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Keystone Pipeline's Connection To Payroll Taxes? It's Up For Debate

The Keystone XL pipeline is supposed to connect Canada to Texas. But does it also have to connect to a payroll tax holiday?

White House Senior Advisor Valerie Jarrett, speaking today on NPR's Tell Me More, said no link should be made because the oil pipeline is not "germane" to legislation involving a tax holiday.

Republicans had made it a sticking point in December when they tied the controversial pipeline to legislation extending a 2 percentage point payroll tax break through the end of 2012. They approved the tax holiday, but only for two months — and with language forcing the White House to make a quick decision on the pipeline.

President Obama responded by halting the project that environmentalists hate.

Jarrett said the Republicans' action made no sense. "What did the pipeline have to do with extending the payroll tax in the first place?" She said help for taxpayers should not be weighed down "with other pieces of legislation that aren't germane."

But also in Washington, D.C., this morning, Wyoming Sen. John Barrasso, a Republican, was speaking at an event sponsored by The National Journal. Barrasso, who insisted on including the pipeline language in the payroll-tax legislation, said Keystone and the tax-break extension are bound together by the common thread of economic growth.

Obama wants to help the economy by boosting workers' take-home pay, and Republicans want to help the economy by increasing energy-related jobs, he said. But Tuesday night's State of the Union address offered no hope that Obama would changing his mind, Barrasso said.

The president's address was "a re-tread" that only repeated the past, Barrasso said. "It was a groundhog-day speech."

(Marilyn Geewax is a senior business editor on NPR's National Desk.)

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