House votes to extend longer-term unemployment aid

WASHINGTON - House Democrats Friday salvaged a bill to continue providing unemployment checks to people out of work for more than six months and revive tax breaks popular with families and businesses.

But spending cuts demanded by Democratic moderates unhappy about voting to increase the deficit will mean layoffs next year by state governments and no health insurance subsidies for people laid off after Memorial Day.

The House approved the legislation 215-204, capping a turbulent week for Democratic leaders, who were forced to kill $24 billion in aid to cash-starved states and $7 billion for health insurance subsidies for laid-off workers. The programs were created by last year's economic stimulus bill.

Left standing is the unemployment insurance extension and a grab bag of unfinished business, including numerous spending measures and a renewal of more than 50 tax breaks for individuals and businesses.

The legislation, which now faces an uncertain fate in the Senate, spends about $115 billion on tax breaks and spending such as assistance for doctors facing lower Medicare payments, a summer jobs program sought by minority lawmakers, and settlements of long-running class-action lawsuits brought against the government by black farmers and American Indians.

Offsetting tax increases, such as a new levy on investment and hedge fund managers, helped bring the bill's drag on the federal deficit down to $54 billion, according to the Congressional Budget Office.

Despite House action, Democrats will miss a deadline of passing a jobless benefits measure before Memorial Day. The Senate left Washington Friday without acting on the legislation. The extended benefits for the long-term jobless expires Wednesday, though the immediate impact will be relatively slight.