(Adds more quotes, details) By Doug Palmer WASHINGTON, Oct 31 (Reuters) - The House of Representatives, defying a White House veto threat, on Wednesday passed a multibillion-dollar expansion of a program to help retrain workers who have lost their jobs because of foreign competition. "The status quo is not working and we must do much more to help American workers compete and thrive in the increasingly competitive global market," House Speaker Nancy Pelosi said shortly before the House voted 264-157 to approve the Trade and Globalization Assistance Act of 2007. Only 38 Republicans joined 226 Democrats in support, and the vote fell short of the two-thirds majority needed to overcome a veto. The bill would for the first time extend federal trade adjustment assistance (TAA) to the service sector, which accounts for about 80 percent of U.S. employment, and allow more manufacturing workers to apply for the aid. It also provides a two-year increase in federal subsidies to help displaced workers pay for health insurance after losing their jobs. Democrats say the current tax credit hasn't worked well and plan to revisit the issue later. House Republican Whip Roy Blunt of Missouri accused Democrats of pouring more money into TAA without making it better. "The result is a bill that raises taxes on both workers and employers by $11 billion, doubling the cost of the program, and expanding its scope to cover the public sector workforce as well," Blunt said in a statement. "How the free exchange of goods and services impacts government employees -- well, that's anyone's guess," he said. FINE-TUNING OPPORTUNITY The House vote came a day after the White House budget office said President George W. Bush's senior advisers would recommend he veto the bill in its current form. The Bush administration supports extending and improving federal trade adjustment assistance, but the bill crafted by House Democrats converts it "from a trade-related program to a universal income-support and training program," the White House budget office said. The Senate is expected to pass its own reform legislation in the coming weeks, providing the opportunity to fine-tune a final bill before the current program expires at the end of the year, said Louisiana Rep. Jim McCrery, the top Republican on the House Ways and Means Committee. The White House Council of Economic Advisers estimates less than 3 percent of longer-term job losses are due to trade. But Democrats argue U.S. policy hasn't kept pace with new threats workers face from globalization, such as the outsourcing of call center and other service industry jobs. The TAA program now costs about $900 million per year and the proposed expansion would add about $6.2 billion in training and unemployment aid over 10 years. It pays for that and other reforms by extending an unemployment insurance surtax due to expire this year and delaying business tax cuts approved by Congress in 2004 until 2012. The bill also modifies the WARN Act by requiring employers to give 90 days notice of plant closings and mass layoffs, instead of 60 days currently, and doubling the penalties for companies that fail to comply.
