Senate fails to reach deal on unemployment; benefits to expire June 2

Senate Democratic leaders conceded late Thursday that an effort to extend unemployment benefits and other expiring provisions through the end of the year will fail.

A nearly $200 billion package of unemployment benefits and tax credits floundered in the House after conservative Democrats balked at the prospect of adding $130 billion to the federal deficit.

As a result, unemployment benefits for hundreds of thousands of Americans will begin to run out on June 2.

Federal subsidies for COBRA health insurance premiums will begin to run out on May 31.

A freeze in scheduled cuts to doctors’ Medicare reimbursements will expire on May 31.

A senior Democratic Senate aide said that Democrats would offer a 14-day extension of unemployment insurance, COBRA, the so-called “doc fix” and the national flood insurance program.

Senate Republicans, however, are expected to object to the proposal because it would add $4 billion to the federal deficit.

Republicans will make a counteroffer of a short-term extension that would be paid for by funds from the economic stimulus program.

The senior Democratic aide said Democrats would object because they believe those funds should be devoted to job creation.

Senators will leave tomorrow for the weeklong Memorial Day recess.

The senior Democratic aide said lawmakers would reconsider an extension of expiring unemployment benefits and tax relief when they return to Washington on June 7.

As many as 200,000 people could lose their benefits in the first week after unemployment insurance expires.