House Passes $1 Trillion Budget Bill, Avoids Shutdown

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WASHINGTON — The House has passed a $1 trillion-plus catchall budget bill paying for day-to-day budgets of 10 Cabinet departments and averting a government shutdown.

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The 296-121vote to approve the measure represented a rare moment of bipartisanship in a polarized Capitol. Lawmakers are also seeking compromise on separate legislation to renew jobless benefits and a cut in payroll taxes.

The bill trims most domestic agencies and awards the Pentagon the smallest budget hike in recent memory. It pays for overseas military operations and a slew of programs ranging from border security to flood control to combating AIDS and famine in Africa.

Senate Minority Leader Mitch McConnell won’t back a compromise payroll tax cut extension unless the bill includes language aimed at forcing construction of a Canada-to-Texas pipeline, his spokesman said Friday, as top congressional Republicans insisted on the controversial provision.

The GOP demands added uncertainty to efforts by McConnell and Senate Majority Leader Harry Reid, D-Nev., to quickly reach a deal on a bill renewing payroll tax cuts and jobless benefits for the long-term unemployed.

A House-passed version of the payroll tax bill would give President Barack Obama 60 days to decide whether to build the proposed, 1,700-mile Keystone XL pipeline.

Obama, with the support of congressional Democrats, has announced he will delay that decision until after next year’s elections, citing a need to study the impact the pipeline would have on sensitive lands in Nebraska. Obama has threatened to reject a payroll tax bill if it includes language easing work on the pipeline.

The postponement would let Democrats avoid having to choose between two of the party’s core constituencies: environmentalists who oppose Keystone, and some unions who covet the jobs it would produce.

As negotiations on the payroll tax bill proceeded Friday, McConnell spokesman Donald Stewart said the minority leader was insisting on the pipeline language.

“The leader will not support any bill without the Keystone XL language as part of the agreement,” Stewart said.

House Speaker John Boehner expressed the same view earlier Friday. The Ohio Republican told reporters that if the Senate sends the House compromise payroll tax legislation without the pipeline provision, the House will vote to put it back in.

“I guarantee that the Keystone pipeline will be in there when it goes back to the United States Senate,” Boehner told reporters.

The House Keystone language says if Obama does not make a decision on Keystone within 60 days, the permit for work would be automatically granted. He would not have to approve the project if he declared the work would not serve the national interest, the House bill says.

Meanwhile, the House began debating a $1 trillion spending bill that would avert a partial federal shutdown beginning Saturday. That measure, which would finance dozens of federal agencies through September, would replace a stopgap spending bill that expires at midnight Friday. House passage on Friday was certain, and the Senate was expected to approve it over the next day or two.

Top lawmakers are hoping that Congress will finish all its work for the year in the next few days.

Before McConnell’s statement on Keystone, Reid said Friday that bargainers were making good progress in the talks on the payroll tax bill, a sentiment echoed by McConnell.

“The majority leader and I are making significant progress on reaching agreement on a package that will have bipartisan support, I hope,” McConnell said. “I think we’re going to get to that place.”

With those talks under way, House leaders planned to send their members home after finishing their work Friday, with plans to return when the Senate produces a payroll tax cut measure for the House to vote on.

The way was smoother for the compromise spending bill. It would fund 10 Cabinet-level departments, such as the Pentagon and the Department of Education, and dozens of smaller agencies. It would finance everything from U.S. operations in Iraq and Afghanistan to veterans’ services, and from airport security inspections to Congress’ own operations.

Reid and McConnell said that even if only the House had approved the spending bill by midnight Friday, the Obama administration agreed there would be no federal shutdown.

Agreement on the spending legislation was reached after Republicans agreed to drop language that would have blocked Obama from easing rules on people who visit and send money to relatives in Cuba. But a GOP provision will stay in the bill thwarting a 2007 law, passed during the administration of President George W. Bush, on energy efficiency standards that critics argued would make it hard for people to purchase inexpensive incandescent light bulbs.

This year’s 4.2 percent payroll tax rate will jump back to its normal 6.2 percent on Jan. 1 unless action is taken by Congress. Few lawmakers want to be blamed for a tax increase that would affect 160 million people.

Extended benefits for long-term jobless people will also expire Jan. 1 without congressional action.

That same day, a 27 percent cut in Medicare reimbursements to doctors would take effect unless lawmakers act, a reduction that could convince some doctors to stop treating Medicare patients.

Obama and congressional Democrats have proposed dropping next year’s payroll tax rate to 3.1 percent, but an extension of this year’s 4.2 percent rate seems likely to prevail. The payroll tax is the major source of financing for Social Security.

Obama also wants to leave in place the current maximum of 99 weeks of benefits for the long-term unemployed. A payroll tax cut bill approved by the House reduces that total by 20 weeks, which the administration says would cut off 3.3 million individuals. Democrats are hoping to soften if not reverse what’s in the House version.

Even without the Keystone pipeline dispute, bargainers had still not reached agreement on how to extend a payroll tax cut through 2012, with major disagreements remaining over how to finance the package.

Just in case, Senate leaders have prepared a shorter, two-month extension of the payroll tax cut and jobless benefits to give themselves more time to reach an agreement.

The two-month payroll tax cut bill, which would also delay the Medicare cuts for two months, would cost $40 billion – almost $200 billion less than the cost of a one-year extension, which might also include a renewal of some expiring tax breaks.

While approval of the short-term measure would let lawmakers go home for the holidays, it would leave them facing the same dispute – how to pay for a longer extension of the tax cut and jobless benefits – in the political hothouse of a presidential and congressional election year.

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