Senate clears vote to help veterans, contractors

WASHINGTON (CNNMoney) -- The Senate overwhelmingly cleared a test vote allowing it to take up a bill this week to help unemployed veterans seeking jobs as well as federal contractors facing a new tax burden in 2013.

The Senate voted 94-to-1 to move forward and take up the bill soon.

Aimed at helping unemployed veterans, the bill gives employers tax credits of up to $5,600 for hiring those who have been unemployed longer than six months. It would also give employers a tax credit of up to $9,600 for hiring long-unemployed disabled veterans.

The October unemployment rate for veterans who left the military after 2001 was 12.1%, leaving about 240,000 veterans out of work, according to the White House. The measure to help veterans is one small piece of President Obama's job package.

"There's no good reason to oppose this bill. Not one," Obama said in a Monday address touting the tax credits and other executive orders aimed at helping veterans find jobs. "It's time for [us] to put country before party, put our veterans back to work."

If the Senate passes the bill later this week, it would have to return for another House vote. But the overwhelming vote in favor of moving forward on the measure suggests an easy path to the president's desk.

Some Senate Republicans on Monday had quietly questioned details about paying for the tax credits to employers that hire veterans.

On Monday afternoon, Senate leaders had yet to release a cost estimate for the tax credits. But they proposed maintaining at current levels special fees that the Department of Veterans Affairs charges veterans for guaranteeing mortgages to help them get low interest rates.

Those fees had been scheduled to get cheaper for veterans. By keeping the fees at current levels, the federal government can tap that revenue stream, some $1.7 billion through 2021, to help unemployed veterans.

The move to help veterans would be attached to a bill that aims to help small businesses.

Senate Democrats and Republicans both support repeal of a Bush-era tax accountability law that would have allowed the federal, state and local governments to withhold 3% of pay to contractors, allowing those dollars to be applied as a credit toward federal income taxes. That law was supposed to take effect on Jan. 1, 2013.

Congress initially passed the withholding requirements back in 2006 to ensure that the government collected all taxes owed by contractors. Big business groups, including the U.S. Chamber of Commerce, have been pushing to repeal the measure.

The House overwhelmingly passed that bill last month with a vote of 405-16.

The cost of repealing the tax withholding measure is about $11 billion. The House paid for the repeal by changing a part of how the government determines who is eligible for federal help under new health care reforms.

The repeal would essentially make it a little more difficult for some to qualify for Medicaid or subsidized health care coverage by redefining the income threshold to include nontaxable Social Security benefits.

The White House issued a statement in October endorsing the House version of the repeal of the 3% withholding for contractors.

Sen. Scott Brown, the Massachusetts Republican sponsoring the repeal of the withholding for contractors, said he was glad the Senate was moving forward.

"If we can do these two things...[helping veterans and small businesses] in one day, maybe it'll usher in a new era of good will," Brown said.

-- CNN's Ted Barrett, Kate Bolduan and Deirdre Walsh contributed to this report.