- The Washington Times - Saturday, December 17, 2011

The Senate reached a deal late Friday to extend the current Social Security payroll tax break for two months while including a provision that would force President Obama to take quick action on a massive transcontinental oil pipeline.

A vote is scheduled in the chamber Saturday. The bill, if passed as expected, then would be sent to the House, which likely would approve the measure Monday.

The Obama administration in recent weeks repeatedly has said it opposed the Keystone XL pipeline provision from being including in the payroll tax bill, though stopped short of issuing a veto threat.

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

But Friday night, White House spokesman Dan Pfeiffer walked back the president’s strident rhetoric and signaled the president would sign the deal, calling it an “an important step towards enacting a key provision of the president’s American Jobs Act and a significant victory for the American people and the economy.”

The proposed Keystone pipeline is a $7 billion project would transport oil from western Canada to oil refineries on the U.S. Gulf Coast.

Business groups and labor unions that would build the project have pushed to quick approval of Keystone, but environmental groups have rallied to block the proposal. The Obama administration recently moved to delay a decision until after the 2012 election, saying it needs more time to study the project. But congressional Republicans — and some Democrats — have pressed for an expedited review.

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

The payroll tax is 4.2 percent this year, but reverts to its usual 6.2 percent on Jan. 1 without congressional action.

Democratic leaders in the House and Senate had pushed for a yearlong extension of the tax break without the Keystone provision, but agreed to the two-month compromise after Republicans refused to drop the pipeline provision.

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

“For the next two months, Democrats will work to extend the middle-class tax cut through the end of the year,” said Senate Majority Leader Harry Reid, Nevada Democrat. “Republicans can either join us, or explain why they want middle-class families’ taxes to go up.”

Earlier Friday, the top Republicans in the House and SenateHouse Speaker John A. Boehner of Ohio and Senate Minority Leader Mitch McConnell — both reiterated their positions that any payroll tax cut extension must include the pipeline language.

Mr. Boehner told reporters Friday that, if the bill came back to the House without the Keystone provision, “we will make changes to it, and I will guarantee you that the Keystone pipeline will be in there when it goes back to the United States Senate.”

Estimates on how many jobs the pipeline project would create vary wildly. 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.

The White House and Democrats turned back GOP attempts to use the legislation to block limits on greenhouse gases, mountaintop removal mining and hazardous emissions from utility plants, industrial boilers and cement kilns.

Republicans abandoned attempts to block an administration policy to ease restrictions on visits to Cuba and on the money sent to relatives on the Communist island nation from family members living in the United States.

• This article was based in part on wire service reports.

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