Energy plays central role in payroll tax cut deal

Lawmaking is sometimes compared to sausage making, and the ongoing debate on a temporary payroll tax cut is no exception. Now energy policy has entered the mix.

Democratic Senators would like to extend renewable energy tax breaks, and Republicans are compelling the Obama administration to make a quick decision on the Keystone XL oil pipeline.

Congress approved a payroll tax cut to help stimulate the U.S. economy via the American Recovery and Reinvestment Act of 2009. The measure is set to expire at the end of this month, and both parties have agreed that renewing it would be a good idea.

However, the parties have wrangled about how to finance the tax cut with Democrats initially preferring a temporary “millionaires’ surtax, and Republicans opting to reduce benefits for Medicare recipients. The payroll tax partially funds Medicare.

Leaders of both parties have amassed a wish list of political add-ons that have delayed its passage, and details on the exact negotiations are incomplete.

It was revealed today that Democrats would like to see expanded unemployment insurance, continue wind energy tax credits, and to revive another tax credit for energy producers. Unemployment benefits and green energy tax credits are economic stimulus.

Energy trade groups, including one group of ethanol makers, have been spending briskly for lobbyists to advocate their interests. Some influential Republican campaign supporters have a substantial financial stake in the pipeline project.

Aside from including a funding component, Republicans have demanded a 30-day review of Calgary-based TransCanada’s applications for a permit to build the Keystone pipeline. The application is being reviewed by the State Department, which is expected to spend several years reviewing its decision.

The White House, environmental groups, and many scientists oppose a fast-tracked decision. NASA climate scientist James Hansen famously said that the pipeline project’s carbon emissions would be “game over” for the climate. Republicans claim that the project will create thousands of jobs.

After all, this is about fiscal stimulus, right? There you have it: sausage.

This post was originally published on Smartplanet.com