The Senate has blocked Republican-backed legislation that would prevent the government from withholding 3 percent of payments to government contractors.
The legislation failed to get the 60 votes needed to end a Democratic filibuster late Thursday. Many Democrats and President Barack Obama support the idea but opposed it Thursday because it would be paid for with $30 billion in cuts from domestic agency spending. The White House promised a veto.
The withholding law was passed in 2006 by a GOP-controlled Congress. The idea then was to make sure contractors couldn't duck their taxes. Advocates of repealing it say it will help create jobs, especially from contractors with smaller profit margins on large projects.
Senate Democratic leader Harry Reid promised that the withholding requirement would be repealed in coming weeks.