles with Republicans and how much will include seeking common ground in hopes of passing legislation.
Leaders of the GOP-controlled House have signaled they support tax cuts for small businesses and changes to jobless insurance to allow states to use unemployment funds for on-the-job training. And they’ve indicated they’ll be willing to accept an extension of cuts to the Social Security payroll tax. But stimulus-style spending is a nonstarter with the tea party-infused chamber.
Tuesday’s vote played out as disaffected crowds continued to occupy Wall Street, a square in Washington and parts of other cities around the country in protest of income inequality and related issues.
Obama advisers said they were working with Senate Democratic leaders on how and when to break out separate aspects of the overall jobs bill for votes.
Even before Tuesday’s defeat, the White House was casting the Senate vote as but the first act in what one Obama adviser called a long-term play – essentially, an autumn full of action to force Congress to take action on jobs. Senior Obama officials said it was important for the Senate to act to keep pressure on the Republican-led House.
Obama promised to press for quick action on public works spending.
“Having relevant businesses get behind an effort to move this infrastructure agenda forward is a priority,” Obama told corporate and labor leaders Tuesday.
“We’re going to need a push, I think, from the business community in particular in order to get this across the finish line,” he said.
Highlights of the $447B jobs bill
Federal spending ($175B) including:
• $50B for highways, transit, rail and aviation improvements. • $54B for unemployment benefits and job training. • $35B for local governments to hire and retain teachers, police and firefighters. • $30B for school construction.
Tax cuts ($272B):
• Extend and expand a payroll tax cut for workers that is scheduled to expire at the end of the year. For 2012, the leg- islation would reduce Social Security taxes paid by workers to 3.1 percent of their wages.
• Cut in half, to 3.1 percent, the Social Security taxes paid by businesses on the first $5 million of their payroll in 2012. Exempt companies that increase their payroll in 2012, through new hires or pay raises, from paying Social Security taxes on the increased payroll, with a cap of $50 million.
• Give a tax credit of up to $4,000 for hiring workers who have been unemployed more than six months.
• Provide a tax credit of up to $5,600 for hiring military veter- ans who have been out of work more than six months.
• Give a tax credit of up to $9,600 for hiring military veterans with service-related disabilities who have been out of work more than six months.
• Extend tax provisions that enable companies to more quickly write off the cost of new equipment, saving companies an estimated $5 billion.
• A new 5.6 percent tax on annual income above $1 million, beginning in 2013. The tax would be applied to wages and investment income. In 2013, an estimated 392,000 U.S. households would see their taxes increase by an average of $110,500. Over the next decade, the tax increase would raise about $453 billion.
Sources: White House, Congressional Budget Office, Tax Policy Center