- The Washington Times - Tuesday, December 13, 2011

President Obama on Tuesday said he will veto House Republicans’ payroll tax extension unless the GOP ditches spending cuts and instead pairs the tax cut with a tax increase on the wealthy.

The threat, communicated by the White House in an official statement of policy, sets up a bruising year-end showdown that could even risk another government shutdown, since Democrats have signaled they won’t sign off on a massive spending bill to keep the government open unless the GOP agrees to their demands on the payroll tax cut.

House Republicans are still pushing ahead with a planned vote later Tuesday on their package, which would extend this year’s payroll tax cut into 2012, but couples it with a provision that would force the administration to make a final decision on the Keystone XL pipeline.

The administration, caught between environmentalists who oppose the pipeline and labor unions who support it, has tried to put off a final decision until after the election.

But the White House, in its veto threat, said nothing about the pipeline, instead attacking the GOP’s use of spending cuts instead of tax increases to offset the Social Security revenue lost from the payroll tax cut.

“[The bill] breaks the bipartisan agreement on spending cuts that was reached just a few months ago and would inevitably lead to pressure to cut investments in areas like education and clean energy,” the White House said, also adding that the bill gives “a free pass to the wealthiest.”

Republicans said that skewed the facts. They said this summer’s debt deal set a ceiling on spending, but that Congress always had the option of spending less than the limits Mr. Obama and House Speaker John A. Boehner agree to.

And they said their bill freezes government salaries — something Mr. Obama himself called for over the last two years — rather than specifically cutting education.

Michael Steel, a spokesman for Mr. Boehner, said once the House votes on the payroll tax bill the pressure will be on the Senate.

“The Senate can take up our bill and amend it, or they can pass their own bill. But they can’t continue to shirk their responsibility to govern. America can’t wait,” Mr. Steel said.

Even though it drew no attention in the White House veto threat, the Keystone pipeline is shaping up as the major sticking point between Congress and Christmas at home.

Senate Democrats are even refusing to agree to the year-end spending bill until the pipeline is pulled out of the tax bill. But that move now has raised the specter of a partial government shutdown, since funding for most federal agencies expires on Friday.

Senate Majority Leader Harry Reid called the pipeline “ideological candy” House Republican leaders were dangling in front of conservatives to get them to accept other provisions such as unemployment.

“They’re wasting time catering to the tea party folks over there,” said Mr. Reid, Nevada Democrat, calling the House bill “dead on arrival” in the Senate.

But Sen. Mitch McConnell, Republicans’ leader in the upper chamber, said by tying the tax cuts and pipeline to the annual spending bills, Mr. Reid is threatening the funding that would keep the government open past Friday.

“The president and the Democratic majority leader of the Senate are now saying they’d rather shut down the government than allow this job-creating legislation to become law,” Mr. McConnell said. “That’s what would happen if they succeed in blocking this bipartisan funding bill from coming to the floor for a vote.”

Republicans say they’ve given Mr. Obama everything he wants: an extension of the payroll tax cut into next year; another round of unemployment benefits, albeit at lower levels than Democrats hoped and another round of the so-called “doc fix,” that waives the 1997 budget law that tried to control costs by imposing ever-decreasing payments to doctors who treat Medicare patients.

In exchange, the GOP said it wanted to force the administration to make a decision on the pipeline, which would carry oil derived from from Canada’s tar sands into the U.S.

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