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Jobs bill advances ... or does it?

By Tami Luhby, senior writer

NEW YORK (CNNMoney.com) -- The Senate's slow-moving effort to spur job creation was thrown into turmoil Thursday.

Senate Majority Leader Harry Reid, D-Nev., said Democrats will offer a slimmed down jobs bill. Only hours earlier, a key Republican and key Democratic issued a more comprehensive measure that they said had bipartisan support.

The switch left many on snowed-in Capitol Hill scratching their heads, wondering why Reid lopped off most of the provisions included in the draft legislation unveiled earlier by Senate Finance Committee's Max Baucus, D-Mont., and Chuck Grassley, R-Iowa.

"The Reid announcement undermines the carefully crafted Baucus-Grassley effort and throws sand in the gears of bipartisan negotiation," a Grassley spokeswoman said.

A Democratic aide said Reid was concerned about the Senate's ability to pass a larger bill.

"It was unclear how much Republican support we would have gotten for a bigger bill, but there is no reason that this slim-downed bill, focusing specifically on Baucus-Grassley-backed job creation measures, shouldn't pass with overwhelming bipartisan support," she said.

The Reid measure, which covers only a fraction of the provisions in the Baucus-Grassley bill, would:

  • Fund highway and transit programs through 2010.
  • Exempt employers from Social Security payroll taxes on new hires who were unemployed.
  • Extend a tax break for business that spend money on capital investments like equipment purchases.
  • Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.

Reid said he hopes to bring up the measure for a vote when Congress returns from its President's Day recess on Feb. 22.

Put on the back burner are: extending the deadline to file for federal unemployment insurance and the subsidy for Cobra health insurance, which expire Feb. 28, as well as extending many tax and health care provisions from last year.

Without an extension, nearly 1.2 million workers will become ineligible for federal unemployment benefits in March, according to the National Employment Law Project. Reid hopes to get to jobless benefits after the recess.

Feeling the heat

Feeling heat from the White House, Reid has advocated for a comprehensive jobs bill for weeks, while trying to negotiate a bipartisan agreement with the GOP, which secured a crucial 41st seat last month. The House passed a $154 billion job creation bill in December.

A Senate agreement began taking shape last week, when Senators Chuck Schumer, D-N.Y., and Orrin Hatch, R-Utah, unveiled a plan to prod businesses to hire the unemployed that drew praise from both sides of the aisle. Then, a 362-page draft of an $85 billion job creation bill circulated among senators on Tuesday.

The comprehensive draft bill from Baucus and Grassley drew praise both from President Obama and key Republican senators on Thursday.

"The President is gratified to see the Senate moving forward in a bipartisan manner on steps to help put Americans back to work," the White House said in a statement.

But it's not clear how much support the Reid bill has among senators, both Republicans and Democrats. Members of both parties have expressed concern about pieces that were stripped out. The more comprehensive bill included provisions that would benefited dozens of industries, from Hollywood filmmakers to southern chicken farmers.

The dust-up came hours after the White House's top economic adviser issued an annual report showing that hiring will remain slow this year. Unemployment is expected to hover at 10% in 2010 and not drop to 2008 levels, which stood at 5.8%, for another seven years.

CNN Radio Correspondent Lisa Desjardins contributed to this report. To top of page

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