Senate passes extension of payroll tax and jobless benefits

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In contrast, a worker making a $100,000 salary would reap a tax cut of about $330 through the two-month extension of the payroll tax cut.

The Senate met in a rare Saturday session to pass the extension. (Photo: Flickr/Johan Ohrling)

Officials said that in private talks, the two sides had hoped to reach agreement on the full one-year extension of the payroll tax cut and unemployment benefits that Obama had made the centerpiece of the jobs program he submitted to Congress last fall.

Those efforts failed when the two sides could not agree on enough offsetting cuts to blunt the measure's impact on the debt.

The failure tees up the issue again for early next year, but it won't get any easier to agree on spending cuts.

Neither House Speaker John Boehner, R-Ohio, nor his aides participated in the negotiations, although McConnell said he was optimistic about the measure's chances for final approval. The payroll tax cut is unpopular in GOP ranks and another vote in two months could present a headache for GOP leaders.

On the controversial Keystone XL pipeline, the legislation requires the president to grant a permit unless he makes a determination that it is "not in the national interest." One senior administration official said the president would almost certainly refuse to grant a permit. The official was not authorized to speak publicly.

The White House on Friday backed away from Obama's earlier threat to veto any bill that linked the payroll tax cut extension with a Republican demand for a speedy decision on the proposed 1,700-mile pipeline. Obama said on Dec. 7 that "any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice."

The president recently announced he was postponing a decision on the much-studied pipeline until after the 2012 election. Environmentalists oppose the project, but several unions support it. The legislation puts the president in the uncomfortable position of having to choose between customary political allies.

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