Jobless benefits to expire as Senate recesses

NEW YORK (CNNMoney.com) -- For the nation's unemployed, here we go again.

The House voted Friday to extend the deadline to file for federal unemployment benefits, but not before the Senate recessed for a week-long Memorial Day break. So jobless Americans will start running out of benefits after June 2.

The Senate will take up the measure when it returns June 7, according to Senate Majority Leader Harry Reid, D-Nev.

House Democratic leaders twice had to shrink the bill to get enough support, ulitimately passing a measure that would raise the deficit by $54.3 billion.

The Democrats spent much of the week trying to round up votes to extend the jobless benefits deadline, part of a larger grab-bag bill that would renew expired tax provisions, lengthen a small business lending program and add to infrastructure investments.

The final version, approved by a 215-204 vote, extended the deadline to file for unemployment benefits through November, but jettisoned sending $24 billion in Medicaid assistance to the states and extending the 65% federal subsidy for COBRA health insurance premiums. The measure would raise the deficit by $31.3 billion.

It also delayed the start of the so-called "carried interest" provision, which increases the tax on money paid to managers of hedge funds and investment partnerships to ordinary income levels instead of the much-lower capital gains rate. It will now begin in 2011.

Separately, the House passed by a 245-171 vote a measure to maintain Medicare physician reimbursement rates through 2011. The extension would increase the deficit by $23 billion. But until the Senate approves the legislation, doctors will see their payment rates drop by 20% starting in June.

Since it was unveiled on May 20, lawmakers scaled back the bill from its original $134 billion price tag by cutting a month off the jobless benefits extension and two years off the Medicare rate extension, as well as by shedding the COBRA and Medicaid provisions.

The jobless have become the caught in a game of political football in recent months. Unable to muster the votes to push back the deadline to file for extended federal unemployment benefits until the end of the year, Congress has resorted to short-term fixes three times.

President Obama urged lawmakers to do more for the unemployed, for states and for small businesses.

"I ask the Senate for its swift action on this package so I can sign it into law, and I urge Congress to move quickly on additional relief measures," Obama said.

Some 1.2 million people will run out of their jobless benefits in June if the Senate fails to act, according to the National Employment Law Project. Federal unemployment benefits, which last up to 73 weeks, kick in after the state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier.

Nearly 10 million people are collecting unemployment insurance. A record 46% of the 15.3 million jobless Americans have been out of work six months or longer.

"Taking a break without extending the unemployment program will break faith with the millions of jobless workers Congress is leaving behind," said Christine Owens, the law project's executive director.

The House measure also would extend through September 2011 emergency funding to states for food stamps and aid for needy families, and a subsidized jobs program.

The elimination of the Medicaid assistance for states is certain to unsettle many governors and state lawmakers. At least 19 states have already assumed those funds in their fiscal 2011 budgets. If it doesn't come through, they'll have to make even more massive cuts to balance their budgets.

The bill also contains a small but significant measure that would extend small business lending incentives that otherwise would expire this month. The program both eliminates fees that the Small Business Administration normally charges for loans made through the agency, and increases the government guarantees on those loans.

Plus, the bill also reinstates dozens of expired tax provisions for people and companies. These include a business research credit and a sales tax deduction for individuals.

-- CNN Congressional Producer Deirdre Walsh contributed to this report.