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Shutdown Averted As House Passes Budget

Brandon Hoffman, Getty Images

The House has passed a $1 trillion-plus catchall budget bill paying for day-to-day operations of 10 Cabinet departments and averting a government shutdown, while Senate talks in renewing a payroll tax cut and jobless benefits reached a critical phase.

The 296-121 vote to approve the spending measure represented a rare moment of bipartisanship in a polarized Capitol. The Senate’s top Republican, meanwhile, raised the stakes in the showdown over the payroll tax cut, insisting he won’t back a compromise extension unless the bill includes language aimed at forcing construction of a Canada-to-Texas pipeline.

As negotiations on the payroll tax bill proceeded Friday, Senate GOP Leader Mitch McConnell, R-Ky., said, “I will not be able to support the package that doesn’t include the pipeline.”

The GOP’s pipeline demands added uncertainty to efforts by McConnell and Senate Majority Leader Harry Reid, D-Nev., to quickly reach a deal on a bill renewing payroll tax cuts and jobless benefits for the long-term unemployed.

Negotiators on the payroll tax measure worked behind closed doors Friday in hopes of sealing agreement on how to pay for the measure. Simply extending the current 2 percentage point payroll tax cut would cost $120 billion, while extending unemployment benefits for the long-term jobless and preventing a cut in Medicare payment to physicians would add tens of billions of dollars more.

A House-passed version of the payroll tax bill would give President Barack Obama 60 days to decide whether to build the proposed, 1,700-mile Keystone XL pipeline.

Obama, with the support of congressional Democrats, has announced he will delay that decision until after next year’s elections, citing a need to study the impact the pipeline would have on sensitive lands in Nebraska. Obama has threatened to reject a payroll tax bill if it includes language easing work on the pipeline.

The postponement would let Democrats avoid having to choose between two of the party’s core constituencies: environmentalists who oppose Keystone and some unions who covet the jobs it would produce.

But McConnell and other Republicans say the project would create thousands of jobs. The company’s developer, TransCanada, says it could produce up to 20,000 jobs, while critics say the figure would be fewer than 3,500, including less than 1,000 that would be permanent.

After passing the catchall spending bill House leaders sent their members home until Monday or later, planning to return when the Senate produces a payroll tax cut measure for the House to vote on.

The way was smoother for the compromise spending bill, which passed on a 296-121 vote. It would fund 10 Cabinet-level departments, such as the Pentagon and the Department of Education, and dozens of smaller agencies. It would finance everything from U.S. operations in Iraq and Afghanistan to veterans’ services, and from airport security inspections to Congress’ own operations.

Reid and McConnell said that even if only the House had approved the spending bill by midnight Friday, the Obama administration agreed there would be no federal shutdown. For extra measure, the House also passed two stopgap spending bills, one to fund the government for a single day and the other for a week.

Agreement on the spending legislation was reached after Republicans agreed to drop language that would have blocked Obama from easing rules on people who visit and send money to relatives in Cuba. But a GOP provision will stay in the bill thwarting a 2007 law, passed during President George W. Bush’s administration, on energy efficiency standards that critics argued would make it hard for people to purchase inexpensive incandescent light bulbs.

This year’s 4.2 percent payroll tax rate will jump back to its normal 6.2 percent on Jan. 1 unless action is taken by Congress. Few lawmakers want to be blamed for a tax increase that would affect 160 million people.

Extended benefits for long-term jobless people will also expire Jan. 1 without congressional action.

That same day, a 27 percent cut in Medicare reimbursements to doctors would take effect unless lawmakers act, a reduction that could convince some doctors to stop treating Medicare patients.

Obama and congressional Democrats have proposed dropping next year’s payroll tax rate to 3.1 percent, but an extension of this year’s 4.2 percent rate seems likely to prevail. The payroll tax is the major source of financing for Social Security.

Obama also wants to leave in place the current maximum of 99 weeks of benefits for the long-term unemployed. A payroll tax cut bill approved by the House reduces that total by 20 weeks, which the administration says would cut off 3.3 million individuals. Democrats are hoping to soften if not reverse what’s in the House version.

Even without the Keystone pipeline dispute, bargainers had still not reached agreement on how to extend a payroll tax cut through 2012, with major disagreements remaining over how to finance the package.

The spending bill advanced after Democrats blocked a series of GOP assaults on Environmental Protection Agency regulations, though the agency’s budget absorbed a cut of more than 3 percent.

GOP leaders did succeed in delays in regulations of coal dust and eliminating federal funding of needle exchange programs. War costs would be $115 billion, a $43 billion cut from the previous year.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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