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Thune suggests Keystone XL approval could be linked to national debt ceiling

MITCHELL, S.D. — Congressional Republicans might try to stall an increase in the nation’s debt ceiling until the Obama administration clears the way for construction of the Keystone XL pipeline, Sen. John Thune told reporters Wednesday.

“There are some things Republicans would like to see happen,” said Thune, a South Dakota Republican. “It could be approval of the Keystone pipeline. That’s something we think has a real impact on the economy.”

A budget deal that received final congressional approval Wednesday could hold off a debt ceiling fight until February, or possibly later depending on revenue coming into the treasury, but Thune said Republicans are preparing for the inevitable 2014 partisan fight.

The controversial pipeline would run from Canada, through South Dakota and to the Gulf of Mexico. Environmentalists have vocally opposed the project as a threat to the global climate while Republicans and others champion it for the jobs its construction would create.

Republican leaders have not settled on the Keystone XL plan, as they plan to gather in January in a retreat to map out a strategy, according to national reports.

Thune said other issues are also on the table.

“As we head into the next year, you will start hearing a robust discussion of what those things might be,” he said.

He said tax reform and changes to Social Security and Medicare, preferably as part of a completed federal budget, are also top contenders.

“If a budget process gets underway next year, it could include tax and entitlement reforms,” Thune said. “That would be a good thing, and it could move as part of a debt ceiling increase.”

Democrats are quoted in national reports as saying they do not intend to negotiate at all with Republicans over the debt ceiling and noted that the GOP’s reputation suffered the last time it tried to force a deal.

Meanwhile, Thune panned the budget deal that passed the Senate on Wednesday, saying it allowed for too much spending. He said the so-called sequestration budget cuts that hit in 2011 have done their job, but he agrees some fixes are needed.

“That reduced overall federal spending two years in a row for the first time since the 1950s. It has had the desired effect,” Thune said.

However, he would favor easing some of the sequestration rules.

“There is a better way to do this, to follow the law but to give federal agencies more flexibility so they could move money around and prioritize better,” he said.