Last updated: February 22, 2010 11:59 pm

US senate moves ahead on $15bn jobs bill

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The US Senate on Monday voted to move forward on a $15bn jobs bill proposed by Harry Reid, leader of the Democratic majority in the Senate.

The 62-30 vote in favour of ending “cloture” prevents a Republican filibuster and came as an exception to the months of gridlock in Congress. It will pave the way for a jobs bill to clear the Senate, just as other critical employment benefits are set to expire.

Democrats needed to secure two Republican votes to block the filibuster and one came thanks to Scott Brown, making his first vote since he filled Edward Kennedy’s former seat in Massachusetts.

“I hope this is the beginning of a new day in the Senate,” Mr Reid said, invoking Mr Brown by name for his bipartisanship.

The scaled-back measure is expected to create 250,000 jobs through an array of tax credits and payroll tax exemptions to stimulate hiring. The bill frees businesses from payroll taxes on workers who are hired after more than 60 days of unemployment and gives them a tax credit of $1,000 for new hires that they keep for more than a year.

The bill also provides funding for highway and transportation projects, allows companies to write-off equipment purchases as expenses and expands the Build America bond scheme to help subsidise school and energy projects.

The bill was originally designed as an $85bn package that was introduced by Max Baucus, a Democrat senator from Montana, and Charles Grassley, an Iowa Republican.

Earlier this month, Mr Reid pulled back from that bipartisan plan in spite of initial praise from Barack Obama, president, arguing that it had become too “watered down”.

“This bill is as good for employers as it is for employees,” Mr Reid told the Senate as he sought to attract a crucial 60 votes. “This is such a good deal.”

Mr Reid argued ahead of the vote that Republicans had supported every part of the bill in the past and that it would require no deficit spending. He scolded the Senate for requiring a procedural “cloture” vote to prevent a filibuster on jobs legislation.

The smaller proposal still pales next to the $150bn bill that passed the US House of Representatives last December and some economists worry that it will do little to revive the labour market, which has lost 8.4m jobs since the recession started two years ago.

John Ligon, policy analyst at the Heritage Foundation research institute, argued that, although the payroll tax holiday would reduce the cost of labour for companies that participate, it would be temporary and have little impact because businesses continue to face weak demand.

The White House on Monday said it “strongly supports” the bill, promising that it would encourage hiring while making it easier for small businesses to invest and expand.

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