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The fight: Tax cuts, jobless benefits and pipeline

By David Espo

Associated Press

Published: Friday, Dec. 16 2011 2:50 p.m. MST

House Minority Leader Nancy Pelosi of Calif., followed by House Assistant Minority Leader James Clyburn of S.C. and House Minority Whip Steny Hoyer of Md. arrive for a news conference on Capitol Hill in Washington, Friday, Dec. 16, 2011, where she criticized Republicans as being responsible for a "do-nothing Congress" .

J. Scott Applewhite, Associated Press

WASHINGTON — The White House backed away from a critical veto threat Friday as top Republicans in Congress served noticed they will extend expiring Social Security payroll tax cuts only if President Barack Obama swiftly decides the fate of a proposed oil pipeline that promises thousands of jobs.

With Republicans talking tough and lawmakers from both parties anxious to leave for the holidays, Obama spokesman Jay Carney declined several times to repeat Obama's earlier statement that he would reject any attempt to link the tax cuts and the Canada-to-Texas pipeline. "There's a process at work. I'm not going to analyze what language would be acceptable and what wouldn't," Carney told reporters.

He made his comments as Republican and Democratic leaders sought a compromise on legislation to renew the tax cuts and long-term jobless benefits that are at the heart of the jobs program that Obama submitted to Congress last fall.

Racing to adjourn for the year, lawmakers moved swiftly to clear separate legislation avoiding a partial government shutdown threatened for midnight — focusing attention on the final disputed issue in a tempestuous year of divided government in an era of high joblessness and public dissatisfaction with Congress.

Obama has said extensions of the tax cuts and unemployment benefits are necessary to help nurture an economic recovery while also sustaining victims of the recession. Republicans injected the pipeline project into the legislation after the president postponed a decision on the long-studied project until after the 2012 elections.

Under the House-passed tax measure the project will go forward unless Obama decides in 60 days that its construction is not in the national interest.

"Let's not just pass a bill that helps people on the benefits side, let's also include something that actually helps the private sector create the jobs Americans need for the long term," Republican leader Mitch McConnell of Kentucky said in Senate-floor remarks that challenged Obama to give ground

In a political jab, he added, "Here's an opportunity for the president to say he's not going to let a few radical environmentalists stand in the way of a project that would create thousands of jobs and make America more secure at the same time."

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.

Apart from the pipeline, negotiators for the two parties struggled over other differences as they sought agreement on the last major measure of the year.

Officials said there was widespread agreement to keep the Social Security tax cut in place for 2012, noting that if it lapsed, 160 million Americans could experience a cut in take-home pay at a time when the economy is still struggling to recover from the worst recession in decades. The president had originally sought to expand the cut but has effectively jettisoned that proposal.

The president also is seeking a renewal of the current system under which a maximum of 99 weeks of jobless benefits is available for the long-term unemployed. The House measure cuts that to 79, and officials said the two sides were considering a compromise between the two levels.

Both parties want to avoid a threatened 27 percent cut in payments to doctors who treat Medicare patients, but that, too, was in flux. The House-passed bill provides a two-year reprieve at a cost of about $38 billion over a decade. Officials said it was possible that delay could be cut to a single year, depending on the level of cuts negotiators could agree on elsewhere in the budget to offset the cost.

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