Payroll tax cut OKd by House; still faces struggle

                                                                                     Washington 

A payroll tax cut package engineered by House Speaker John Boehner was overwhelmingly approved by Republicans on Tuesday despite a veto threat from President Obama, escalating a year-end showdown over extending the benefit for 160 million American workers.

Passage of the measure was a momentary victory for the speaker, who has struggled to get reluctant Republicans on board for the tax break, which puts a $1,000 in average workers' pockets. It was approved 234-193, with 224 Republicans and 10 Democrats voting in favor.

But the Republican win is expected to be short lived, as the bill has limited chances in the Senate, where Democrats oppose the GOP priorities that Boehner added to the bill to win Republican votes, including one to accelerate the controversial Keystone XL pipeline.

The tax break expires Dec. 31, and Senate Majority Leader Harry Reid, D-Nev., warned Boehner in a phone call that GOP leaders have spent too much time catering to their conservative flank rather than negotiating with Democrats on a compromise.

"This is what I told him: We are not going to finish the work of our country this year unless we work together," Reid said. "They are wasting time catering to the Tea Party when they should be working with Democrats on a bipartisan package that can pass both houses."

To bring Republicans to the table, Democrats have slow-walked an unrelated year-end spending bill that is needed to keep the government running, preventing the GOP-led House from finishing its work and leaving town for the holidays.

The payroll tax holiday, which has been in place for 2011, reduces the Social Security contribution workers pay from 6.2 percent to 4.2 percent. Lost contributions to the Social Security trust fund would be replenished - under the GOP proposal, it would be backfilled by spending cuts elsewhere in the budget. The chief actuary for the retirement system has said the fund would be unaffected.

In attracting Republicans by tacking GOP priorities to the bill, however, Boehner pushed away Democratic votes.

House Minority Leader Nancy Pelosi, D-San Francisco, acknowledged the Keystone project has supporters among Democrats and their allies in the labor unions. They agree with Republicans it will create jobs. But Pelosi said Republicans should not use the tax cut to advance the project.