WASHINGTON | Fri Dec 16, 2011 11:07pm EST
WASHINGTON (Reuters) - Deeply divided U.S. lawmakers on Friday eked out an agreement to extend payroll tax cuts for just two months, and only after Democrats bowed to Republican demands on a controversial oil pipeline.
To try to break a stalemate in the payroll tax cut negotiations, Obama's fellow Democrats first dropped their proposal to pay for it with a surtax on millionaires. Then on Friday they abandoned what had appeared to be a non-negotiable demand -- for the Keystone XL oil pipeline from Canada to Texas to be kept separate from the payroll tax cut issue.
The measure would require Obama to make a decision on allowing construction of Keystone within 60 days or declare that "oil trade with Canada is not in the national interest of the United States," according to an aide to Republican Senator Richard Lugar.
