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Reid Instransigence on Substitute Jobs Bill Leaves Lawmakers Scratching Heads

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Senate Majority Leader Harry Reid listens to President Obama's State of the Union address Jan. 27 in Washington. (AP Photo)

Despite calls for bipartisanship -- most notably in an unceremonious retirement announcement by Sen. Evan Bayh, D-Ind. -- Senate Majority Leader Harry Reid will not allow amendments to a jobs bill he substituted last week in place of a popular measure that had won across-the-aisle support.

A spokesman for the leader told Fox News on Wednesday that Reid will allow tax provisions in subsequent legislation passed after his $15 billion Hiring Incentives to Restore Employment Act, which Reid swapped in to replace an $85 billion bill crafted by Finance Committee Chairman Max Baucus, D-Mont., and ranking member Chuck Grassley, R-Iowa.

Reid jettisoned the Baucus-Grassley bill in a surprise move that provoked bipartisan head-scratching and even a bit of outrage. Disdain for the process by which Reid offered his replacement measure put the leader on the defensive, and Reid was forced to call the Senate's newest Republican, Sen. Scott Brown of Massachusetts, and others to try and win votes for his pared down, incremental bill.

But Republicans are at a loss about why the majority leader bailed on the first bill, and they’re unlikely to be pacified by efforts to reach out on his measure.

"I just don't get it," a senior Senate GOP leadership aide told Fox News. "Reid is literally snatching defeat out of the jaws of victory here."

Another senior Senate GOP leadership aide said when Republicans return next week from the Presidents Day recess, they are likely to highlight amendments that they would have offered had Reid not closed off changes to the bill. These amendments would likely include an extension of popular tax cuts for research and development, as well as energy tax credits, according to the GOP aide.

The $15 billion Reid bill included a $13 billion exemption from Social Security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days; $35 million for small business depreciation; $2 billion for "Build America Bonds" for infrastructure; and a one-year extension of the highway bill, which one senior Senate Democratic aide told Fox News would have "no revenue effect."

Republicans have taken strong exception to the latter claim. Sen. Judd Gregg, R-N.H., a fiscal hawk, released a statement last week blasting the move.

"I want to warn my colleagues not to be distracted by those who call this draft legislation a 'jobs' bill, because the reality is that this plan doesn't create more jobs, just more government and more debt," Gregg said.

"A perfect example is the highway extension plan, which transfers $47 billion from the Treasury's General Fund to the Highway Trust Fund over the next 10 years, adding to the nation's debt burden. In 2010 alone, a $19.5 billion transfer will instantly increase the federal debt by that amount. The Highway Trust Fund is insolvent, and instead of attempting to fix the problem, this draft bill would simply kick the can down the road and ask our children to pay for these transfers, with interest," he added.

A senior Senate Democratic leadership aide told Fox News on Wednesday that Reid does not have the 60 votes needed to break a filibuster on the HIRE bill. However, Reid has not given up on the legislation, and has dispatched a number of his top Democrats to make the case to reporters.

Wednesday, it was Sen. Barbara Boxer, D-Calif., with leaders from the transportation sector talking about more jobs. Thursday is New York Sen. Chuck Schumer, D-N.Y., and Rhode Island Sen. Jack Reed's turn. They will appear with Mark Zandi, a favored economist with Democrats these days who formerly worked for Sen. John McCain's 2008 presidential campaign.

Boxer, on a conference call Wednesday with reporters, staunchly defended the Reid bill and took great exception with Gregg's comments, while admitting that the money will have to be repaid eventually.

Nevertheless, Boxer argued that the transportation sector needs help now.

"I have a hard time understanding how Senator Gregg would want to see more pink slips for an industry" that's facing massive layoffs, she said.

"If this HIRE Act is not passed ... we'll see thousands of projects grind to a halt and thousands of jobs lost," warned William Millar, President of the American Public Transportation Association, who joined Boxer on the call.

But in a tough election year for Democrats, even some Democrats are at a loss. Sen. Blanche Lincoln, D-Ark., has demanded that Reid move forward with a bipartisan bill.

Those sentiments were echoed even more strongly this week by Sen. Evan Bayh, D-Ind,., when he announced his surprise retirement from the Senate in part because of the partisan move on the jobs bill.

"There's too much partisanship and not enough progress, too much narrow ideology and not enough practical problem-solving. Even in a time of enormous challenge, the people's business is not being done,” Bayh said, scolding colleagues on both sides of the aisle.

On Wednesday, Bayh spokesman Eric Kleiman did not rule out the possibility the senator would back Reid.

"(Bayh) needs to see what's in the final bill. He does believe it's important to strive for bipartisan support on the bill."

Already, one Republican, Utah Sen. Orrin Hatch, who co-authored the tax cut for new hires that appears in the Reid bill, has said he will oppose it next week when it comes up for a vote, and it is clear that many, if not most, Republicans are likely to join him, according to several senior Senate GOP aides.

"Since the Massachusetts election, I doubt there are 60 senators in the United States Senate who will blatantly ignore the American people's persistent call for bipartisanship and vote for cloture," Hatch told The Wall Street Journal. "The majority leadership still has time to prove they are serious, reverse course and work with us to deliver a bipartisan jobs bill all Americans can be proud of."

Boxer argued that Reid was "just breaking (the jobs agenda) down into smaller pieces" and that provisions "including clean energy, (more) support for small business, and additional infrastructure provisions" would be included in later bills this year.