Congressional Democrats made their first proposal on one of themore contentious elements of the payroll tax cut package with anoffer to trim maximum U.S. unemployment benefits by six weeks.

The plan offered to Republicans yesterday would end unemploymentbenefits after 93 weeks instead of the 99 weeks now available instates with the nation's highest jobless rates, according to adocument explaining the proposal. Republicans have proposedreducing the expanded jobless benefits to 59 weeks.

If Congress doesn't act by Feb. 29, unemployment benefits wouldbe cut to 26 weeks.

Lawmakers are negotiating the benefits as part of a plan thatwould continue a payroll-tax cut for workers and prevent a drop inMedicare reimbursements to doctors. The proposal was the mostsubstantial one offered by Democrats since a House-Senatenegotiating panel began meeting Jan. 24. Republicans said the offerwas inadequate.

“That's what you do at the very beginning of a bargainingsession so your people can see you're representing theirinterests,” Senator Jon Kyl of Arizona, one of the Republicannegotiators, told reporters yesterday. “But with a week to go, it'snot really a good-faith offering.”

Congress in December passed a two-month extension for themeasures, through this month, because they couldn't agree on how topay for them through 2012. Lawmakers aren't scheduled to be inWashington the week of Feb. 20, limiting the amount of timeavailable for negotiations.

Senate Finance Committee Chairman Max Baucus, a Montana Democratwho crafted the unemployment compensation proposal, said he wouldcontinue working with Republicans.

“We made an offer and we'll continue to negotiate,” he toldreporters yesterday. “That's the standard procedure.”

In a conference call with reporters, Representative SanderLevin, a Michigan Democrat who is a House negotiator, urgedactivists seeking extensions of jobless benefits to pressureRepublicans.

“Pour it on,” he said on the call yesterday.

As lawmakers' skepticism about the potential for an agreementrises, some have begun discussing the possibility of extending themeasures for several months at a time.

“We are going to extend these programs to the end of the year,”said Representative Kevin Brady, a Texas Republican on thenegotiating panel. “Whether we do it the right way now, or” an“uncertain way, two months to two months, it's going to getdone.”

$100 Billion Cost

The Democratic offer didn't suggest how to pay the $100 billioncost of the package for the rest of the year. Republicans haveproposed paying for it by, among other things, continuing a payfreeze for government workers, which Democrats oppose. Democratshad proposed a surtax for high-income earners.

Republicans oppose the surtax and are urging Democrats to comeup with an alternative.

“We are still in the dark as to where the Senate Democrats areon how we pay for all the spending,” Brady said.

Representative Chris Van Hollen of Maryland, a House Democraticnegotiator, said his party is “prepared to pay for it but youshouldn't be paying for it off the backs of middle- incometaxpayers.”

In addition to the surtax, Van Hollen said Democrats would payfor the plan by ending tax benefits for oil-and-gas companies orchanging the preferential tax treatment for carried-interestcompensation to private equity and venture capital managers.

“We've got a lot of proposals on the table,” Van Hollensaid. “But once again, they are defending special-interest taxbreaks. That's what it always comes down to.”

The disagreement may put the measures at risk of expiring onFeb. 29. Still, House Majority Leader Eric Cantor of Virginia saidRepublicans are determined to extend the payroll tax cut.

“We are not in any way, shape or form advocating for taxes to goup on hardworking people,” Cantor said on the House floor.

House Republicans were blamed for brinkmanship in December. TheHouse initially rejected a two-month extension of the payroll-taxcut, then accepted the short-term deal in the face of politicalpressure.

The negotiators “need to get moving” to reach an agreement,House Speaker John Boehner of Ohio told reporters at his weeklynews conference. “The sooner the better.”

Bloomberg News

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