The Senate approved a short-term extension of the payroll tax cut, unemployment benefits and a fix to physician’s Medicare reimbursement payments for two months. The final vote was 89-10.
These are clean extensions that punt the larger extension into next year, when this entire debate will repeat itself at the end of February. There are only two additional measures on this bill. First, there’s a pay-for, which was included in both a Democratic and Republican version of payroll tax cut legislation. That would be the increase in payments by mortgage lenders to Fannie Mae and Freddie Mac to guarantee mortgages. This saves roughly $35.7 billion over a 10-year period, and causes the bill to actually reduce the deficit in the 10-year budget window by $2.968 billion. Only $1.3 billion of that hits in the first year, so the bill follows the “increase the deficit now, reduce it later” format broadly consistent with the Democratic mainstream of thought on stimulus these days. And this is a pay-for where bankers pay Fannie and Freddie more of a market rate for guaranteeing mortgages. Furthermore, any increase in Fannie and Freddie’s cash flow means less money that taxpayers have to use to bail them out. I don’t think anyone should have a problem with the pay-for.
The second measure concerns the Keystone XL pipeline. There’s been a ton of misinformation around this part. I know some people have termed this a GOP victory but I don’t see why. Even the venerable 350.org rushed out a call to action last night saying that Obama caved on the pipeline and that everyone must call to get him to veto the bill. They are either playing along or don’t understand that this provision will ensure a denial of the permit in rapid fashion.
The bill stipulates that the Administration must make an up-or-down decision on the permit for the pipeline within two months of the signing of this act. The State Department has already said that doesn’t leave them enough time to explore the re-routing both they and the state of Nebraska and pipeline owner TransCanada have said they want to consider, to avoid the Ogalalla Sand Hills region, and particularly the aquifer that supplies water to the area. So if faced with a 60-day timeline, the State Department said, they would have to deny the permit. Earlier in the week the White House agreed with them, saying that The House bill simply shortens the review process in a way that virtually guarantees that the pipeline will NOT be approved. So adding this provision kills the pipeline in the short term. [cont’d.]
And Republicans, by the way, KNOW this. They want the President to deny the permit. The tell is that Newt Gingrich spoke up about the pipeline in the debate on Thursday night. Republicans want to position Obama as someone destroying US jobs to satisfy environmentalists. They also would like to say that he is stopping the supply of domestic energy production. None of this is true with regards to Keystone XL. The pipeline won’t create jobs, all the energy production in this case comes from Canada, and the President actually has presided over a boom in domestic energy production, although that hasn’t led to a drop in oil prices because we simply don’t have that much oil domestically.
But the likely outcome on Keystone XL fits a narrative for the GOP. So they want to see the President cancel the pipeline to make it a campaign issue. The counter-argument for the Democrats is that the demand by House Republicans to give an answer within 60 days on a pipeline whose route remained in flux killed the permit. So this becomes your run-of-the-mill he-said/she-said, and the pipeline doesn’t get built. My understanding is that it would not impact the possibility of the pipeline being approved after the elections, when more time is given to the environmental impact. So that’s a fight environmentalists will still have to wage. In the short term, within 60 days they will have a President reject the pipeline, and then they can go to their lists and tell everyone how their pressure got it done. But they’ll have to extend a note of gratitude to Republicans, who made it all possible.
That is, if the House signs off on it. House Republicans would not totally commit to passing the legislation, although given the 89-10 vote in the Senate, it would appear to have broad bipartisan support. My expectation is they’ll get it passed early next week, and the whole debate will punt to February, but we’ll have to see.
The Senate also passed the omnibus spending bill, which funds the government until next September. That bill includes a mild cut to total government operations, as per the spending cap in the debt limit deal, and some pretty bad provisions. But it gets the spending issue out of the way for nine months, so it passed.