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Obama, Senate Democrats Balk at House GOP’s Version of Payroll Tax Extension

December 13, 2011 at 12:00 AM EDT
The Republican-led House passed legislation Tuesday to continue a payroll tax cut extension that affects 160 million workers, but Democrats balked at a separate provision that would force federal approval of the hotly debated Keystone oil pipeline to run from Canada to Texas. Jeffrey Brown reports.

JEFFREY BROWN: A Republican bill to preserve a politically charged tax cut went before the U.S. House today. But the move sparked an immediate warning from the White House.

It was the latest act in the building drama over a payroll tax cut extension for 160 million Americans. Republicans pushed a bill to keep the tax cut for another year. It would also extend long-term jobless benefits again, while gradually winding down the maximum time period from 99 to 59 weeks.

But they also attached a separate provision which would force federal approval of the hotly debated Keystone oil pipeline to run from Canada to Texas.

House Majority Leader Eric Cantor argued that’s about creating jobs.

REP. ERIC CANTOR, R-Va., House majority leader: Because, if the president said he wants to make sure that we create jobs, and he wants to be there for the middle class, that’s what this bill does, tens of thousands of jobs, if not more.

JEFFREY BROWN: Democrats like New York’s Charles Rangel insisted Republicans are, in effect, holding the payroll tax cut hostage to the pipeline.

REP. CHARLES RANGEL, D-N.Y.: Let’s get rid of all the pipeline language. Let’s do what the bill is supposed to do, and let’s not put in something that could impede the passage.

JEFFREY BROWN: President Obama had delayed a decision on the Keystone pipeline until 2013.

Today, a White House statement said he would veto the Republican bill if it gets to his desk. That seemed unlikely, though, since Senate Democrats served notice they’d block the House Republican measure first.

In addition to the pipeline provision, Democrats opposed financing the bill by raising Medicare premiums for wealthier seniors and extending a pay freeze for federal workers for another year. But both sides also had one eye on the clock as it ticked down to the congressional holiday recess.

SEN. MITCH MCCONNELL, R-Ky., minority leader: We’re going to have to act here before the week’s out. And we are in favor of extending the payroll tax holiday for another year, in favor of extending unemployment insurance, with some reforms.

SEN. HARRY REID, D-Nev., majority leader: Republicans seem eager to get out of town. Some have even suggested they’re willing to leave before we reach a compromise on the payroll tax cut and other things. We’re not going to do that. We’re willing to stay here until that happens and we work something out.

JEFFREY BROWN: Despite the seeming deadlock, Congress-watchers like Sarah Binder of the Brookings Institution say there’s much strategizing going on behind closed doors.

SARAH BINDER, Brookings Institution: Nobody wants to be raising taxes in whatever form. They don’t want to do that on Christmas. Right? They can’t — Republicans and Democrats can’t have those headlines.

And Democrats may think, well, we will just blame the Republicans. But the public doesn’t really see it that way. It’s much more likely to be a pox on both your houses.

JEFFREY BROWN: In the meantime, the lack of agreement also threatened to tie up other key legislation. It was widely reported that White House aides want Democrats to hold up a $1 trillion bill to keep the government running past Friday, that is, until and unless a deal is reached on the tax cut extension and unemployment benefits.