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Senate rejects latest stimulus spending bill

WASHINGTON - President Barack Obama's plea for more stimulus spending as insurance against a double-dip recession hit a roadblock in the Senate Wednesday, the victim of election-year anxiety over huge federal deficits.

A dozen Democrats joined Republicans on a key 52-45 test vote rejecting an Obama-endorsed, $140-billion package of unemployment benefits, aid to states, business and family tax breaks and Medicare payments for doctors because it would swell the debt by $80 billion.

The swing toward frugality runs counter to the advice of economists who support the bill's funding for additional jobless benefits and to help states avoid public service layoffs. They fear the economy could slip back into recession just as it's emerging from the biggest economic downturn since the Great Depression.

Federal Reserve Chairman Ben Bernanke warned last week that while lawmakers need to come up with a plan for tackling the nation's long-term deficit, the recovery is still fragile. It's too early for large, immediate spending cuts, he said.

"We've got to do more to build on the existing jobs momentum and that's what these targeted measures are about," said White House economist Jared Bernstein.

Earlier, the Senate passed another version with even bigger deficits. But that was before tea party-backed candidates running on anti-deficit, anti-big government platforms began knocking off established politicians in spring primaries.

Despite the loss, Democratic leaders predicted serenely that a scaled-back version of the measure, extending unemployment benefits for the long-term jobless and providing $24 billion in aid to the states, could pass, possibly as early as later this week, after relatively minor revisions.

"We need to change a few things," Majority Leader Harry Reid (D-Nev.) said.


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