* Some House conservatives leaning 'yes'
* Democrats stung by failure to extend jobless benefits
* vote could come Thursday
By David Lawder and Thomas Ferraro
WASHINGTON, Dec 11 Republicans in the U.S. House of Representatives on Wednesday were falling in line behind a bipartisan two-year budget deal, indicating that the normally rambunctious group of lawmakers is not spoiling for a year-end fiscal fight.
Despite conservative groups' denunciation of the plan and public opposition from some members associated with the conservative Tea Party movement, the Republican-controlled House was planning to vote on Thursday to pass the deal, Representative Kevin McCarthy, the third-ranking Republican told Reuters.
A key House panel, on a 9-3 vote, cleared the legislation for debate and votes in the full House. The Republican-controlled Rules Committee refused to allow Democrats to offer an amendment to extend federal unemployment benefits that expire later this month.
The agreement, if approved, would be the first to bridge the bitter partisan divide between Republicans and Democrats in Washington that has paralyzed Congress since 2010. It is aimed primarily at breaking a cycle of fiscal crises in Washington following last October's chaotic 16-day closure of many federal agencies.
While it includes modest deficit reduction measures - $85 billion in savings over ten years and an easing of across-the-board budget cuts known as the "sequester" - it effectively concedes that larger scale savings of the sort envisioned in various "grand bargain" proposals are out-of-reach politically.
For some Republicans, it could have the added merit of keeping the public's attention focused on President Barack Obama's healthcare law and its rocky rollout instead of on another budget battle in the midst of holiday season.
Republicans were hammered in public opinion polls for their role in the October shutdown, but this faded quickly as the media later shifted its focus to the Obamacare troubles.
The party's divisions, enflamed during the shutdown, were still on display Thursday.
Organizations influential with House conservatives - such as the Heritage Foundation, the Club for Growth and Americans for Prosperity - continued denouncing the agreement.
In response, House Speaker John Boehner publicly lashed out at some of the groups for opposing the deal even before it was made public.
"They're using our members, and they're using the American people, for their own goals," said Boehner. "This is ridiculous. Listen, if you're for more deficit reduction, you're for this agreement," Boehner said.
Club for Growth President Chris Chocola responded after Boehner's comments: "This proposal swaps debt reduction today and next year for the dubious promise of debt reduction a decade from now."
In past budget battles, many conservative House Republicans refused to back legislation negotiated by Boehner or his subordinates.
Many say they will buck the leadership again this time. But others were starting to fall in behind their leaders.
Representative Tim Huelskamp of Kansas, a Tea Party favorite, told reporters he expects more than two dozen of his fellow conservatives to vote against the deal, which would not be enough to sink it if some Democrats vote for it.
"It's more spending," Huelskamp complained.
"I'm leaning yes," said Representative Tim Griffin, a conservative Republican from Arkansas, who said it would avoid future government shutdowns and "locks in some certainty, which I think the economy needs and the American people need."
The deal is splitting possible Republican presidential contenders as well. It was negotiated in part by House Budget Committee Paul Ryan, the party's vice-presidential nominee in 2012 and a likely candidate again in 2016.
Others likely to compete with Ryan for the Republican nomination remain opposed, including Senators Marco Rubio of Florida and Rand Paul of Kentucky.
Despite the generally positive reception for the deal from Republican leaders and most Democrats, the two parties are unaccustomed to cooperating and the agreement inevitably will remain fragile until it is done.
A complication arose on Wednesday, for example, as House Republican leaders added a provision to the deal that would temporarily forestall a reduction in payments to doctors by the Medicare health program for the elderly.
This so-called "doc fix" is a perennial temporary adjustment made in Congress to get around Medicare cost controls written into law.
This angered Democrats, who have so far been thwarted in their demands to add an extension of federal jobless benefits due to expire at year's end.
"I think it puts at risk the whole bill and it surely puts at risk my vote," said Democratic Representative Sandy Levin, who is pushing for help for the 1.3 million long-term unemployed.
With people set to lose those benefits while the jobless rate remains at 7 percent, the Obama administration said the economy could take a hit as long-term unemployed people have less money to spend.
"It's absolutely unconscionable that we are - could possibly even consider leaving Washington, D.C., without extending those benefits," House Democratic leader Nancy Pelosi told reporters.
Passage of the agreement in the House before the chamber recesses on Friday for the year would all but guarantee the same in the Senate, probably next week.