WASHINGTON, Aug 5 (Reuters) – The U.S. Senate on Thursday
approved an election-year jobs bill that would send states
$26.1 billion to help them cope with historic budget shortfalls
and give Democratic lawmakers a victory to tout on the campaign
trail.

In a vote of 61 to 39, the Senate passed a bill that would
send the states $16.1 billion for Medicaid, the healthcare
program for the poor, and $10 billion to prevent teacher
layoffs. States could face total budget gaps this year of $120
billion.

WASHINGTON, Aug 4 (Reuters) – The U.S. House of Representatives on Wednesday took the rare step of cutting short its summer recess to return to the Capitol, as Democrats moved to pass an election-year jobs bill intended to help states cope with historic budget shortfalls.

"I am calling members of the House back to Washington at the beginning of the week to pass this bill and send it to President Obama without further delay," House Speaker Nancy Pelosi said in a statement.

The bill would send U.S. states $16.1 billion for Medicaid and $10 billion for schools in order to prevent states — which could face budget shortfalls of more than $120 billion this year — from cutting teachers’ jobs and healthcare.

The Senate voted 61-38 to close debate on the bill on Wednesday and move to a final vote, expected to take place on Thursday. Democrats need only 51 votes for final passage and are proceeding as if it were an accomplished fact. Similar measures previously passed the House.

"Today’s vote is an important development as we head back into the school year and tens of thousands, probably more than 160,000 teachers, as a result of this economy, were likely facing pink slips," White House Press Secretary Robert Gibbs said, adding that President Barack Obama is eager to sign the bill.

CRITICS SEE A TAX HIKE

Fiscal conservatives oppose the legislation due to fears it will add to the deficit and tie states’ hands on how to spend the funds. Republicans attacked the idea of the House returning, even before Pelosi’s announcement, and called the measure a "job-killing tax increase."

Democrats facing a wave of anti-Washington anger hope passage of the measure will convince voters going to the polls Nov. 2 of their commitment to bringing down the high U.S. unemployment rate, which is near 10 percent.

The fragile rebound from the economic recession that began in 2007 is foremost on the minds of voters and candidates for the 435 House seats and 37 Senate seats up for grabs.

Although states have been begging for the Medicaid money, they are wary of the teachers’ fund as it requires them to maintain education spending at 2008 levels, which many cannot afford.

Members of the healthcare industry are reassured by the Medicaid money and patient advocates say the extra funds will keep states from curbing nursing and home visitation programs.

Supporters say the bill will not add to the deficit because it is paid for by closing tax loopholes, eliminating advance refunds on the earned income tax credit and ending stimulus funds for food stamps earlier than expected.

One tax loophole that would be closed would raise more than $10 billion over a decade by preventing companies from claiming foreign tax credits for income not yet subject to U.S. tax. Another relates to how foreign stock acquisitions are valued for tax purposes.

"It saves jobs without adding a dime to the deficit," said Senator Charles Schumer, a Democrat from New York. "We cut in other places to help save the jobs of firefighters and teachers."

BATTLE OF BUDGETS AND ELECTIONS

More than half of the 50 U.S. states counted on the funds for Medicaid for fiscal 2011, which started last month for many. Those states use the federal government’s reimbursements to run Medicaid.

The federal stimulus plan increased the reimbursements, but that money runs out in December, so states will have to cut spending and raise taxes to fill the void.

The Senate’s move on Wednesday means "many other states will not be forced to make drastic cuts that would have harmed both our citizens and our economic recovery," said Washington Governor Chris Gregoire.

Pennsylvania Governor Ed Rendell said that in his state, "there will still be some layoffs probably, but they will be significantly diminished."

Federal Reserve Chairman Ben Bernanke, White House economic adviser Christina Romer and many economists see state budget woes as a drag on the economic recovery.

Public opinion polls show voter discontent is growing over federal spending.

"Washington needs to take care of its own fiscal mess, not deepen it by bailing out the states," said Senate Republican leader Mitch McConnell.

Stephen Hess, a senior fellow at the liberal-leaning Brookings Institution, told Reuters that calling the House back into session "is a big move in terms of how unusual it is."

He added, "I don’t think it comes from a position of strength" on the part of Democrats, who are having to run for re-election amid a high, 9.5 percent unemployment rate that could hurt their political prospects this year. (Additional reporting by Kim Dixon, Susan Cornwell, and Matt Spetalnick in Washington and Jon Hurdle in Philadelphia; Editing by David Alexander, Paul Simao, Leslie Adler, Andrew Hay and Jan Paschal)

WASHINGTON (Reuters) – The U.S. House of Representatives will cut short its summer recess in hopes it can approve billions of dollars in aid for states and prevent teacher layoffs, House Speaker Nancy Pelosi said on Wednesday.

“I will be calling the House back into session early next week to save teachers’ jobs and help seniors and children,” Pelosi wrote on Twitter.

WASHINGTON, Aug 4 (Reuters) – A bill to send U.S. states
billions of dollars for schools and healthcare advanced in the
Senate on Wednesday, bolstering states’ hopes for federal help
in confronting enormous budget holes.

The Senate voted 61-38 to close debate and move the
legislation toward a final vote. Republicans also attempted to
kill the bill, saying it violated U.S. budget rules, but the
Senate voted to waive budget rules and allow it to proceed.

WASHINGTON, Aug 2 (Reuters) – The U.S. Senate on Monday
killed a plan to send $26.1 billion dollars to states due to
deficit concerns, marking a setback for those counting on
federal help with budget gaps.

The plan would have been paid for by closing tax loopholes
enjoyed by big multinational companies.

WASHINGTON (Reuters) – The Senate on Monday will decide whether to send billions of dollars to states to help cover steep healthcare costs, a plan paid for by closing tax loopholes enjoyed by big multinational companies.

Chances looked slim late on Monday for passage of the plan, which would provide states with $16.1 billion through June for Medicaid and also give them $10 billion to avert teacher layoffs.

WASHINGTON, Aug 2 (Reuters) – Nearly half of all U.S.
states are fighting President Barack Obama’s healthcare reforms
and those that have taken the battle to court were heartened on
Monday by a judge’s decision to let Virginia proceed with its
lawsuit against the program.

“Today’s ruling is a setback for the Department of Justice
and is vindication that the states’ lawsuits have merit,” said
Ryan Wiggins, spokeswoman for Florida Attorney General Bill
McCollum in Tallahassee.

WASHINGTON (Reuters) – A judge ruled on Monday that the state of Virginia could proceed with its challenge to President Barack Obama’s landmark healthcare law, a setback that will force the White House to defend its reforms in the middle of a tough congressional election campaign.

In the opening salvo of the legal fight, U.S. District Judge Henry Hudson refused to dismiss the state’s lawsuit, which argued the requirement that its residents have health insurance was unconstitutional.

WASHINGTON (Reuters) – House of Representatives Speaker Nancy Pelosi wants a vote before November elections on whether to extend tax cuts for those with annual income over $250,000 a year, she said in an interview broadcast on Sunday.

“The tax cuts for the wealthiest … (with income of) $250,000 and above, were the Bush initiative,” Pelosi said on ABC’s “This Week,” referring to former President George W. Bush.

WASHINGTON (Reuters) – State tax revenue is improving, but only slightly, and may not be enough to end steep spending cuts or replace the loss of assistance from the federal stimulus plan that expires in December, according to a report on Tuesday.

The National Conference of State Legislatures said states faced a collective budget gap of $83.9 billion when creating their budgets for fiscal 2011, which for most began on July 1.