Obama signs spending bill, averts shutdown

[1]

US President Barack Obama on Sunday faced a new congressional gridlock over a payroll tax cut after he signed into law a USD 1 trillion spending bill, averting a government shutdown.

The US Senate passed the spending bill and a two-month payroll tax holiday extension on Saturday, punting that problem down the road, but not for long.

Obama had initially sought a one-year extension for the tax cut and unemployment benefits. The compromise tax measure further dented Obama's authority by forcing him to revisit a contentious pipeline plan, and while the legislation passed easily, its short duration highlighted the inability of feuding lawmakers to bridge the divide on a more comprehensive deal.

Obama told reporters he was 'pleased' with the deal, but made it clear he was expecting more. "While this agreement is for two months, it would be inexcusable for Congress not to further extend this middle-class tax cut for the rest of the year" when they revisit the issue in early 2012, he said at the White House shortly after the Senate vote.

But Republican Senate Minority Leader Mitch McConnell said that 'in order to achieve something around here, you have to compromise'.

The deal thrusts the contentious Keystone XL pipeline, to carry oil from Canada's tar sands to the US Gulf Coast, back onto the political agenda.

Obama had put off a decision on the project, which pits environmentalists against labour unions and business interests in his political base, until after the November 2012 elections in which he is hoping to secure a second term.

The move drew Republican howls. Instead, the bill gives him just 60 days to review the pipeline project, a deadline Obama did not mention during his brief remarks. "This bill will stop President Obama's delaying tactics," said Republican Senator Richard Lugar.

"It is absolutely incredible that President Obama wants to delay a decision until after the 2012 elections apparently in fear of offending a part of his political base."

The White House's apparent concession in agreeing to legislative language requiring Obama to ostensibly reconsider it within two months will enrage environmentalists who lean Democratic and campaigned against the project.

Republican Senator Kay Bailey Hutchison acknowledged 'stark' differences between the parties over how to pay for the tax cut extension, with some lawmakers on both sides of the aisle furious that the bill slashes inputs to the already creaky Social Security system.

"We don't think that we should defund Social Security," Republican Senator Mark Kirk said alongside his Democratic colleague Joe Manchin. Both had voted against the measure.