With voter anxiety over the economy remaining high, Democrats hope to bring down the 10 percent unemployment rate before the November congressional election. The House of Representatives passed a $155 billion bill last month that aims to stimulate the job market through infrastructure projects and helping states pay the salaries of public employees.
In the Senate, Democrats Byron Dorgan and Dick Durbin have been paring back 121 job-related proposals into a package they are expected to unveil in coming weeks. Their proposal is likely to differ substantially from the House version, with provisions that boost small businesses and renewable energy efforts, aides said.
The Senate might not pass a jobs bill until March, which would have to be reconciled with the House version before President Barack Obama could sign it into law.
Democrats are seeking to iron out differences between sweeping bills passed by the Senate and House to revamp the $2.5 trillion U.S. healthcare system, Obama's top domestic priority. Polls show a public backlash against the plan. But Democrats say they expect polls to be more supportive once they strike a deal that Obama can sign into law.
Financial regulation reform, another top Obama priority, will dominate debate in the Senate Banking Committee in coming weeks, with a bill likely to emerge as early as next month.
The House approved a measure in December that cracks down on big banks, hedge funds, executive pay and the derivatives market, while setting up new government bodies to deal with financial risks to economic stability.
Republicans and banking lobbyists want to block or weaken a bill, offered by Senate Banking Committee Chairman Chris Dodd, that in some ways is tougher than the House bill.
Dodd's recent decision to retire at the end of the year has complicated the measure's outlook.
Senator John Kerry is trying to break a deadlock over climate-control legislation that he and his fellow Democrats want to put to a vote during the first half of the year. Obama says climate control is another of his priorities, and he led negotiations last month in Copenhagen at an international summit on the topic. But with the November election, it's unclear whether enough senators will be willing to vote for a bill that could end up raising energy and other consumer prices during hard economic times.
DEBT LIMIT AND DEFICIT CONTROL
Lawmakers raised the country's debt limit to $12.4 trillion in December, but they will have to hike it further when the Treasury Department reaches that limit in coming weeks.
Democratic leaders have said they want to raise the limit by at least $1.8 trillion so they won't have to revisit the issue before the election.
The Senate plans a vote to increase the debt limit on Wednesday and could lessen the pain by coupling it with action on two measures that backers say could bring spending under control.
One proposal would create a commission that would give lawmakers political cover to back spending cuts, tax hikes or other measures to reduce the deficit.
The other, known as "paygo," would require new spending to be offset with tax hikes or spending cuts elsewhere, although there could be a wide range of exceptions.
Both measures face substantial hurdles, but lawmakers are in talks with the White House to hammer out a compromise. One possible outcome: a tougher paygo law, combined with a budget commission set up by the White House.
Lawmakers are awaiting a request from Obama for money to pay for his decision to send 30,000 more U.S. troops to Afghanistan. The administration is expected to ask Congress for $33 billion for the troop increase announced by Obama in December.
Congress appears certain to approve funding, but it will be a tough vote for many. Democrats are divided over Obama's decision. Republicans largely back it and are expected to provide the needed votes to clear the funds.
Democrats and Republicans are eager to give Obama more tools to sanction Iran for refusing to stop its nuclear work.
Before senators went home for the holidays, Senate Majority Leader Harry Reid said he wanted to hold a vote after the break on a bill that directs the president to sanction companies that supply gasoline to Iran. A similar measure already has passed the House.
But it is unclear whether the Senate will go ahead with its vote because the administration has grown cool to broad-based sanctions. It is looking instead at focused sanctions against Iran's leadership