Unemployment benefits, 'doc fix' scaled back in Senate bill

NEW YORK (CNNMoney.com) -- Seeking to appease deficit hawks, Senate Democrats scaled back unemployment benefits and Medicare physician reimbursement measures on Wednesday.

The revised jobs bill eliminates a $25 weekly supplement for the jobless that had been part of the last year's stimulus act. Those currently receiving the supplement in their unemployment benefits check will continue to do so until they exhaust their extended benefits, or until the week of Dec. 7, whichever comes first. That cut will reduce the bill's cost by $5.8 billion over the next decade.

The new version of the bill would also freeze a 21% cut to Medicare physician reimbursement rates only through November, instead of through 2011. This will reduce the bill's size by $16.4 billion over 10 years.

The legislation, which has been stuck in the Senate for more than a week, originally came in at about $140 billion and would have added about $78.7 billion to the deficit. The revised bill would raise the deficit by $55.1 billion.

Lawmakers are hoping to vote on the bill as early as Thursday. But if Democratic leaders can't rustle up enough support, the vote could be pushed back to next week.

The Senate's actions mirror what happened in the House, which twice had to shrink its version of the jobs and tax extenders bill to secure enough votes among members wary of raising the federal deficit even further. Representatives ultimately passed a measure in late May that would increase the deficit by $54.3 billion.

The grab-bag legislation pushes back the deadline to file for federal unemployment benefits until the end of November, renews expired tax provisions, lengthens a small business lending program and adds to infrastructure investments.

It also 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. Under the revised bill introduced Wednesday, investment fund managers would have to treat 75% of this money as ordinary income, beginning in 2011.

The revised bill further hiked a tax on oil that finances the Oil Spill Liability Trust Fund to 49 cents, up from the 34 cents in the House version. The current tax is 8 cents. This measures is now projected to raise $18.3 billion over 10 years.

The revised Senate bill retained $24 billion in Medicaid funding to states, a provision the House had to jettison. President Obama and governors pressed lawmakers to keep the money, which many state officials have already included in their fiscal 2011 budgets, which begin July 1.

Senate lawmakers also voted Wednesday to include a measure in the bill that would push back the deadline to close on home purchases and still qualify for a federal tax credit of up to $8,000. Homebuyers would have until September 30, instead of June 30, to complete the transaction. The provision will cost $140 million over 10 years.