The fight: Tax cuts, jobless benefits and pipeline

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."