House passes bill linking tax cut, Keystone pipeline

WASHINGTON – The House on Tuesday passed legislation that sets up a showdown with the Obama administration over the Keystone XL oil pipeline by tying a plan to speed up the project’s approval to a tax- cut extension the president favors.

At its heart, the bill would renew a 2-percent Social Security payroll tax cut before it expires Jan. 1 and extend unemployment insurance, though the ceiling on those benefits would be trimmed from 99 weeks to 59 weeks.

But House Republicans folded in the unrelated pipeline proposal and another provision to strike new Environmental Protection Agency pollution standards for industrial boilers. The measure would give the Obama administration 60 days to decide whether to approve a permit for TransCanada Corp.’s proposed Keystone XL pipeline, which would carry crude from Alberta, Canada, to Southeast Texas refineries.

The House voted 234-193 to pass the legislation and send it to the Senate, where Democratic leaders have called it dead on arrival.

President Barack Obama also vowed to reject any legislation linking the pipeline and payroll tax cut. On Tuesday, the White House issued a formal veto threat. Without specifically pointing to House Republicans, the White House insisted the payroll tax cut measure had been hijacked to score political points.

A quick recess?

But GOP lawmakers could force the White House’s hand. If the House quickly recesses for a holiday break, Senate Democrats and the Obama administration may have no choice but to let the payroll tax cut expire on Jan. 1 or accept the pipeline proposal as the price for that tax relief. Congress also is deliberating a broad spending bill to keep the government running through next September.

The State Department recently decided to delay a final verdict on whether the $7 billion project is in the national interest until early 2013 so it could conduct an environmental analysis of an alternative route being considered by TransCanada and Nebraska policymakers.

Proponents say Keystone XL would let the U.S. get more of the oil it needs from a North American ally instead of the Middle East, while simultaneously providing new transportation opportunities for currently land-locked oil produced in western states.

A study commissioned by TransCanada concluded that as many as 20,000 jobs could be created if the pipeline’s construction were approved, though other estimates put the number around 3,000.

Republicans on Tuesday seized on those numbers as evidence that it makes sense to bundle the pipeline and payroll tax bills as a job-creation package. Rep. Pete Olson, R-Sugar Land, said the measure represented “an opportunity to reduce our reliance on Middle Eastern oil and create thousands of American jobs.”

House Majority Leader Eric Cantor, R-Va., challenged Obama to support the package.

“The president said he wants to make sure that we create jobs, and he wants to be there for the middle class,” Cantor said. “That’s what this bill does. It creates tens of thousands of jobs, if not more.”

Environmentalists argue the job claims are wildly inflated and regardless, the price is too high. They say the pipeline would expand the market and demand for oil sands crude, which produces more greenhouse gas emissions than alternatives.

House Minority Leader Nancy Pelosi, D-Calif., accused Republicans of being disingenuous, in insisting they support the payroll tax cut extension while combining it with proposals that the president has vowed to veto.

“It’s hard to understand how you can say you’re for something except you’re going to put up obstacles to its passage,” she said on the House floor.

Rep. Sheila Jackson Lee, D-Houston, said Congress should approve the payroll tax cut without bogging it down with other issues. “The payroll tax cut is now shackled with unwanted baggage,” she said.

Why Green voted no

The legislation put some Democrats in a tough spot politically, including lawmakers who have backed the Keystone XL pipeline and voted in favor of curbing the EPA’s regulatory power.

Rep. Gene Green, D-Houston, said he supported the pollution and pipeline provisions in the GOP’s payroll tax cut measure, but ultimately voted against the bill because it would pare the number of weeks that the long-term unemployed could receive benefits in order to help pay for the tax break.

“If we want to cut the deficit, we need to get people back to work, not cut unemployment benefits,” Green said.

“I can’t really at this time of high unemployment go home and say we’re cutting unemployment from 99 to 59 weeks,” Green added. “I’m not going to be the Grinch that stole Christmas.”