Last week, we flagged an attempt by Representative Lee Terry of Nebraska to get the Keystone XL pipeline approved within weeks—something the Obama administration has delayed until at least 2013, if the project even survives that long. Terry is crafting a measure that would take the power to approve Keystone XL away from the Obama administration and give it to the Federal Energy Regulatory Commission, an independent agency. His bill would also require FERC to approve the pipeline within thirty days.

Terry plans to attach this bill to a big year-end package that would extend a payroll tax cut and unemployment benefits. But when asked about Terry’s plan by a reporter yesterday during an appearance at the White House with Canadian Prime Minister Stephen Harper, Obama said he would reject any package that contains provisions on Keystone XL:

Q: Thank you, Mr. President. I have Keystone questions for both of you. Mr. President, we’ve got some House Republicans who are saying they won’t approve any extension of the payroll tax cut unless you move up this oil pipeline project. Is that a deal you would consider? […]

PRESIDENT OBAMA: First of all, any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice.

And the reason is because the payroll tax cut is something that House Republicans, as well as Senate Republicans, should want to do regardless of any other issues. The question is going to be, are they willing to vote against a proposal that ensures that Americans, at a time when the recovery is still fragile, don’t see their taxes go up by $1,000. So it shouldn’t be held hostage for any other issues that they may be concerned about.

Obama’s  threat is quite significant, because the political mechanics had suddenly became dangerous for pipeline opponents. Democrats and the White House are extremely eager to get a payroll tax cut and extended unemployment insurance passed, and Republicans have been pushing hard on Keystone XL in recent weeks—so there was real concern that, in the final horse-trading over the desperately sought economic measures, Democrats might let the Keystone XL provision survive. Obama didn’t explicitly say the word “veto,” but he has no doubt served at least a warning to Congressional leaders not to allow the Keystone provision through.