“To give Mr. Obama a spinal implant, the House passed a provision that would give TransCanada a permit to start building in 60 days if the President does nothing. He can still kill the pipeline if he objects. But at least Hamlet of Pennsylvania Avenue would have to make up his mind.”
The Wall Street Journal editorializes,
We’ve largely ignored the not-so-great payroll tax debate on the assumption that it would pass in any case and won’t matter much to the economy. But now things are getting interesting: If Republicans hang tough, they might even get a useful policy victory in return for giving President Obama his political fillip.
Keep in mind that the payroll tax “cut” is nothing more than a tax holiday. All the political palaver is about extending it for one more year, through 2012, so Mr. Obama can claim he did something for middle-class voters before Election Day. Because it is temporary, the tax holiday will do little to change employer incentives to hire.
The best one can say for the payroll reprieve is that individuals will better spend the money than the government would. The problem is that government will keep spending anyway, borrowing the money instead. The one-year payroll extension will take something like $121 billion from Social Security revenues, which means about 10% to 15% of the entire federal budget deficit expected for this fiscal year.
Congress is now fighting over the details of how to “pay for” this lost revenue with spending cuts. But the only certainty is that most of those cuts will be either notional or pulled from the later years of the 10-year budget window and thus never happen. The real news in this end-of-year political rush is that total federal spending in fiscal 2012 will increase—notwithstanding all the posturing about a new era of spending restraint. Mr. Obama and Senate Democrats have blunted House GOP efforts this year and largely preserved the government they grew so rapidly in 2009-2010.
Which makes it all the more important for Republicans to show some achievement for their first year controlling the House. They’re trying to do that now with a series of policy riders in the spending and payroll-tax bills, and two in particular are worth stressing because they have considerable Democratic support.
One provision would force a decision on the Keystone XL pipeline within 60 days. This is the most shovel-ready project in America, as the TransCanada company has already made plans to buy the steel pipe to carry crude oil from Canada and the Upper Great Plains to the Gulf of Mexico. The pipeline would create thousands of new jobs, both immediately and downstream, which is why the Teamsters and other unions support it.
But Mr. Obama’s green financiers see the pipeline as a conveyer of evil carbon, and so the President recently postponed any decision past the election into 2013. Now, that’s economic leadership.
To give Mr. Obama a spinal implant, the House passed a provision that would give TransCanada a permit to start building in 60 days if the President does nothing. He can still kill the pipeline if he objects. But at least Hamlet of Pennsylvania Avenue would have to make up his mind.
The Keystone codicil is now being negotiated in the Senate, where at least eight Democrats have said publicly they hope the project goes forward: Jon Tester and Max Baucus of Montana, Kent Conrad of North Dakota, Joe Manchin of West Virginia, Mary Landrieu of Lousiana, Mark Begich of Alaska, Ben Nelson of Nebraska and Claire McCaskill of Missouri. Perhaps they’re among the few Democrats who still care about blue-collar voters, as opposed to public unions and Mill Valley hedge-fund greens.
The other provision passed by the House would give companies five years to comply with the Environmental Protection Agency’s onerous boiler rule. That rule would impose vast costs on industries that burn oil or coal, such as manufacturers and utilities.
Senators Susan Collins (R., Maine) and Ron Wyden (D., Ore.) introduced a bill in July telling the EPA to repropose the rule in less costly form. Their bill has 40 co-sponsors, including a dozen Democrats, which counting 47 Republicans would put it very close to the 60 Senate votes needed to overcome a filibuster. Here is another case in which Mr. Obama’s green dreamers are clashing with the blue-collar industrial workers that he claims his payroll tax holiday is so desperately needed to help.
White House aides have been working behind the scenes to strike both of these provisions from the payroll tax bill. Spokesman Jay Carney even offered the amusing note that Republicans shouldn’t get anything in return for passing the bill because everyone favors tax cuts. So Mr. Obama’s view of bipartisanship is that Republicans give him what he wants and he gives them nothing except more denunciation for not raising taxes on millionaires.
Republicans are in a strong bargaining position, and there’s no reason for them to give in to the Senate or the White House. We doubt Mr. Obama is willing to see the payroll tax holiday die in the name of stopping regulatory relief and a pipeline that will create more jobs. Republicans will have a great election issue if he does.