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KeystoneXL Showdown

Last week, despite a temporary hiccup, Democrats and Republicans agreed to a 2-month extension of the social security payroll tax cut passed near the end of 2010:

Despite Mr. Obama’s veto threat of any legislation that tried to tie approval of the Keystone pipeline to the payroll tax-cut extension, White House officials said they were sanguine that at the end of the day, Mr. Obama would not find himself forced to fast-track the pipeline.

The State Department has already put off a decision on Keystone pending changes in the route and further environmental reviews, and has indicated that any attempts to hasten the project will most likely result in its disapproval, a warning White House officials gleefully repeated time and again on Saturday.

Still, for Mr. Obama, the Keystone project now remains tied to the payroll-tax cut extension, which puts the president at risk in an election year of appearing to coddle the environmental groups who form part of his Democratic base at the expense of the 160 million Americans who the White House says would benefit from continuing the tax cut.

The legislation will force President Obama to make a ruling on the KeystoneXL pipeline within the next 2 months, rather than allow the opportunistic delay that Obama had decided upon earlier, which punted a final decision until after the 2012 election.

We have written repeatedly about the benefits of the KeystoneXL Pipeline (see a recent op-ed here by Dave Bier) and we believe that it will eventually be approved. However, some analysts believe that forcing Obama’s hand on the KeystoneXL Pipeline has effectively forced him to deny the permit for its construction, as the State Department cannot complete a new environmental study (looking at an alternative route supported by Nebraskans) within the time-frame required. Though denying the permit would hammer home the point that President Obama’s green agenda is helping to delay the economic recovery, it would not bring much needed construction jobs as well as the physical infrastructure of the pipeline which is desparately needed to transport oil around the United States. We will continue to keep you updated on news relating to the pipeline, and let us hope that Obama approves the pipeline.

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