Obama's jobs bill falls to pieces in Congress

WASHINGTON Mon Oct 3, 2011 11:02pm BST

U.S. President Barack Obama delivers remarks at the Human Rights Campaign's annual dinner in Washington, October 1, 2011. REUTERS/Jonathan Ernst

U.S. President Barack Obama delivers remarks at the Human Rights Campaign's annual dinner in Washington, October 1, 2011.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - President Barack Obama's job-creation package effectively fell to pieces on Monday as a top Republican lawmaker said the House of Representatives will only pass portions of the $447 billion measure.

As Obama continued to press lawmakers for a vote on his signature legislation, Representative Eric Cantor, the No. 2 House Republican, said that was not going to happen.

Asked if the bill as a complete package was dead, Cantor said: "Yes."

The bill appeared to be in trouble in the Democratic-controlled Senate as well, where aides from both parties said it will likely fail when it comes up for a vote later this month.

Monday's developments made plain what many analysts have believed for weeks -- that Washington is too divided to take any significant steps to lower the 9.1 percent unemployment rate before the 2012 congressional and presidential elections.

"At this point I think that Washington has become so dysfunctional that we've got to start focusing on the incremental progress we can make," Cantor said. "Both sides want to do the big, bold things -- the problem is they look vastly different."

Obama said he would be willing to consider a piecemeal approach on the legislation, which could be central to his re-election prospects. Polls show that jobs and the economy are voters' top concern and that many Americans have lost confidence in Obama's economic leadership.

"If there are aspects of the bill that they (Republicans) don't like, they should tell us what it is they are not willing to go for, they should tell us what it is they are prepared to see move forward," Obama told reporters.

Since unveiling the plan in a high-profile speech to Congress last month, Obama has promoted the package in campaign-style rallies across the country as he tries to show voters he is taking steps to spur the sluggish economy.

Most elements of the bill have polled well among voters -- even the tax increases on businesses and the wealthy that Republicans and some Democrats adamantly oppose.

House Republicans have advanced their own job-creation agenda centered around relaxed pollution regulations.

At the same time, they have said they are willing to work with Obama whenever possible, seeking to lower the temperature since a bruising budget battle in August led to a downgrade in the United States' credit rating for the first time.

HOUSE TO PASS ONE PIECE OF THE PACKAGE

Cantor said the House would pass one element of Obama's jobs package this month: a provision that allows government contractors to collect all the money that is due to them, rather than having 3 percent automatically withheld for taxes.

That would cost about $14 billion over 10 years -- a tiny fraction of the entire jobs bill, which is centered around a payroll tax cut, infrastructure spending and aid to cash-strapped state and local governments.

Republicans also will work with Obama to pass long-stalled trade agreements, Cantor said. One central element of the package, which would extend a payroll tax cut for businesses and workers, is "part of the discussion," Cantor said, but he declined to say whether he would bring it up for a vote.

Senate Democratic leader Harry Reid said he would schedule a vote on the bill later this month.

"Members of both parties should rally behind the common-sense, bipartisan approach of this legislation," Reid said.

Prospects for passage in the Senate appeared doubtful as most legislation needs support from both parties in order to advance. All but a handful of Republicans will vote against it, according to a Republican aide, and several Democrats are likely to oppose it as well.

Moderate Democrats in the Senate have objected to some of the tax increases Obama has proposed to pay for the bill.

"Nobody is all that excited about the president's jobs bill," a senior Democratic aide said.

(Additional reporting by Thomas Ferraro and Kevin Drawbaugh; editing by Mohammad Zargham)