Keystone climbdown leaves Obama supporters scratching their heads

President Obama put two conditions in end-game talks on extending the payroll tax holiday.

He wanted to pay for the extension with a surtax on millionaires, and he made clear that the Keystone XL oil pipeline should be kept out of the legislation.

“Any effort to try to tie Keystone to the payroll tax cut I will reject,” the president said. “So everybody should be on notice.”

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In the end, Obama got neither demand.

Just a week after saying he would reject a payroll tax cut extension that included Keystone language, Obama backpedaled on both issues and won just a two-month extension of the payroll tax holiday, far less than the full-year extension he requested in his jobs bill.

Millionaires won't pay higher taxes for the cost of the payroll cut, and House Republicans forced the White House to swallow language forcing Obama to make a decision in 60 days on approving development of the oil sands pipeline from Alberta, Canada, to the Gulf Coast.


While it’s unclear how Obama will emerge from this latest debate politically, some say the latest outcome is reflective of the president’s limited negotiating skills. While the president can seem convincing when selling a plan in town halls across the country, supporters and observers question his ability to seal the deal at crunch time.

“It’s part of a larger pattern where the White House caves after making a grand sell,” said one prominent Democratic strategist. “At the end of the day, what this tells me is that they’re more pragmatic than ideological.”

White House aides were quick to note that the Keystone permit doesn’t mandate construction of the pipeline. They argued the GOP had effectively killed the Keystone pipeline, since they said it wouldn't be possible for the State Department to do an adequate review under the new 60-day timeline.

Republicans, however, believe they will be able to go into the election year criticizing the president for blocking development of a project they say would create thousands of jobs at a time when the unemployment rate remains high.

They painted the deal as a tremendous political win for their party, and the agreement left some of the president’s supporters scratching their heads.

“The talking points on Keystone miss the point,” said one former Obama administration official. “The goal of the GOP is to force the White House’s hand before the election which is what they’ve done now.”

After lawmakers reached a deal on Friday night, political consultant and former presidential adviser David Gergen, told Reuters that, “the Democrats appear to have conceded two significant issues on the payroll tax and got a measly two months extension in return.”

White House aides argue they didn’t lose anything in the deal.

“We gave up nothing,” a senior administration official said on Saturday. “Where [Republicans] caved was they didn’t want to do the payroll tax cut and they decided to under tremendous public pressure pass a major piece of the jobs act.”

“[The word] 'Cave' would suggest that we gave something away and we did not do that,” the official continued, adding that in the long run, the lawmakers who decided to pass the provision will “shoulder the blame” and not the president.

“In the long term, this is a political loss for them,” the official continued, referring to congressional Republicans.

The White House walked a fine line in the tax negotiations, after Obama and his aides were criticized for being too involved in the summer debt talks and then for their laissez fair approach with the supercommittee this fall.

This time around, Obama made calls to Senate Majority Leader Harry Reid (D-Nev.) and other members of Congress and he met with Senate leaders. Senior adviser Pete Rouse, Rob Nabors, who heads Obama’s legislative affairs shop, and White House budget director Jack Lew were also involved in closed-door conversations.

The White House would not discuss the “sausage-making” of the payroll tax deal. But a former Obama administration official who has knowledge of how negotiations with the Hill work, said,  “We’d use Reid as a primary negotiator in the end game.”

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“The White House gives him a lot of latitude on what the end game should look like,” the official said. 

White House officials would not say if they reached out to Republican lawmakers. But Brendan Buck, a spokesman for House Speaker John Boehner  (R-Ohio) said Obama didn’t pick up the phone during the debate. A GOP Senate aide familiar with the payroll tax extension talks said the president “could not have been more separated from the talks.”

“He was the most detached person from this process of any of the major players,” the aide said.

Cal Jillson, a professor of political science at Southern Methodist University, said Obama will never be an “instinctive power politician” like Lyndon Johnson or Franklin Delano Roosevelt.

While in this most recent debate the president did sit down with Democratic leaders at the White House, “It would be smart for Obama to meet with the leaders down to the committee level,” he said. 

“I don’t think he’s a good negotiator,” Jillson said, adding that Obama looks weak to have any part of the Keystone language in the bill.  “It’s a sign of his inability to see all the moving parts.”

“He looks at things the way a college professor would,” Jillson added. “Our whole approach to interacting with other people is argument and debate. “He falls down in thinking that the well made argument wins the argument and in politics it doesn’t work that way.”

Alexander Bolton contributed to this report.