An effort to revive extended unemployment benefits that expired last month was blocked on the Senate floor Thursday by a Republican-led filibuster.
Nearly 1 million people who had been receiving extended unemployment benefits have lost them due to the congressional inaction; Senate Republicans, joined by one Democrat, Nebraska's Ben Nelson, voted to block a measure that would have extended those benefits until December.
"If there were ever an example that is clear and direct that this is the party of no, this is it," Senate Majority Leader Harry Reid (D-NV) said.
Minority leader Mitch McConnell (R-KY) defended his party's refusal to approve the jobless benefits, saying they would have added to the deficit.
"Are our friends on the other side willing to extend these programs without adding to the debt?" he asked. "That's the real question in this debate."
McConnell instead proposed using stimulus funds meant for job creation to fund a one-month extension of the benefits, but Democrats refused.
The rejected bill would also have provided $16 billion in new aid to states, preserving the jobs of thousands of state and local government workers and providing what White House officials called an insurance policy against a double-dip recession. It also included dozens of tax breaks sought by business lobbyists, and tax increases on domestically produced oil and on investment fund managers.
The demise of the bill means that unemployment benefits will phase out for more than 200,000 people a week. Governors who had been counting on federal aid will now have to consider a fresh round of budget cuts, tax increases and layoffs of state workers.
"This is a bill that would remedy serious challenges that American families face as a result of this Great Recession," said Max Baucus (D-MT), the chief author of the bill. "This is a bill that works to build a stronger economy. This is a bill to put Americans back to work."
The bill has been sharply pared back after weeks of negotiations with GOP moderates Olympia Snowe and Susan Collins of Maine. The most recent version, unveiled Wednesday night, contained new cuts to food stamps and pared back the state aid provision to allow Democrats to claim the measure was fully paid for except for the unemployment insurance extension.
In February, McConnell had supported an earlier, bipartisan version of the bill that would have added more than $30 billion to the debt, according to a co-author of the measure, Sen. Charles Grassley (R-IA).
Democrats hope that political pressure from voters outraged about the cutoff of jobless aid and from business groups seeking renewal of longstanding tax breaks might eventually revive the bill.
The latest version of the measure contains a variety of provisions sought by lawmakers in both parties, anchored by the jobless aid and dozens of tax cuts sought by the business groups.
The latest draft would add $33 billion to the deficit -- down from the $80 billion deficit impact of the measure when it came to the floor two weeks ago.
The catchall measure also includes farm disaster aid, $1 billion for a youth summer jobs initiative and an extension of a bond program that subsidizes interest costs for state and local infrastructure projects. It would levy a new tax on investment fund managers but extend tax breaks such as lucrative credits that help businesses finance research and develop new products, and a sales tax deduction that mainly helps people in states without income taxes.
Crestfallen Democrats tried in vain to win support from moderate Republicans Snowe, Collins and Scott Brown of Massachusetts. They voted in March to defeat a filibuster.
"The debt is out of control," Brown said. "Since I did that last time, the debt's at over $13 trillion and rising."
The bill has long been considered a must-pass measure, but the political sands have shifted since it first passed in March. That vote came in the wake of a political scalding for Republicans after Sen. Jim Bunning (R-KY) blocked a short-term extension of jobless aid.
In the interim, however, the debt crisis in Europe and growing anxiety on deficits and debt among voters has turned Republicans against the legislation, though it's been cut considerably since passage of a March version that would have added about $100 billion to the debt.
Most of the measure -- except for a six-month extension of jobless benefits for people who have been out of work for more than six months -- is financed with offsetting tax increases or spending cuts, including more than $10 billion cut from last year's stimulus bill. Congress has always approved additional unemployment benefits as a deficit-financed emergency measure.
Democratic leaders said they bent over backwards to accommodate demands by Republicans for a smaller measure. Among the cuts revealed Wednesday was a more than $10 billion cut from last year's stimulus bill, mostly by paring back food stamp benefits by about $11 a month per beneficiary.
"They asked to have it reduced; we did it," said Sen. Patty Murray (D-WA). "They asked to have it paid for; we did it."
NPR's David Welna contributed to this report, which includes material from The Associated Press.