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Obama: Payroll tax cut fight isn't over yet

The debate over extending the payroll tax cut appears close to being resolved, but President Obama on Tuesday told voters the fight isn't over yet.

"Washington shouldn't hike taxes on working Americans right now," Mr. Obama said from the White House. "That's exactly what's going to happen in a couple weeks if Congress doesn't do something about it," he said, noting that the typical American family will pay nearly $1,000 more in taxes this year if the payroll tax cut expires.

House Republicans on Monday announced they could consider extending the 2 percent payroll tax cut for the rest of the year without offsetting the costs with spending cuts -- a significant policy shift for the Republicans and a political victory for Democrats.

Still, there's a chance the deal could unravel. Sen. John Barasso, R-Wyo., one of the senators involved in the payroll tax negotiations, said Monday that the House GOP decision came as a surprise to him and that the GOP was still looking for ways to pay for the measure.

Mr. Obama said there were some "hopeful signs" from Congress, but added, "You can't take anything for granted here in Washington until my signature is actually on it. We've got to make sure the American people's voices keep breaking through."

Seeking perhaps the last bit of political capital he can win from the issue, Mr. Obama was joined at the White House Tuesday by working Americans who responded to the White House's "What Does $40 Mean to You?" campaign. The campaign sought to highlight the fact that if Congress fails to extend the payroll tax cut, the typical family making $50,000 a year will lose about $40 from each paycheck.

"Tens of thousands of working Americans flooded us with their stories," Mr. Obama said. "It would make their choices more difficult. It would mean $40 less in groceries to feed your kids... to cover bills and the rent... to take care of an elderly parent."

Echoing the themes he used in his State of the Union address and to explain his proposed 2013 budget, Mr. Obama said, "This is a make or break moment for the middle class in America and for folks who want to be int he middle class... We can settle for a country where a few people do really, really well and everybody else struggles to get by, or we can restore an economy where everybody gets a fair shot."

Just last week, House Speaker John Boehner told reporters that Republicans would continue to insist that "this spending ought to be offset with reductions in spending elsewhere." But with negotiations with Democrats stalled, House Republicans are opting to avoid another political beating over the issue.

The payroll tax bill could come to the floor this week. The House and Senate are scheduled to be on recess for all of next week for the President's Day holiday. When they return, there will only be two days to get a final bill to the president's desk before the tax cut and unemployment insurance expire.

"When the plane is lifting off the ground, you don't ease up on the throttle," the president said today. "Our plane is up there, but we're not at cruising altitude yet."

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