Despite a last-minute appeal by President Obama, the Democrat-controlled Senate late Tuesday rejected his nearly $450 billion jobs-stimulus proposal, as lawmakers looked ahead at other ways to spur job growth.
Mr. Obama's plan didn't get a single Republican vote, as expected. But Senate Majority Leader Harry Reid failed to keep his 53-member Democratic caucus together, and a procedural vote fell far short of the 60 needed to keep the measure alive and proceed toward a final vote.
"Republicans unanimously voted against our nation's economic health to advance their narrow political interests," the Nevada Democrat said. "They voted against this job-creating bill despite previously supporting many of the ideas it contains, such as tax cuts for the middle class and small businesses."
The finally tally was 50-49, with Mr. Reid switching his "yes" vote to "no," a technical move that will allow him to bring up the measure again.
The measure calls for $447 billion in short-term infrastructure spending and tax cuts, offset by long-term tax increases that would raise $467 billion over 10 years. Those tax increases include eliminating tax breaks for oil and gas companies and limiting the deductions individual taxpayers could claim.
The vote outcome was expected, as many senators — including some Democrats — opposed tax increases included in the plan.
"I again emphasize my belief that rather than increasing taxes on wages or ordinary income, the bill should be paid for by other means, such as raising the capital-gains rate or ending costly subsidies and tax loopholes," said Sen. Jim Webb.
The Virginia Democrat voted Tuesday to keep debate on the bill alive but said he would have voted against it if it reached a final-passage vote.
Democratic Sens. Jon Tester of Montana and Ben Nelson of Nebraska, both of whom are up for re-election next year, joined 46 Republicans in voting against the measure. One Republican, Sen. Tom Coburn of Oklahoma, did not vote.
Hours before the vote, the president said lawmakers faced "a moment of truth" in dealing with the troubled U.S. economy.
"Any senator who votes 'no' should have to look you in the eye and tell you what exactly they're opposed to," Mr. Obama told an audience at a union electricians' training center in Pittsburgh.
"I think they'll have a hard time explaining why they voted 'no' on this bill — other than the fact that I proposed it."
The proposal would cut payroll taxes, give businesses incentives for hiring the unemployed, extend unemployment benefits, and boost spending on construction projects for schools, roads and bridges. The president says it will help reduce the national unemployment rate of 9.1 percent.
Senate Minority Leader Mitch McConnell derisively called the president's proposal a "second stimulus," referring to the Democrat-crafted $787 billion stimulus package Mr. Obama signed into law in 2009 over Republican objections that it was bloated with pork-barrel spending.
"By proposing a second stimulus, Democrats are showing the American people that they have no new ideas for dealing with our jobs crisis," the Kentucky Republican said.
The U.S. Chamber of Commerce also pushed hard against the bill.
"The bill proposes a variety of temporary tax incentives that at best are unproven or at worst have failed to create permanent new jobs," wrote chamber Vice President for Government Affairs R. Bruce Josten in an open letter to senators.
Mr. Obama, who lobbied hard for the plan, vowed that Tuesday's vote "is by no means the end of this fight." He said that he will work with Mr. Reid to try to get at least portions of the package through Congress.
"With each vote, members of Congress can either explain to their constituents why they're against common-sense, bipartisan proposals to create jobs, or they can listen to the overwhelming majority of American people who are crying out for action," he said.
Republican lawmakers say they are willing to consider some aspects of the president's proposal, such as payroll-tax cuts, but they also favor other measures, such as cutting what they consider onerous regulations and expanding domestic oil and gas production.
"Now it's time for both parties to work together and find common ground on removing government barriers to private-sector job growth," said House Speaker John A. Boehner, Ohio Republican.
Another option for Democrats is a proposal by Mr. Reid to move forward with a revised version of the president's plan that calls for a new 5.6 percent surtax on those with incomes of at least $1 million, with the revenue used to pay for the jobs-stimulus package.
The surtax is designed to win support from wavering Democrats who had opposed Mr. Obama's bill because of tax increases they said would hurt charitable giving and could bite small businesses. Targeting those making $1 million a year is seen as a more politically palatable option.
But Mr. Reid's proposal likely will come up against strong opposition from Republicans, who generally reject tax increases of any kind.
Sen. Orrin G. Hatch of Utah, the senior Republican on the Senate Finance Committee, said last week that the proposed surtax, like a similar one for couples earning at least $1 million that was rejected by the previous Congress, would trickle down to hurt small businesses.
"The definition of insanity is doing the same thing over and over again, expecting different results," Mr. Hatch said. "This tax hike was a bad idea in 2009, and it's a bad idea today."
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