Republicans tweak Obama with new pipeline gambit

Washington's top Republican on Friday launched a new blocking maneuver as President Barack Obama sought to strong arm Congress into extending a tax holiday for 160 million American workers.

House Speaker John Boehner warned he would not extend the payroll tax cut without a measure designed to speed a decision on building a contentious oil pipeline that Obama has delayed until after the 2012 election.

The move was the latest twist in a bitter pre-Christmas game of brinkmanship that at one point threatened to shut down the vast US government and is drawing new battle lines ahead of Obama's reelection bid next year.

Obama is daring Republicans to leave town without providing relief to middle class Americans trapped in tough economic times, while his foes want to further dent the president's authority before he seeks a second term.

Seeking to stimulate the sluggish recovery, Obama wants to extend a payroll tax holiday to give workers a $1,500 tax cut next year, warning that failure to act by the end of December will saddle them with a $1,000 tax hike instead.

But House of Representatives Republicans complicated the process by inserting a measure in the payroll tax bill requiring the State Department to make a decision on the US-Canada Keystone XL pipeline within 60 days.

Boehner said that if the Senate sends the House a payroll tax bill stripped of the pipeline language, he would reinsert it and send it back.

"If that bill comes over next week, we'll make changes to it and I guarantee that the Keystone pipeline will be in there when it goes back to the United States Senate," Boehner told reporters.