Archive for Friday, December 16, 2011

Senate leaders reach accord on tax cuts

Compromise would require Obama to make decision on pipeline

December 16, 2011

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— Senate leaders agreed on compromise legislation to extend Social Security payroll tax cuts and jobless benefits for two months while requiring President Barack Obama to accept Republican demands for a swift decision on the fate of an oil pipeline that promises thousands of jobs.

A vote is expected today on the measure, the last in a highly contentious year of divided government.

Any deal would also require House passage before it could reach Obama’s desk.

A senior administration official said on condition of anonymity that the president would sign the measure but almost certainly refuse to grant a permit for the oil pipeline project. The official was not authorized to speak publicly about the deal.

Racing to adjourn for the year, lawmakers moved quickly to clear separate legislation avoiding a partial government shutdown threatened for midnight.

There was no immediate response to the compromise from the White House, which a few hours earlier had backed away from Obama’s threat to veto any bill that linked the payroll tax cut extension with a Republican demand for a speedy decision on the 1,700-mile Keystone XL oil pipeline proposed from Canada to Texas.

Republican senators leaving a closed-door meeting put the price tag of the two-month package at between $30 billion and $40 billion said the cost would be covered through a fee on mortgages backed by Fannie Mae and Freddie Mac.

The legislation would also provide a 60-day reprieve from a scheduled 27 percent cut in the fees paid to doctors who treat Medicare patients.

Several officials said it would require a decision within 60 days on the pipeline, with the president required to authorize construction unless he determined that would not be in the national interest.

Obama recently announced he was postponing a decision until after the 2012 elections on the much-studied proposal. Environmentalists oppose the project, but several unions support it, putting the president in the uncomfortable position of having to choose between customary political allies.

Senators in both parties hastened to claim credit.

Sen. Richard Lugar, R-Ind., issued a statement that said the compromise included legislation he authored “that forces President Obama to make a decision” on the pipeline.

Sen. Max Baucus, D-Mont., said he had “brokered a final deal by bringing lawmakers from both parties together to support jobs.”

Officials said that in private talks, the two sides had hoped to reach agreement on the full one-year extension of payroll tax cuts and jobless benefits that Obama had made the centerpiece of the jobs program he submitted to Congress last fall.

Those efforts failed when the two sides could not agree on enough offsetting cuts to make sure the deficit wouldn’t rise.

“We’ll be back discussing the same issues in a couple of months, but from our point of view, we think the keystone pipeline is a very important job-creating measure in the private sector that doesn’t cost the government a penny,” said Sen. Mitch McConnell of Kentucky, the Republican leader.

There was no immediate reaction from House Speaker John Boehner. Neither he nor his aides participated in the negotiations, although McConnell said he was optimistic about the measure’s chances for final approval.

Obama said on Dec. 7 that “any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice.”

More recently, a veto threat issued Tuesday against the House-passed version of the bill cited the introduction of “ideological issues into what should be a simple debate about cutting taxes for the middle class.” Senior administration officials later told reporters that was a reference to the pipeline.

The State Department, in an analysis released this summer, said the project would create up to 6,000 jobs during construction, while developer TransCanada put the total at 20,000 in direct employment.

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