By Andrew Taylor, Associated Press Writer
WASHINGTON (AP) -- President Barack Obama urged the Senate in his State of the Union speech on Wednesday to pass immediately a "jobs bill" promoting clean energy, small businesses and infrastructure projects.
Obama also proposed eliminating capital gains taxes on small business investment and extending tax breaks for businesses to invest in new plants and equipment.
However, his Senate allies say they can't pass such a package all at once, despite privately floating a similar $83 billion plan that top leaders have worked on for weeks. Rather, they're making plans to advance a small, first piece of Obama's jobs agenda next month featuring a tax credit for businesses that make new hires.
It's a bow to the political realities of a voting public -- and moderate Democrats -- increasingly worried about government spending. The first initiative is aimed at winning over Republicans now that Democrats will soon lose their filibuster-proof Senate majority.
The jobs tax credit would anchor a $15 billion to $30 billion measure that would be voted on next month, a senior Democratic aide said. It would also include tax breaks for small businesses and subsidies for infrastructure bonds issued by state and local governments.
Obama proposed "a new small business tax credit -- one that will go to over one million small businesses who hire new workers or raise wages."
Finding ways to pay for the jobs initiative without padding the $1.4 trillion deficit is another matter. The idea of using leftover Wall Street bailout money to pay for the jobs agenda is fading fast, with key Democrats like Budget Committee Chairman Kent Conrad, D-N.D., now opposed. Dropping that move could reduce Republican opposition to a bite-size jobs measure.
Sen. Barbara Boxer, D-Calif., said it would be easier to sell the piecemeal approach to voters. "People understand it better than if you put 10 things in one bill," Boxer said.
Boxer's remarks indicate that a draft $83 billion package that leaked out this week is already dead, a point other Senate Democrats acknowledge privately.
The draft plan combined the jobs tax credit with $30 billion for infrastructure projects, more than $10 billion in energy efficiency subsidies for homeowners and businesses, and about $18 billion to help school districts pay teachers' salaries. But it was met with "sticker shock," the Democratic aide said.
The exact makeup of the first new, smaller measure is still under discussion, said the senior Senate Democratic aide, who spoke on condition of anonymity to discuss internal party strategy. The measure could be voted on as early as next week.
Conrad's move to block the use of bailout funds to make it look like the jobs plan wouldn't increase the deficit has further jumbled the outlook since it's forcing lawmakers to search for budget cuts elsewhere.
Conrad had earlier approved of the idea, but he announced his opposition after Congressional Budget Office Director Douglas Elmendorf said using the bailout money to defray the cost of the plan is a misleading gimmick that wouldn't produce real savings.
In taking a piece-by-piece approach, Senate Democrats are rejecting the all-in strategy taken last month by the House in passing an approximately $174 billion jobs measure. That measure passed by the barest of margins after Speaker Nancy Pelosi, D-Calif., had to convince about two dozen reluctant Democrats to vote for the debt-financed measure, and the Senate has not acted on it.
Pelosi is not a fan of the per-job tax credit idea, which was conspicuously left out of the House bill. She and other opponents worry that businesses would play games to claim the credit while not doing much to create jobs.
Also looming on the Senate agenda is safety-net legislation to again extend unemployment benefits and health insurance subsidies for the jobless. Temporary extensions expire Feb. 28.