Payroll Tax Battle Isn't Over Yet

President Obama is urging supporters to pressure Congress to extend the payroll tax cut before it expires at the end of the month.

"We all need you to speak out," he said in a video released by the White House Tuesday.

The President said if Congress doesn't act to extend the cut, American workers will see $40 less in each bimonthly paycheck.

Republicans Drop Call For Cuts

House Republican leaders said Monday that they were willing to extend the payroll tax cut, and have dropped their bid to offset the cost of the cuts by eliminating spending.

The Christian Science Monitor reported Tuesday that it's a defeat for Republican lawmakers:

“It’s a total capitulation,” says Stan Collender, a longtime congressional budget analyst, now with Qorvis Communications in Washington. House Speaker John “Boehner read the tea leaves and said, ‘I’m not going to do this again.’ ”

House Republicans took a pounding in the polls last December, as a struggle over how to pay for extending benefits was resolved at the 11th hour only after Speaker Boehner told his deeply divided caucus, in a conference call, that they had no option but to accept a two-month extension of the popular tax break – until Feb. 29 – and continue negotiations.

And now House leaders have to sell the plan to their rank and file Republicans.

Democrats welcomed Boehner's announcement on the payroll tax cut, but are pushing GOP lawmakers to include an unemployment insurance extension as well as a "Medicare fix" to prevent a 27 percent cut in doctor reimbursement rates.