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GOP Ties Oil Pipeline to Unemployment Insurance, Payroll Tax Cut

December 12, 2011 - by Donny Shaw

For months, Democrats and Republicans in Congress have been talking about the need to come together on a plan to extend several policies that will expire at the end of the year. But with just a handful of days left before the holiday break, the two sides are only growing further apart on how to get it done.

The policies include the payroll tax holiday, unemployment insurance, a patch of the Alternative Minimum Tax to ensure that it does not affect middle-income earners, and an override of a 27% cut to Medicare doctor pay that is scheduled to go into effect. At this point both parties agree that they should be extended, but they disagree over how to offset their approximately $350 billion price tag. The Democrats are proposing to pay for the extensions with a small tax on all income earned above $1 million, while the Republicans are proposing to prevent all federal employees from receiving pay raises for two years and requiring them to contribute more to their pensions.

And that’s basically where things stood for weeks — until now. House Republicans, rather than bending towards the Democrats, are now adding unrelated language to the bill that is supported by some of their top corporate donors:

House Republicans Friday unveiled their bill to extend the payroll tax cut, jobless benefits and the Medicare reimbursement formula, setting up an early week vote and a Christmastime showdown with the Democratic Senate.

The bill — called the Middle Class Tax Relief and Job Creation Act of 2011 — is nearly 370 pages, and includes peripheral issues such as restarting the stalled Keystone XL pipeline project, altering of environmental regulations and the selling of broadband spectrum.

The Republicans’ bill would also reduce the maximum amount of time unemployed workers could receive insurance benefits to 59 weeks from the current 99 and allow states to require drug testing for recipients. 

The construction of the Keystone XL pipeline, which would carry crude oil from Canada to the Gulf Coast, is being delayed by the Obama Administration over environmental concerns, is a priority for top Republicans funders. Companies like Valero Energy, Exxon Mobil, and Chevron that have reported lobbying recently on stand-alone legislation to expedite the pipeline consistently donate millions each year to federal candidates with the vast majority of the money going to Republicans.

President Obama has already vowed to “reject” any bill that links the Keystone XL pipeline issue to the payroll tax cut extension.

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