Obama to GOP: No other issues on payroll tax bill

By ALAN FRAM
Associated Press

WASHINGTON (AP) — President Barack Obama raised the threat of a veto Wednesday if Republicans try attaching controversial oil pipeline or other language to a bill renewing payroll tax cuts and unemployment coverage, intensifying their year-end partisan showdown.

Obama's warning — which prompted an immediate and equally bellicose response from the GOP — signaled that there is no easy end in sight as the two sides maneuver over renewing tax reductions and jobless benefits that without congressional action expire Jan. 1 — just as the 2012 election year begins.

Top House Republicans are laboring to overcome conservative resistance to GOP legislation extending this year's 2 percentage point reduction in the 6.2 percent Social Security payroll tax for another year.

Their bill would also renew benefits for the long-term unemployed, though for fewer than the current maximum of 99 weeks, according to Republicans who spoke on condition of anonymity. It would also impose new rules on unemployment programs, such as granting states waivers to use some funds to experiment with programs like job training, the Republicans said.

To lure votes, House GOP leaders have planned to add a provision easing the way for construction of the proposed Keystone XL oil pipeline from Canada to the Midwest, a plan that is backed by industry and unions but opposed by environmentalists.

"Any effort to try to tie Keystone to the payroll tax cut, I will reject," Obama told reporters at the White House.

In an effort to nail down rank-and-file GOP support, party leaders have also discussed including provisions blocking some Obama administration pollution rules and paying for nearly half the roughly $180 billion package by extending the current pay freeze on federal workers through 2015.

Without being specific, Obama added, "My warning is not just specific to Keystone. Efforts to tie a whole bunch of other issues to what's something that they should be doing anyway will be rejected by me."

Mike Steel, spokesman for House Speaker John Boehner, R-Ohio, fired back within minutes.

"We are working on a bill to stop a tax hike, protect Social Security, reform unemployment insurance and create jobs," Steel said. "If President Obama threatens to veto it over a provision that creates American jobs, that's a fight we're ready to have."

A 2 percent payroll tax cut would save $1,000 for a family earning $50,000 yearly.

House Republicans planned to meet Thursday morning in hopes of uniting behind a measure that the chamber could vote on next week.

Boehner's goal is to win the 218 House votes needed for passage from the chamber's 242 Republicans, no easy task in a year in which several dozen conservative and tea party Republicans have not hesitated to oppose party leaders. That is important because it lets them avoid compromising with Democrats until the measure reaches the Democratic-led Senate.

Some conservatives were continuing to show resistance to the payroll tax package this week.

"It spends too much and it doesn't cut enough," said Rep. Jeff Flake, R-Ariz.

"The speaker's challenge is as it has been all year," said Rep. Steven LaTourette, R-Ohio, who is close to Boehner. "You've got 42 people, 48 people who are not reluctant about leaving the reservation on some of these more difficult votes. So the math is to get to 218 and he's working it and he's working it hard."

Across the Capitol, Senate Majority Leader Harry Reid, D-Nev., signaled flexibility in how to pay for extending the payroll tax cut.

His Senate Democratic bill would, as Obama has proposed, trim the payroll tax for 160 million workers to 3.1 percent next year, though it would not provide tax cuts for employers as well. To pay for it, Democrats would slap a 1.9 percent surtax on income exceeding $1 million, a levy that most Republicans oppose, saying it would curb job creation.

Democrats have used that opposition to try painting Republicans as favoring the rich over the middle class.

But when asked by reporters whether he would accept spending cuts to pay for the bill, Reid only ruled out reductions in federal agency budgets, which have already been sliced twice this year.

"We're ruling nothing out, okay?" Reid said, other than agency budget cuts.

Reid was still planning a showdown vote later this week on a Democratic version of the bill that was pre-ordained to fall to GOP opposition.

He also threatened to keep senators working through the Christmas holidays until legislation was on its way to Obama's desk. Lawmakers have been hoping to quit town for the year by Friday Dec. 16, though that seems unlikely.

"Republican leaders have two options," Reid said. "They can work with us to forge a compromise that will pass, or they can move even further to the right to appease the tea party, because that's what this is all about." (Copyright 2011 by The Associated Press. All Rights Reserved.)