WASHINGTON — The Senate on Monday cleared the way for a measure that would repeal a tax withholding program on government contractors and provide tax incentives for companies that hire veterans, making them the first pieces of President Barack Obama's jobs plan to gain some momentum in Congress.
The Senate voted 94-1 to take up the bill to end a new tax withholding program on government contractors after the House easily passed the measure last month. Democrats also intend to make the Senate bill the vehicle for a package of tax breaks to spur the hiring of veterans after Obama promoted that effort Monday with the approach of Veterans Day, on Friday.
These modest provisions are the only ones so far in Obama's sweeping proposal to promote hiring that have gained support in both parties. Republicans have denounced Obama's plan as a second stimulus package and blocked it in the Senate.
The provision for federal, state and many local governments to withhold 3 percent of their payments to contractors was created under President George W. Bush's administration but delayed until 2013. It was enacted after investigations showed that thousands of contractors were behind on billions of dollars in taxes. Advocates of the repeal say the contractors could use the money to hire more workers.
The Congressional Budget Office said its repeal would reduce federal revenue by $11 billion over 10 years. To pay for it, the House passed another bill that would fix an apparent error in the health care law that would allow hundreds of thousands of middle-income early retirees to get nearly free Medicaid coverage meant for the poor.
The effort to help veterans of Iraq and Afghanistan break into the workforce has earned bipartisan support. The last thing "veterans should have to do is fight for a job when they come home," Obama said as he urged Congress to pass a tax credit of up to $9,600 for companies that hire veterans. He also announced a package to help veterans with counseling and job referrals.