Obama warns GOP not to tie pipeline to tax cuts

12 08, 2011 by Associated Press

President Barack Obama warned congressional Republicans that he would reject any effort to tie extraneous issues to an extension of the payroll tax cut, including the approval of a controversial oil pipeline between the U.S. and Canada.

"If the payroll tax cut is attached to a whole bunch of extraneous issues not related to making sure that the American people's taxes don't go up on Jan. 1, then it's not something I'm going to accept," Obama said Wednesday following a meeting with Canadian Prime Minister Stephen Harper.

Obama stopped short of issuing a veto threat, saying he did not believe lawmakers should let it come to that.

House Speaker John Boehner, R-Ohio, and other Republican leaders have pushed for Obama to approve the pipeline project, saying it would create much-needed jobs in the U.S. And they've suggested adding a provision to a payroll tax cut bill that would be designed to speed construction of the pipeline.

The payroll tax cuts are due to expire at the end of the year. If the cuts are not extended, the White House says the average family would see their taxes increase by $1,000.

As with the payroll tax cut extension, the Keystone pipeline has become a heavily contested political issue for Obama, who risks angering environmental supporters — and losing re-election contributions from some liberal donors — if he approves it.

The State Department, which has been overseeing the review process, decided last month to delay a decision on whether to proceed with the pipeline until 2013, after the presidential election. The delay is intended to allow the project's developer to figure out a way around Nebraska's Sandhills, an ecologically-sensitive region that supplies water to eight nearby states.

The move was poorly received in Canada, which views the project as critical to its economy. Labor groups in the U.S., as well as Republican lawmakers, also want the pipeline, and see it as a way to create U.S. jobs.

With Harper by his side, Obama denied the delay was tied to politics, and said it was important for Canadians to understand the need to make sure all questions regarding the pipeline project were properly understood, especially the environmental impact and the health and safety issues.

"I assured him we will have a very rigorous process to work through that issue," Obama said.

Harper has been critical of the delay, and has previously suggested that American politics may be at play. But standing alongside Obama at the White House Wednesday, Harper was more measured. He showed no sign that their talks had yielded any progress on the issue.

"Barack and I have discussed that on many occasions. He's indicated to me, as he's indicated to you today, that he's following the proper process," he said. "I take that as his answer and you can appreciate that I would not comment on domestic politics on this issue or any other issue here in the United States."

The Keystone XL pipeline would carry an estimated 700,000 barrels of oil a day, doubling the capacity of an existing pipeline from Canada. The 1,700-mile structure would carry as much as 700,000 barrels of oil a day from tar sands in Alberta, Canada, to refineries in Texas, passing through Montana, South Dakota, Kansas, Nebraska and Oklahoma.

Supporters say it could significantly reduce U.S. dependence on Middle Eastern oil while providing thousands of jobs. Opponents say the pipeline would bring "dirty oil" that requires huge amounts of energy to extract. They also worry about possible spills, noting that a current pipeline operated by TransCanada has had several spills in the past year.

Senate Republicans have introduced a bill that would require the administration to approve the Keystone XL pipeline within 60 days, unless the president declares the project is not in the national interest. But the Republican bill has little chance of approval in the Democratic-controlled Senate.

Ahead of Obama and Harper's meeting, Senate Minority Leader Mitch McConnell, R-Ky., said approving the pipeline would give Obama an opportunity to follow through on his pledge to make job creation his top priority.

"Here's the single greatest shovel-ready project in America, ready to go, and for some reason he's suddenly not interested," McConnell said.

Boehner had urged Obama to use his meeting with Harper to announce his approval of the pipeline, saying, "While it might make for inconvenient politics for the president, the administration is out of excuses and running out of time."

Obama and Harper also announced a joint agreement on border management aimed at streamlining the regular flow of goods and people across the border, while also strengthening security. The two leaders also touted plans for creating standardized regulations on both sides of the border, which the Obama administration said would make it easier to trade vehicles and car parts across the border.