Market News

 January 23, 2012
GOP mulls tying Keystone approval to payroll tax bill

 Any hope the Obama administration may have held that its rejection last week of the controversial Keystone XL pipeline would draw a line under the row was dashed yesterday, after Republicans confirmed they are considering tying the project to an upcoming payroll tax cut bill that the government is committed to passing.

Speaking on Fox News Sunday, Republican House speaker John Boehner said "every option is on the table" as the GOP seeks to secure approval for a project that they argue will help create jobs and enhance US energy security.

Asked directly if the party could seek to link approval of the pipeline to the upcoming payroll tax bill, which aims to extend popular middle-class tax breaks, Boehner admitted it is an option Republicans are considering.

However, Republicans are mindful that, when they attempted to link approval of the project to a two-month extension of payroll tax breaks late last year, the tactic proved unpopular.

Moreover, President Obama ultimately responded to the Congress-imposed deadline for reaching a decision on the Keystone project by rejecting the plan in its current form.

But senior figures within the GOP are convinced they can do Obama electoral damage by painting his rejection of the project as a "job-killing" move designed to keep his environmental base happy.

The Obama administration has maintained that its wider energy policy has served to create thousands of jobs, particularly in fast-expanding clean energy sectors.

It has also kept the option of approving future pipelines connecting Canadian tar sands to US Gulf coast refineries, arguing that last week's rejection was based on the fact that the Republican-imposed deadline did not allow officials enough time to assess the project.

However, the administration is keen not to be bounced into making further decisions on the project before this November's election, given that approval of the pipeline will inevitably anger environmental groups and many Democrat voters.