By Caren Bohan and Aruna Viswanatha
WASHINGTON (Reuters) - A senior Democrat said on Sunday he hoped an emerging deal on the U.S. budget would include an extension of unemployment benefits but added that his party would not necessarily walk away from an agreement that left it out.
"I don't think we've reached that point where we've said, ‘This is it, take it or leave it,'" Senator Richard Durbin told the ABC program "This Week," when pressed on whether his party would insist on including jobless aid in a final deal.
Durbin, the second-ranking Senate Democrat, said that based on what he has heard from Senator Patty Murray, the lead Democratic negotiator on the budget, the fiscal talks are making progress and moving in the right direction.
The House of Representatives and Senate budget panel, created after the government shutdown in October, is discussing a two-year accord that would ease the impact of across-the-board spending cuts known as the "sequester" and lower the near-term risk of another damaging fiscal showdown.
Durbin's comments signaled some flexibility on the issue of jobless aid. House of Representatives Democratic leader Nancy Pelosi said last week that Democrats "cannot support" a budget deal without an extension of unemployment insurance. Pelosi later clarified that she would like to see jobless benefits included in the budget deal but that she would be open to the idea of passing it under separate legislation.
Speaking on ABC on Sunday, Republican Senator Rob Portman, who is a member of the negotiating committee, expressed optimism about a fiscal deal, saying he hoped it could come together by the end of the week.
An extension of emergency unemployment benefits is a priority for President Barack Obama and his Democratic allies in Congress. Democrats have warned that without an extension, federal benefits will expire for some 1.3 million Americans in the week of December 28.
Democrats see a budget deal as one of the best legislative vehicles for passing an extension of the jobless aid, though they have said there are other options they could consider.
Federal unemployment benefits kick in for out-of-work Americans who have exhausted their state unemployment aid, which in many states runs out after 26 weeks.
The emergency federal aid began during the Great Recession in 2008 and has been renewed every year since.
Though government figures on Friday showed the U.S. unemployment rate fell to a five-year low of 7 percent in November, many Democrats say the U.S. job market is still far from robust and long-term unemployment remains a problem for many Americans.
Republican House of Representatives Speaker John Boehner has said that if Obama has a plan for extending unemployment benefits, he would "entertain" it.
Speaking on "Fox News Sunday," Senator Rand Paul of Kentucky, a possible 2016 Republican presidential candidate, said an extension of jobless benefits beyond the traditional 26 weeks could work against the unemployed.
He cited studies that show that the longer workers have been unemployed, the harder it is for them to find jobs.
"When you allow people to be on unemployment insurance for 99 weeks, you're causing them to become part of this perpetual unemployed group in our economy," Paul said. "And it really - while it seems good, it actually does a disservice to the people you're trying to help."
(Editing by Doina Chiacu)