Democrats dangle tax cuts to win Republican support for jobs bill

Senate Democrats are dangling tax provisions favored by the GOP in hopes of building bipartisan support for a jobs bill Senate Majority Leader Harry Reid (D-Nev.) plans to unveil by Monday.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, and Sen. Chuck Grassley (Iowa), the panel’s ranking Republican, are working on a tax package that would serve as the main vehicle of jobs legislation.

Reid plans to pass the bill next week before Congress leaves for the Presidents Day recess, but he needs GOP support.

Vice President Joe Biden administered the oath of office to Sen. Scott Brown (R-Mass.) Thursday afternoon, giving Republicans the 41 Senate seats they need to block legislation.

The emerging plan on jobs is to produce a package of tax cuts that could win Republican support. The core of the proposal would include a tax credit for employers who hire new workers in 2010 and a package of tax extenders, such as the research and development tax credit.

The tax package would not include an estate tax provision, according to sources.

"The hope is if you make it a Republican-enough bill we can get Republicans to sign on," said a person familiar with the talks.

Democrats hope to get Republicans to sign on to support the tax package and then to add other job-creation proposals, such as infrastructure spending, to the package.

Sens. Charles Schumer (D-N.Y.) and Orrin Hatch (R-Utah), two other members of the Finance panel, are working with Baucus and Grassley.

As of Thursday afternoon, Democratic negotiators were not certain how much infrastructure spending and energy-efficiency spending they could persuade Republicans to accept.

A Democratic source familiar with the negotiations said that extensions of unemployment insurance and government subsidies to the COBRA health insurance program would likely be included.

Provisions designed to assist small businesses, such as reforms to the Small Business Administration and a partnership among the SBA, Commerce Department and U.S. Trade Representative to promote exports, could also draw Republican support.

Republicans are less eager to support a litany of new spending programs, however.

Earlier in the day, Democratic leaders unveiled a list of such proposals as part of their jobs agenda. The list included an extension of the Surface Transportation Act, rebates to consumers who make their homes more energy-efficient and grants to upgrade school buildings, among other ideas.

Sen. Kent Conrad (D-N.D.) said lawmakers received a report from the Congressional Budget Office projecting the effectiveness of various proposals.

He said the CBO predicted that tax credits for new hires, the unemployment insurance extension and more generous rules for small-business expensing would have the biggest impact on job creation.

But some Democrats disagree sharply with that analysis.

“My opinion is that it’s shortsighted,” Sen. Tom Harkin (D-Iowa), chairman of the Senate Health Committee, said of the decision to pack the first jobs package with tax credits.

“It’s not very efficient,” said Harkin. “Using CBO’s methodology, the most effective way to create jobs is to load up a C-17 cargo plane with $50 bills and have it fly over the country pushing money out the door.”

Harkin said he favored spending on school renovation that “would put a lot of people to work this summer” and help the national economy in the long term by investing in the education of future workers.

Reid said during Thursday's press conference that lawmakers would vote on a jobs bill Monday. But a source familiar with negotiations said it would be difficult to assemble a package and win Republican support in time for a Monday vote.

Sen. Mike Enzi (Wyo.), a Republican on Finance, said that lawmakers and the public should have three days to review the bill before voting on it.

Enzi also said that Republicans would demand that the cost of the package be offset.

“That’s what we should do for everything, pay for it,” said Enzi. “We’ve maxed out the nation’s credit card.”