US Lawmakers Avoid Shutdown, Fight Over Taxes

The parties agreed to a measure that will keep the government funded through next year but still fight over taxes.

Democrats and Republicans on Friday agreed to enact an omnibus spending bill to keep much of the federal government funded through next year but failed to deliver an extension of the payroll tax holiday and unemployment benefits.

The House of Representatives passed an omnibus measure Friday night that spends more than $900 billion for the fiscal year 2012 which started on October 1. The departments of government that are covered by the measure, which is composed of nine different spending bills, have been funded by continuing resolutions until now. $518 billion is included for defense.

With the omnibus, total discretionary spending, which excludes entitlements like Medicaid and Medicare and also unemployment compensation, will total more than $1 trillion for 2012.

Republicans have conditioned their support for extension of jobless benefits, current Medicare reimbursement rates for doctors and the payroll tax cut that was enacted last year on regulatory approval for the construction of an oil pipeline that is to run from the tar sands of Alberta, Canada to the refineries of Houston, Texas.

Conservatives and unions are unusually united in their support for the $7 billion pipeline project because it would create construction jobs. President Barack Obama, however, has delayed final approval until after next year’s presidential election because environmentalists, which tend to vote Democratic, oppose the pipeline.

House speaker John Boehner announced on Friday that if the Senate, where the Democrats are in the majority, vote to extend the payroll tax cut, his conference will amend its bill to facilitate a speedy approval of the pipeline’s construction.

The Republican leader cannot afford to cave on the issue, which his party’s presidential contenders have already turned into a campaign item, because in passing the omnibus spending measure, he broke an election promise and disappointed conservative voters.

Ahead of last year’s congressional elections, Republicans pledged not to enact bundled appropriation bills altogether. To avoid a government shutdown, they did just that on Friday night. In the process, they lost the ability to try to defund programs that are covered by specific spending bills like the Environment Protection Agency and President Obama’s health-care reform law. They also lost the opportunity to try to derail the Dodd-Frank financial reform law and didn’t have a chance to debate the policies of the National Labor Relations Board on the floor of the House.

These are the very battles that Democrats would rather avoid going into an election year. The EPA, Obamacare, Dodd-Frank and the NLRB are all cited by Republicans as institutions or laws that are too costly to businesses and discourage job creation. They blame Senate Democrats for never enacting a proper budget in this administration to begin with which has forced both parties to fund the government on the basis of continuing resolutions and botched compromises as Friday’s that do little to balance the budget because Democrats are resistant to reining in spending and Republicans won’t raise taxes.