Reid Tosses Bloated Bipartisan Jobs Bill For Something Leaner

The Senate's bipartisan jobs package , which had robust support from the White House and the GOP, but was packed with corporate giveaways, lasted less than a day.

Senate Majority Leader Harry Reid (D-Nev.) emerged from a Democratic Caucus meeting Thursday afternoon to announce that he had decided to scrap it, in exchange for a much-simplified package. The decision left aides to members of both parties scratching their heads, but there may be a smart political rationale behind it.

The new bill drops disaster assistance and extensions of unemployment insurance and COBRA helath-insurance subsidies, all Democratic priorities which will need to be addressed before they expire within the next few weeks.

But Reid also ditched one of K Street's highest priorities, an extension of soon-to-expire tax breaks that are highly beneficial to major corporations, known as tax extenders, as well as other corporate giveaways that had been designed to win GOP support.

Reid didn't mince words. "We're going to move this afternoon to a smaller package than I talked about in the press," he told reporters following a meeting with his Democratic caucus. "We're going to do a bill that has four things in it."

One is to expand the Build America Bonds program, which allows state and local governments to borrow at lower costs for infrastructure projects and other jobs programs. "We're going to do the highway-bill extension for one year, which will save a million jobs," he said.

The bill will also include an extension of a small-business tax break under section 179 of the Tax Code, Reid said. The final element is a payroll tax scheme cosponsored by Sen. Charles Schumer (D-N.Y.) and Sen. Orrin Hatch (R-Utah).

That provision is estimated to cost $13 billion over ten years and, according to a Finance Committee memo, "would offer an exemption from Social Security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days. The maximum value would be equal to 6.2 percent of wages up to the FICA wage cap ($106,800). There would also be an additional $1,000 income tax credit for every new employee retained for 52 weeks to be taken on the employer's 2011 income tax return."

"And then," said Reid, "when we finished that, we'll move on to the tax extenders and all the other stuff. But we feel that the American people need a message. The message that they need is that we're doing something about jobs. We have -- we don't have a jobs bill, we have a jobs agenda. And we're going to move forward on that jobs agenda."

That movement will have to wait until after the President's Day recess, which begins on Monday. Reid said he would have the package ready to go when the Senate returns, and declined to keep members in town for a vote.

"People have schedules. You know, when people leave Washington who are members of Congress, it's not that they head for the beach and sip tea and smoke cigars. People have work to do. We represent constituencies," said Reid.

Some liberals were disappointed that more Democratic priorities, including unemployment and health care benefits, weren't being included, said staff briefed on Thursday's meeting. But in their misery, they were comforted by the fact that the top Republican priority was also stripped from the package. K Street has been lobbying furiously for tax extenders that had been included in the Finance package.

Reid alluded to the real author of those tax extenders. "We are not going to confuse this with tax extenders," he said. "One of my favorite stories was -- I think it was in the New York Times -- one of you wrote about 'Democrats introduce a jobs bill, but most of it was written by lobbyists downtown.'" Reid said the new bill could not be mistaken for the work of lobbyists. Or, as he put it: "No one's written what we're going to bring up downtown."

Reid plans to move forward with unemployment and COBRA in the near future, and still has the giveaways in his pocket to win Republican backing, which is needed thanks to their 41-seat super-minority. But splitting them off for a later vote gives him a chance to highlight which party supports which.

WATCH REID'S ANNOUNCEMENT:

UPDATE: If Reid wanted a fight, it looks like he'll get it. "Senator Reid's announcement sends a message that he wants to go partisan and blame Republicans when Senator Grassley and others were trying to find common ground on solutions to help get the economy back on track and people back to work," said Jill Kozeny, spokeswoman to Grassley, ranking member of the Finance Committee, in a statement. Grassley had endorsed the previous version of the bill. "Senator Reid did this just as Republican senators were saying they liked things in the Baucus-Grassley draft, which would have prevented billions of dollars in tax increases and offset any spending. The Majority Leader pulled the rug out from work to build broad-based support for tax relief and other efforts to help the private sector recover from the economic crisis."