House Republican leaders prepared proposal to be voted on next week that would extend the payroll tax cut and unemployment benefits while laying the groundwork for approval of the Keystone XL oil pipeline. The House proposal would shift decision-making power from the State Department to the Federal Energy Regulatory Commission, and would also shorten the time frame for a decision. The State Department wanted to delay the decision in order to examine environmental issued raised. President Barack Obama has said he would reject any measure that attempted to tie the pipeline project to payroll taxes.
Senate proposals on both sides of the issue were blocked by a failure to obtain the necessary 60 votes. A Democratic proposal would have included a surtax on income over $1 million to pay for the lower tax rate. The Republican proposal sought to shrink the size of government. Party leaders and Obama must reach a compromise by the end of the year or see payroll taxes increase in 2012.