Congress still trying to reach a deal on payroll tax, unemployment benefit extensions

Editor’s note: The House has passed a bill to extend benefits, but the Senate continues to delay. See our latest update.

Congress has two priorities before the year ends: approve a $1 trillion bill to fund the government’s operations into 2012, and extend the payroll tax cuts and unemployment benefits set to expire Dec. 31.

Increasingly, the two proposals are being linked together.

Today, the House will vote on its version of the unemployment and payroll tax bill. The Senate has done a number of votes on this topic already.

The House version would extend unemployment benefits, but reduce the maximum length of time a person can be on unemployment from 99 weeks to 59 weeks. But the more controversial part is how the Republicans want to pay for the plan, and an unrelated extra provision that it includes, said Takeaway Washington Correspondent Todd Zwillich.

According to Zwillich, the proposal would be paid for with a federal hiring freeze, cuts to federal pensions and other cuts in government benefits.

“Democrats aren’t for those things,” Zwillich said.

But, perhaps more controversially, the legislation also includes wording to accelerate the construction of the Keystone XL pipeline — an oil pipeline that would bring more oil from Canada to the United States.

The Obama administration sought to delay that plan just a few weeks ago, in the wake of large protests, now Republicans are trying to get it moving again.

“They delayed it until after the election, because they (the Democrats) have a problem with their environmental base.

Republicans say linking Keystone XL with unemployment and payroll taxes makes sense, because it amounts to a jobs project.

What seems increasingly likely is that not only will Keystone and the payroll tax and unemployment benefits be linked, but that the federal spending bill will be wrapped up as well.

“It must pass, or else there’s a government shutdown. Nobody seems to really have the stomach for the kind of showdown that led to the big government shutdown right before Christmas, with Newt Gingrich, in 1995,” said Zwillich.

President Barack Obama has indicated that he’s willing to keep Congress in Washington through the holidays if they don’t pass a payroll tax and unemployment extension.

“They may stay another week. They don’t necessarily all have to get done by Friday, but these two bills being linked improves the likelihood of them getting done,” Zwillich said.