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An attempt by congressional Democrats on Monday to secure around $26 billion in emergency aid to state governments seems likely to fail when Senate lawmakers vote on the measure later Monday.
Republican leadership said they expect all of their members to vote against the bill in a procedural vote scheduled for Monday evening. Democrats would need at least one Republican to join them in order for consideration of the bill to continue.
"Let's be clear: This vote, like the principle behind it, is simple," Senate Majority Leader Harry Reid (D., Nev.) said on the Senate floor on Monday. "It's about saving jobs--not just because we need to keep unemployment from growing, but because of how important those jobs are in our society."
Sen. Mitch McConnell (R., Ky.), the top Republican in the Senate, made no secret about his party's view of the legislation.
"This bill is a brazen attempt to funnel more money to the public employee unions before an election at a moment of record deficits and debt, and to set the stage for a massive tax hike before the end of the year," McConnell said Monday afternoon.
The legislation would provide roughly $16 billion in funding for state governments to help them pay for rising costs stemming from an expansion of the Medicaid program, which provides health care for lower-income Americans.
Current federal funding for the expansion of the program expires at the end of the year. Democrats are seeking to continue the funding through the first six months of 2011.
The legislation would also transfer $10 billion to local school boards to help them avert layoffs of teachers, which many economists expect could occur this autumn due to the dire financial straights in which many local governments find themselves. Democrats say the package would help to save 140,000 teacher jobs.
Democratic senate aides said the cost of the package would be fully offset by closing what they say is a tax loophole on U.S. multinational firms that currently pay a lower rate of tax on foreign earnings.
It would also propose cuts to the Pentagon's budget, although not in a way that would affect funding for the conflict in Afghanistan or continuing U.S. presence in Iraq, Democrats said.
And it would reduce funding for the food-stamps program to the level at which it stood before last year's economic-recovery program was passed by Congress.
But the non-partisan Congressional Budget Office said the plan would add around $5 billion to the federal budget deficit over the next decade. According to its assessment of the bill, the CBO only gives partial credit to some of the Democrats' proposed spending cuts.
The White House issued a statement Monday lending its support to the legislation.
Even if Democrats were able to secure some Republican backing for the package, House lawmakers have already departed for the August recess and wouldn't be able to take up the bill until they return to Washington, D.C., in September.
Pessimism about the vote's chances appeared to weigh on hospital stocks Monday afternoon, pulling them back from gains they had been posting earlier in the day.
LifePoint Hospitals Inc. (LPNT) had traded higher all morning after posting better-than-expected second-quarter results, but the stock turned negative early Monday afternoon and closed down 1.4% to $30.47.
Other hospitals closing lower were Community Health Systems Inc. (CYH), down 3.2% to $31.38, Health Management Associates Inc. (HMA), down 1.5% to $7.05, and Universal Health Services Inc. (UHS), down 2.9% to $34.92.
Fears about the funding not getting extended have weighed on the hospital sector for weeks, Robert W. Baird analyst Whit Mayo noted, and at this point he thinks this issue is likely already priced into the stocks.
The decline in the hospital stocks was set against a strongly positive market Monday, with the Dow Jones Industrial Average posting a gain of more than 200 points.
-By Corey Boles, Dow Jones Newswires; 202-862-6601; firstname.lastname@example.org
(Jennifer Cummings in New York contributed to this article.)