By Richard Cowan

WASHINGTON (Reuters) - Senate Democrats on Thursday offered a new plan to revive federal unemployment benefits until mid-November and pay the $18 billion price tag with new spending cuts, but hopes of a bipartisan deal dissolved into bickering by day's end.

"The package does what the Republicans wanted," Senate Majority Leader Harry Reid, a Democrat, said on the Senate floor. He said the cost of renewing the jobless benefits for about 1.4 million long-term unemployed Americans would be "entirely paid for" and would contain "structural changes they (Republicans) were demanding."

But key Republicans promptly rejected the Democratic initiative to renew the benefits that expired on December 28, dashing hopes earlier in the day that the two parties were moving toward a compromise.

Indiana Senator Dan Coats complained that the cost of the new federal benefits would not be covered until years in the future.

"It's pretty hard to explain to anybody outside government, 'Let's spend the money now and we'll send you a check'" in a decade or so.

Coats was one of six Republicans who on Tuesday helped Democrats advance the debate on a three-month extension of the federal benefits that were helping the unemployed amid a 7 percent national jobless rate.

Democrats, who control the Senate 55-45, need the support of Republicans like Coats to overcome procedural roadblocks and win passage of any unemployment compensation bill.

The expiration of federal jobless benefits initially left more than 1.3 million long-term unemployed people without weekly payments that averaged about $300. Reid said that since then, the number has grown to about 1.4 million.

Democratic Senator Jack Reed of Rhode Island, one of the negotiators, late on Thursday declared on the Senate floor that "We are still trying to find a bipartisan approach" that can pass the Senate and House of Representatives.

Under the latest Democratic initiative, most of the $18 billion cost would have been offset by extending automatic spending cuts, known as "sequestration," meaning that the savings would be achieved in 2024, according to a Senate aide describing the plan.

A small amount of additional savings would have been achieved by tightening requirements for people who collect both jobless benefits and disability payments, Reid said.

Reid also said the measure would "reduce slightly" the number of weeks a jobless person could collect payments, which could have presented problems for some liberal Democrats.

Democrats had been pushing for a one-year extension of the expired benefits while Republicans have said they would go along with a three-month renewal, but only if the costs were covered.

(Additional reporting by David Lawder, Editing by Chizu Nomiyama, Jonathan Oatis, Cynthia Osterman and Ken Wills)


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