* Extension would fund projects past Nov. elections
* No Republican decision on oil pipeline in extension
* Democrats accuse Republicans of stalling on jobs measure
By David Lawder
WASHINGTON, June 7 (Reuters) - Signaling that hopes for a deal on a transportation construction bill may be fading, U.S. House of Representatives Speaker John Boehner on Thursday floated the idea of a six-month extension of current funding to push the issue past the November elections.
Boehner told reporters that if House and Senate negotiators fail to agree on new long-term funding by June 30, when the latest stop-gap authority for road, bridge and rail transit projects expires, he would not want another short-term extension.
"Frankly, I think if we get to June 30, there would be a six-month extension and move this thing out of the political realm that it appears to be in at this moment," Boehner said.
The fight in Congress over the transportation bill is one of several being waged between Democrats and Republicans on high-profile issues, with each side trying to gain the upper hand in their bids to win re-election on Nov. 6.
The highway bill is particularly important as it would authorize major job-creating construction projects across the United States at a time when the economic recovery is losing steam and jobs are the top issue for voters.
Democrats stepped up their accusations that Republicans were "stalling" the transport measure and other jobs-focused legislation in an effort to keep the economy weak and undermine Obama's re-election hopes.
"For months the congressional Republicans have worked against any piece of legislation that might create jobs or spur economic growth," Senate Majority Leader Harry Reid said on the Senate floor.
"Congressional Republicans' No. 1 goal isn't to improve the economy or create jobs, it's to defeat President Obama," added Reid, a Democrat.
In a sign of his pessimism about the highway bill, Reid sent Boehner and Senate Republican leader Mitch McConnell a letter on Thursday offering to use part of the measure's funding mechanism to pay for a separate, $6 billion bill to keep student loan interest rates from doubling.
Boehner said he still wanted agreement on a long-term transport bill - a measure he once touted as his signature jobs initiative.
But House members are preparing to depart from Washington for another recess next week, leaving just two weeks to reach a deal, pass it through both chambers and get a signature from President Barack Obama. Four weeks of haggling so far has produced little progress on core differences.
"I'm very hopeful that they will get into serious discussions quickly," Boehner said.
A major sticking point in the House-Senate negotiations over the two-year, $109 billion transportation bill passed by the Senate is House Republicans' insistence on including approval of TransCanada Corp's $7 billion Keystone XL oil pipeline.
Asked whether Boehner would insist on Keystone approval as a condition of a six-month extension or agree to a "clean" extension of current law, Boehner's spokesman, Kevin Smith, said no decisions have been made at this point.
President Barack Obama opposes any move to fast-track the project until new environmental reviews are completed.
The 1,700-mile (2,736-km) pipeline, which would carry crude from Canadian oil sands to Texas refineries, was not included in a compromise offer made by lead Senate negotiators Barbara Boxer, a Democrat, and James Inhofe, a Republican.
Boehner also has had a difficult time getting his own caucus to support a transportation bill - even one with Keystone and new oil drilling rights included - because of its costs. Many fiscal conservatives backed by the Tea Party movement will not support a multibillion-dollar spending bill at a time of high budget deficits.
House Transportation and Infrastructure Committee chairman John Mica said House Republicans on Thursday would make a counter-offer on the Senate plan, adding that negotiations would continue by conference call during next week's recess.
"Our staffs are negotiating some of the terms of what hopefully would be a successful conference report," said Mica, who has typically voiced more optimism about the transportation bill than has Boehner.
Senator Boxer, the California Democrat, complained that another extension would exhaust the Highway Trust Fund because it is currently not collecting enough gasoline taxes to support current project spending levels. The fund is expected to be depleted sometime after Oct. 1.
"I am very disappointed that Speaker Boehner is even talking about a long-term transportation extension, which would lead to the Highway Trust Fund going bankrupt, when all of our efforts must be focused on passing a transportation bill by the June 30th deadline, Boxer said in a statement. "Three million jobs and thousands of businesses are at stake."
Although the current extension is keeping projects going that have already started, the uncertainty over long-term funding is hampering states' ability to proceed with long-term projects, preventing the hiring of hundreds of thousands of idled construction workers.
Construction was particularly hard-hit in May's dismal U.S. jobs data released last week, with employment in the sector falling 28,000 during the month.