US & Canada

Payroll tax cut passes House with pipeline conditions

Unemployed people at a job fair New York City 12 December 2011
Image caption Republicans say raising taxes will hinder efforts to create jobs in the US economy

The US House of Representatives has passed a bill to extend payroll tax cuts by tying the measure to a much-disputed oil pipeline project.

The Republican-backed bill was voted in by 234-193, but is unlikely to pass the Senate where Democrats called it "ideological candy" for conservatives.

President Barack Obama says he will veto any bill linking the tax break to the disputed Canada-to-Texas pipeline.

Republicans oppose a Democratic-backed deal urging more taxes for the wealthy.

Republican Speaker of the House John Boehner praised the bill after it passed on Tuesday, saying it could extend the payroll tax "without job-killing tax hikes".

The White House renewed its appeal that America's highest earners should "pay their fair share" to offset the estimated $180bn (£116bn) cost of the payroll tax cut, but made no mention of the pipeline clause.

Congress "cannot go on vacation before agreeing to prevent a tax hike on 160 million Americans and extending unemployment insurance", White House Press Secretary Jay Carney said.

US lawmakers have been engaged in bitter partisan disputes over government spending throughout the year.

In November, the Obama administration delayed a decision to approve the Keystone XL pipeline project, which would run from the Canadian province of Alberta to refineries in Texas.

The project has met with opposition from Nebraska and environmental groups that are concerned the pipeline would pass through the Sand Hills region, which contains a major aquifer.

While Canada is behind the project, the White House has said it will reassess the pipeline route, delaying a final decision till after the 2012 presidential elections.

More on this story