Opponents of President Barack Obama's $447 billion jobs planblocked the measure in the Senate, with two Democrats joiningRepublicans to derail his prime proposal to help turn around thestruggling economy.

The tally on the test vote was 50-49, falling short of the 60needed to advance the measure and shelving it in its current form.Voting was completed in the evening as the roll call remained opento let Senator Jeanne Shaheen, a New Hampshire Democrat, return toWashington to vote in support of the plan.

The broad plan includes cuts in payroll taxes for workers andemployers and provides new funding for roads, bridges and otherinfrastructure.

Senate Minority Leader Mitch McConnell called the measure a“lousy idea” that relies on proposals similar to 2009's $825billion stimulus, an effort he said that failed to work.

“If voting against another stimulus is the only way we can getDemocrats in Washington to finally abandon this failed approach tojob creation, then so be it,” said McConnell, a KentuckyRepublican.

Senate Democratic leaders last week revised the president'sinitial proposal, partly to try to pick up more support withintheir party. That scrapped Obama's method of paying for the jobsplan, including higher taxes on families making more than $250,000a year. Senate leaders substituted a 5.6 percent surtax on peoplemaking at least $1 million annually.

'Tax Gimmicks'

Even so, Democratic Senators Jon Tester of Montana and BenNelson of Nebraska opposed the plan. “I can't support tax gimmicksthat do little to create jobs” and don't address the need for abipartisan deficit-cutting plan, Tester said in a statement.

Before the Senate voted, Majority Leader Harry Reid accusedRepublicans — who are trying to take control of the Senate andWhite House in 2012 — of attempting to hamper the economy forpolitical benefit. He said Republicans are opposing job-creationideas they supported in previous years.

“Republicans oppose those ideas now because they have a proventrack record of creating jobs, and Republicans think if the economyimproves it might help President Obama,” said Reid, a NevadaDemocrat. “So they root for the economy to fail, and oppose everyeffort to improve it.”

Pressing Ahead

Obama vowed to press ahead and seek to get individual provisionsof his plan passed by Congress.

“Tonight's vote is by no means the end of this fight,” Obamasaid in a statement. As they vote on each component “members ofCongress can either explain to their constituents why they'reagainst common-sense, bipartisan proposals to create jobs, or theycan listen to the overwhelming majority of American people who arecrying out for action.”

The vote leaves Obama's economic agenda in limbo because thepolitical parties disagree about what should be done to lower thenation's 9.1 percent unemployment rate, said Clint Stretch,managing principal of tax policy at Deloitte Tax LLP in Washington.Republicans seek permanent tax cuts and deregulation, while Obamaand congressional Democrats want more federal spending andshort-term tax reductions.

“The president's jobs initiative is at the end of itslegislative life — not that it really had one,” Stretch said. Hesaid the focus will likely shift away from jobs and toward the workof a congressional supercommittee that is tasked with cutting $1.5billion from the federal deficit over 10 years.

Obama's Plan

Obama proposes to create jobs by cutting payroll taxes forworkers and employers by half, extending jobless benefits,providing aid to states for schools and emergency workers andboosting spending on public works projects such as roads andbridges. He also would provide tax breaks for employers to hire theunemployed.

The plan considered today would be financed by Senate Democraticleaders' proposed surtax, which the U.S. Congressional BudgetOffice said would raise $453 billion.

Obama endorsed the leaders' plan. He had proposed cappingitemized deductions for individuals earning more than $200,000 ayear and couples earning more than $250,000. He also proposedraising taxes on private equity firm managers, real estateinvestors and venture capitalists, and ending oil and gassubsidies.

'Issues of Inequality'

The new method of offsetting the bill's costs still ran intoDemocratic opposition. Senator James Webb, a Virginia Democrat,said he would vote to let debate start, but wouldn't support theSenate jobs legislation as it was drafted. He said a tax onmillionaires that is income-based fails to address real issues ofinequality in the tax code. He said the best method to spread thetax burden would be to boost taxes on capital gains.

“The present proposal looks good at first glance; it sounds goodon a TV bite, but in all respect to the people who put it forward,I do not believe it's smart policy and it does not go where thereal economic division lies in our country,” Webb said.

In the House, Obama's plan also faces hurdles. Republicans whohold the majority oppose the tax increases, and party leaders therealso have said it adds spending in many areas already bolstered in2009's economic stimulus measure.

House Republican leaders say some of Obama's ideas, such aspayroll tax cuts, are worth considering.

The Senate bill is S. 1660.

Bloomberg News

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