US President Barack Obama yesterday faced a new congressional gridlock over a payroll tax cut after he had signed into law a US$1 trillion spending bill, averting a government shutdown.
The US Senate passed the spending bill and a two-month payroll tax holiday extension on Saturday, punting that problem down the road, but not for long.
Obama had initially sought a one-year extension for the tax cut and unemployment benefits.
The compromise tax measure further dented Obama’s authority by forcing him to revisit a contentious pipeline plan within 60 days, and while the legislation passed easily, its short duration highlighted the inability of feuding lawmakers to bridge the divide on a more comprehensive deal.
Obama told reporters he was “pleased” with the deal, but made it clear he was expecting more.
“While this agreement is for two months ... it would be inexcusable for Congress not to further extend this middle-class tax cut for the rest of the year” when they revisit the issue early next year, he said at the White House shortly after the Senate vote.
However, Republican Senate Minority Leader Mitch McConnell said that “in order to achieve something around here, you have to compromise.”
The deal thrusts the contentious Keystone XL pipeline, to carry oil from Canada’s tar sands to the US Gulf Coast, back onto the political agenda.
Obama had put off a decision on the project, which pits environmentalists against labor unions and business interests in his political base, until after the elections in November next year, in which he is hoping to secure a second term. The move drew Republican howls.
Instead, the bill gives him just 60 days to review the pipeline project, a deadline Obama did not mention during his brief remarks.
“This bill will stop President Obama’s delaying tactics,” Republican US Senator Richard Lugar said. “It is absolutely incredible that President Obama wants to delay a decision until after the 2012 elections apparently in fear of offending a part of his political base.”
The White House’s apparent concession in agreeing to legislative language requiring Obama to ostensibly reconsider it within two months will enrage environmentalists who lean Democratic and campaigned against the project.
Republican US Senator Kay Bailey Hutchison acknowledged “stark” differences between the parties over how to pay for the tax cut extension, with some lawmakers on both sides of the aisle furious that the bill slashes inputs to the already-creaky Social Security system.
“We don’t think that we should defund Social Security,” Republican US Senator Mark Kirk said alongside Democratic US Senator Joe Manchin.
Both had voted against the measure.
The US House of Representatives, which earlier approved the spending bill, could take up the tax cut measure today, capping a frenetic period of maneuvering between the White House and its Republican foes.
However, approval was far from certain. According to the New York Times, a number of rank-and-file Republicans objected to the measures in a Saturday conference call with US House of Representatives Speaker John Boehner, indicating it would face an uphill battle.
Amid the bitter sniping between the two major parties, US Representative Debbie Wasserman Schultz said her fellow Democrats in the House would back the -payroll tax cut bill, but that the pipeline amendment was a mistake by her rivals.