Both Republican Chuck Grassley and Democrat Tom Harkin voted Saturday morning for a two-month extension of the payroll tax cut and unemployment benefits.
Saturday’s 89 to 10 vote didn’t resolve the controversy over a tax cut affecting approximately 160 million Americans, because the Senate did not pass the one-year extension approved by the House on December 15. Instead, Senate leaders negotiated a two-month extension for the payroll tax cut, unemployment benefits, and the “doc fix” that delays a scheduled cut in Medicare reimbursements to doctors.
Senate Republican Leader Mitch McConnell (R-Ky.) won an important concession by pressing Democrats to include in the bill House-passed language to expedite construction of the Keystone XL oil sands pipeline.
The bill does not extend an array of expiring business tax provisions, which Senate leaders were negotiating as part of a possible deal to extend the payroll tax holiday for a full year.
The legislation is expected to cost around $30 billion and will be offset by increasing the fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee repayments of new mortgage loans.
Neither Grassley nor Harkin released statements on the latest payroll tax cut compromise.
Note: the bill would not force President Barack Obama’s administration to approve the Keystone project. Rather, it would require the president to make a decision quickly, instead of waiting until 2013. I doubt Obama has the guts to kill a major pipeline project during an election year. Republican presidential candidates pounded him on this issue during the recent debate in Sioux City. On the other hand, one unnamed official suggested moving the decision forward will make approval of Keystone less likely:
The two-month extension of the payroll tax cut, which cleared the Senate on Saturday, includes a Republican provision that would compel the president to decide the fate of the pipeline within 60 days. It would also allow any changes to the pipeline route to bypass the National Environmental Policy Act, which subjects major federal projects to review.
The president had vowed to veto any bill that included conditions on Keystone XL, but the Republican rider has put him in the position of having to kill the project during election season or allow it to move forward without full, federal environmental safeguards, certain to outrage environmental groups.
A senior administration official said Saturday that the shortened time frame, as laid out by the new legislation, meant that a permit for the pipeline would almost certainly be rejected because there was not nearly enough time to review alternative routes.
The State Department and the pipeline company, TransCanada, are still trying to find a new route for Keystone, which would run from Alberta to the Gulf Coast.
It’s not yet clear whether the House of Representatives will pass the Senate’s version of the payroll tax cut extension. Russell Berman reported for The Hill that many House Republicans oppose the two-month deal.
All three Iowa Democrats in the House issued statements on December 16 calling for Congress to pass the payroll tax cut extension. After the Senate’s vote on Saturday, Representative Dave Loebsack (IA-02) criticized the new compromise:
“The only thing today’s vote in the Senate does is kick the can down the road and continue to put partisan gridlock ahead of Iowa families. With the paycheck of hardworking Iowans on the line, it is not a time for the political games that have plagued Congress to continue.
“For nearly a month, I have called on the leaders in the House to bring up and pass legislation that will extend the pay roll tax cut for a full year. I have also demonstrated my willingness to compromise to ensure 160 million Americans do not see their taxes raised. Though there were many provisions I did not like, I was only one of six members of the House who was willing to buck leadership on both sides of the aisle and vote for legislation that would support working families, not politics. Iowa families deserve more than political expediency and temporary solutions – while this bill provides temporary relief, work must begin immediately on the solution for the rest of the year so that Iowans’ paychecks aren’t put on the line again two months from now.”
The Senate has now adjourned for the year and presumably won’t reconvene to consider any new House version of this legislation until January. The current payroll tax cut, unemployment benefits extension, and Medicare “doc fix” will expire without Congressional action by December 31.
UPDATE: Harkin’s press release of December 19 focused on the unemployment benefits extension rather than the payroll tax cut, which has dominated most Democrats’ talking points:
Harkin Statement on Senate Passage of a Two Month Continuation of Unemployment Assistance
WASHINGTON, D.C. – Senator Tom Harkin (D-IA) today issued the following statement after the U.S. Senate passed a two month continuation of unemployment assistance by a vote of 89-10. The measure must now be approved by U.S. House before going to the President. Harkin is Chairman of the Senate Health, Education, Labor, and Pensions Committee and the Appropriations subcommittee on health, education, and labor.
“The U.S. Senate took a crucial step today on behalf of the many families around the country struggling this holiday season, including more than 7000 Iowans who would have seen their unemployment assistance expire. These workers and their families rely on this assistance to pay bills and put food on the table, and local communities rely on the economic activity that these benefits generate.
“With the economy still struggling, however, I was disappointed that Congressional Republicans could not agree to a full one year extension of these important benefits. Congress has no more urgent priority than economic recovery. Supporting middle class families is an important step in that recovery.”