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Senate Approves $60 Billion For War, While House Cuts $24 Billion For Unemployed Workers And State Aid

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WASHINGTON — The Senate easily passed an almost $60 billion war funding bill Thursday, but anxiety over out-of-control budget deficits led House leaders to drop tens of billions of dollars in spending from a separate catchall bill anchored by an extension of jobless benefits.

Confronted with a rebellion by Democratic moderates, House leaders planned to dump overboard $24 billion in aid to states and allow generous health insurance subsidies for laid-off workers to expire. The changes were an effort to round up votes to extend unemployment benefits and renew more than 50 popular tax breaks that expired last year.

Help for doctors facing a big cut in Medicare reimbursements would also be dropped from the measure, aides and lobbyists said, and is unlikely to be resurrected by a vote on Friday.

Democrats will miss their self-imposed deadline of passing the jobless benefits measure before Memorial Day, even if the House passes the bill Friday. The Senate announced Thursday that it will not hold any more votes until senators return from their holiday break June 7.

The steps by House leaders could reduce the deficit impact of the bill to as little as $30 billion or so in hopes of winning over moderate "Blue Dog" Democrats unhappy about adding to the deficit as the national debt is on the verge of topping $13 trillion. A version circulated last week would have added $134 billion to the deficit.

One Blue Dog, Rep. Henry Cuellar, D-Texas, said he would probably vote for a slimmed down version of the bill.

"The bigness issue and the deficit issue has been addressed," Cuellar said.

Across the Capitol, Senate Democrats had far better success in advancing the war funding bill, which would pay for President Barack Obama's 30,000 troop increase in Afghanistan.

A dozen Republicans, including GOP leader Mitch McConnell of Kentucky, joined Democrats in a 67-28 vote to pass the bill. Two anti-war Democrats, Sens. Ron Wyden of Oregon and Russ Feingold of Wisconsin, opposed it.

The war funding bill also includes $5 billion to replenish disaster aid accounts, and there's money for Haitian earthquake relief and aid to U.S. allies in the fight against terror.

The war funding measure has been kept relatively clean of add-ons that could draw GOP opposition – to the frustration of liberal Democrats such as Sen. Tom Harkin of Iowa, the top Senate sponsor of a $23 billion plan to help school districts avoid teacher layoffs as local revenues remain weak. Facing sure defeat, Harkin declined to offer the plan to the war funding bill.

Thousands of people are set to begin losing jobless benefits when an extension of unemployment insurance expires next week. A 65 percent subsidy for health insurance benefits for the unemployed under the COBRA program also expires.

The benefits extensions are part of a sweeping package of unfinished business that lawmakers had hope to complete before their Memorial Day recess to avoid the embarrassment of letting them lapse before going on vacation. Efforts to pass short-term extensions to buy time were doomed to fail since they would require the agreement of all 100 senators.

Democratic leaders cut the package of spending and tax cuts Wednesday by about $50 billion – to $143 billion – in an attempt to pick up votes. Thursday's moves could whack more than $50 billion more from the measure.

It's a tough vote for lawmakers who want to help constituents hit hard by the recession but are wary of being labeled big spenders. The economy is starting to pick up, but unemployment is still high as the nation continues to struggle from the loss of more than 8 million jobs. At the same time, angst over deficit spending is growing as midterm congressional elections near in November.

Senate Majority Leader Harry Reid, D-Nev., said that the Senate would not vote on the House tax and spending measure and announced the Senate would shortly adjourn for the Memorial Day recess.

The expanded jobless benefits provide up to 99 weeks of payments in many states, at a cost of nearly $40 billion. The benefits are part of a bill that includes a one-year extension of about 50 popular tax breaks that expired at the end of last year and a delay in scheduled cuts in Medicare payments to doctors.

It was looking grim Thursday night for a proposal to delay the scheduled 21 percent cut in payments until 2012, which would cost nearly $22 billion. The plan was to be dropped from the bill, and a separate vote on putting it back was thought likely to fail.

The cost of the bill would be partially offset by tax increases on investment fund managers, oil companies and some international businesses. The tax increases total about $57 billion over the next decade. Changes giving underfunded pensions more time to improve their finances would raise $2 billion.

Also in the House, Appropriations Committee Chairman David Obey, D-Wis., called off a vote on a far larger version of the war funding bill that added the $23 billion to help school districts avoid teacher layoffs, along with $6 billion to make up for a funding shortfall in grants for low-income college students. An Obey spokesman blamed the busy floor schedule and ongoing uncertainty over the jobless benefits bill. Appropriations panel Republicans had vowed to offer a raft of politically painful amendments.

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