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Senate Democrats Who Back Keystone Rebuff Debt-Limit Linkage

Some Senate Democrats who back the Keystone XL Pipeline are rebuffing plans by House Republican leaders to attach approval of the project to a measure suspending the nation’s debt ceiling, a sign the Republican strategy could falter.

House Republican leaders say they’ll introduce legislation this week that suspends the U.S. borrowing limit for one year, while attaching some spending cuts and policy provisions that include authorization of the $5.3 billion pipeline project. Treasury Department Secretary Jacob J. Lew told House Speaker John Boehner in a letter today that measures to avoid breaching the nation’s $16.7 trillion debt ceiling will be exhausted on Oct. 17.

At least three Democratic senators who support the pipeline -- Mark Begich of Alaska, Max Baucus of Montana and Joe Manchin of West Virginia -- said in interviews that language for a project opposed by President Barack Obama has no place in a debt-ceiling measure.

“I’ve supported Keystone, but we should have a clean debt-limit bill,” Begich said. “That’s been the traditional way, and it’s been very successful.”

A battle over the pipeline proposed by TransCanada Corp. (TRP) of Calgary entered its sixth year last week, and has drawn in lobbyists representing more than 50 different groups. The pipeline would link Alberta’s oil sands to refineries on the U.S. Gulf Coast.

Environmental Assessment

The State Department, which has to sign off because the project crosses the international boundary, is conducting an environmental-impact review.

The Keystone gambit by House Republicans has support among many senators of their own party, with some arguing that the risk of breaching the current limit gives them leverage on the pipeline issue.

“The Keystone Pipeline is an important asset that we need to be developing, and I’ve opposed the president’s opposition to that,” Senator John Isakson, a Georgia Republican, said. “Quite frankly, in the legislative game that we play, when you have a must-pass piece of legislation that’s when you can make your case. I don’t think it’s inappropriate at all.”

Yet the Keystone effort by House Republicans comes at the same time both chambers are engaged in a tough game of brinksmanship over the terms of a stop-gap spending measure to keep the government operating past Oct. 1. House Republicans attached a provision to a House-passed funding bill that would repeal the 2010 health care overhaul, threatening a shutdown unless they and Senate Democrats can agree on an alternative the president will sign within days.

Obamacare Measure

Like the health care defunding provision, Obama opposes any legislation forcing a decision on the pipeline project. And in the case of both the government funding bill and the debt-limit measure, Democrats can strip out the unwanted language from the House-passed bill with just 51 votes. They also can introduce their own debt-limit measure without reference to Keystone. The party controls 54 votes in the Senate, including the two independents that usually join their caucus.

Senator Sheldon Whitehouse, a Rhode Island Democrat and top opponent of the Keystone project, said it is foolhardy for Republicans to think they could prevail at any effort to push the pipeline through the Democratic Senate on a debt-related measure.

“It’s the same hostage-taking tactics for things they can’t accomplish legislatively,” he said. “The chances it would pass are pretty slim. I think the president has been pretty clear that he wants a clean debt limit, and if they’re going to start attaching stuff to it that’s a game two can play.”

‘Political Risks’

Senator Richard Burr, a North Carolina Republican, said he rejects Obama’s refusal to negotiate about Keystone when the debt measure begins to make its way through both chambers.

Asked whether there are political risks to Republicans engaging in two rounds of brinksmanship within days or weeks of one another, Burr said it’s a risk worth taking.

“There are political risks to not having the right policy in place,” he said. “If you focus on economic growth, things like Keystone are absolutely essential, whether the president wants it or not. I think it’s important for the legislative branch to initial pro-growth policies, and that’s one of them.”

House Republican leaders said on Sept. 20 that their debt proposal will be put forth this week, and it could see a floor vote as early as Friday.

House Bill

House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, said Republican leaders will seek to attach a number of unrelated provisions to the debt legislation besides the Keystone project, including a one-year delay of Obama’s health-care law, instructions for revamping the U.S. tax code, means-testing for Medicare and reductions in government regulations and language blocking Environmental Protection Agency greenhouse-gas and coal-ash regulations.

Obama called House Speaker John Boehner days ago to tell him that he wouldn’t negotiate on the debt ceiling, the White House and the speaker’s office said in separate statements. The president urged Congress against a “self-inflicted wound,” according to the White House, while Boehner was “disappointed” by Obama’s stance against negotiation, the Ohio Republican’s office said.

Manchin, who often parts ways with Democratic leaders on environmental and budget matters, said that he’s sticking with his party over the matter of keeping stray issues out of this fall’s debt debate.

“I’m 1,000 percent for the pipeline, but let’s fix our debt,” he said. “Let’s work on that.”

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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