The lame-duck Congress, mired in a partisan clash over taxes and spending and preoccupied with a battle over extending the Bush tax cuts, refused Wednesday to restore federal financing of extended unemployment benefits, which had lapsed overnight.

The inaction means the imminent loss of unemployment compensation for some 800,000 out-of-work Americans, with nearly 2 million long-term unemployed expected to be affected by Jan. 1, according to the Labor Department.

US Labor Secretary Hilda Solis, speaking Wednesday at a press conference organized by Democratic congressional leaders, said that by next spring, another 6 million unemployed workers will lose benefits if Congress does not act. “Millions of families are going to struggle to put food on the table or put gas in the gas tank,” she said.

The press conference at the Capitol's Visitors Center had the trappings of a rally, with scores of unemployed workers from around the country in attendance.

Belt-tightening for Mary Williams

Mary Williams, a mental-health counselor from Philadelphia who has been out of work for seven months and lost her unemployment coverage with the overnight lapse in funding, was in the crowd.

Congress’s failure to act means even more belt-tightening, Ms. Williams says. “I try to take care of a roof, food, and the car I need to go from place to place to find jobs,” she says. “It’s choosing what’s most important – the basic necessities.”

She tells of moving from North Carolina to Texas, then to Philadelphia to find work, then going back to college for a graduate degree to improve her skills. She says she is now negotiating extensions on her student loans.

She says she hopes Congress acts quickly. “My car is almost paid for,” she says, and without help she will lose it.

Lawmakers on both sides of the aisle say that they recognize the unusually difficult economy facing unemployed workers and want to extend benefits. But for now, this measure is held hostage to a larger battle over extending the Bush tax cuts.

“We have never failed to [extend jobless benefits] as long as the unemployment rate was above 7.2 or 7.4 percent,” said Sen. Jack Reed (D) of Rhode Island, who proposed a temporary extension of benefits for one year in a floor speech on Monday. The national rate is currently 9.6 percent, according to Labor Department statistics from October.

Obstruction with '19th century maneuvers'

Efforts in the Senate to extend the unemployment benefits were trapped in a procedural wrangle and never allowed on the floor for consideration. It fell to Sen. Scott Brown (R) of Massachusetts to object on behalf of the Republican Party to one proposed measure that required unanimous consent to move to the floor.

“We are in the midst of a historic economic crisis. I realize that,” he said. But to avoid ”burdening future generations,” the $56.4 billion measure must be offset with cuts elsewhere, he said. Senator Brown proposed tapping unspent federal dollars in other programs, such as the 2009 Obama stimulus plan.

Senator Reed objected, noting that the Republican plan to permanently extend the Bush tax cuts gives the wealthiest Americans a $700 billion tax cut that is also not offset – and, unlike the employment benefit, would not expire.

Senate Republicans stepped up the pressure on tax cuts this week by signing a letter pledging to block all legislation on the floor until Congress resolves how to fund government for the current fiscal year and extend the 2001 and 2003 Bush tax cuts, now set to expire on Dec. 31. Senate Democrats want leverage to move legislation critical to their base on issues ranging from immigration and unionizing police and firefighters to compensation for people wounded in the 9/11 attacks.

The result is classic gridlock. While intense bargaining continues behind closed doors on how to wind down the 111th Congress – including extending unemployment insurance – lawmakers are fighting procedural battles on the floor.

“Republicans are using arcane 19th century maneuvers to block the extension of unemployment insurance,” said Sen. Tom Harkin (D) of Iowa, at a rally today with unemployed workers. “We’re going to get it done. One way or another, we’re going to get it done.”