Democrats believe payroll tax victory bolsters chances of taking House

Democrats believe their chances of recapturing the House have improved significantly after what was widely seen as a GOP meltdown in the payroll tax debate.

Democrats believe the messy fight has helped narrow the advantage Republicans have traditionally held on tax policy.

The party has long espoused populist tax policy, with mixed results in recent years. But Democratic strategists think that is about to change, as high unemployment rates have given new traction to their proposals, which Republicans dismiss as class warfare.

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Tad Devine, a Democratic strategist, said he believes Democrats can recapture the House in part because of growing public resentment over wealth disparity.

“The issue is really starting to be clarified for middle-class voters. It’s emerging as the biggest issue of the campaign, the fundamental unfairness of society where the wealthy are getting very wealthy and the middle class are falling behind,” Devine said.

He said House Republicans hurt themselves by taking a stand against a short-term extension of the payroll tax cut, only to fold and pass it a few days later.

“The Republicans have shot themselves in both feet,” Devine said.

Minutes after the Senate passed a two-month extension of the payroll tax holiday Friday, Senate Majority Leader Harry Reid (D-Nev.) signaled Democrats would press their advantage by bringing the millionaires’ surtax back to the table.

Rodell Mollineau, a former senior aide to Reid and president of American Bridge 21st Century, a Democratic super-PAC, said Democrats feel emboldened by the tax fight. 

“Holding firm on any big issue gives you momentum heading into the next big issue. The stars are aligned that people are ready to hear this message,” Mollineau said.

Senate Democrats stood their ground by refusing to negotiate with House Republicans, daring House Speaker John Boehner (R-Ohio) to kill a Senate-passed short-term extension of the payroll tax holiday.

Some Democrats think it could be a dry run for the bigger fight next year over extending the Bush tax rates. The Democratic strategy could demand that income rates on the top brackets are raised, and attempt to blame Republicans for holding middle-class tax cuts hostage to ensure that rates for millionaires stay level or decline.

Democrats have been hampered in recent years in debating the Bush tax rates by disparities within their party. 

Strategists believe the payroll tax debate and setting a threshold for raising taxes at a million dollars in annual wages has forged greater unity.

“The problem when it comes to the Bush tax cuts, I think, is sometimes regional concerns and state-specific concerns get in the way of a coherent and strong national message that tax policy should be geared toward the middle class,” said Mollineau, who ran the Senate Democrats' communications center in 2009 and 2010.

“What happened over the last year has emboldened Democrats as a whole to have a more macro-level look at our tax policy,” he said.

Sen. Charles Schumer (N.Y.), the Senate Democrats’ chief political strategist, believes the payroll tax debate crystallizes the message Democrats are pushing for the 2012 election.

“Republicans make this fight, 'don’t raise taxes on millionaires,' and we’re saying 'cut taxes for the middle class' and they’re opposing it,” Schumer said.

A week ago, Schumer said Republicans would risk their House majority if they didn’t back down and accept a Senate-passed short-term extension of the payroll tax holiday.

"If House Republicans let taxes go up on the middle class on January 1, it could very well cost them the majority in the House next year. And they will deserve it," he said.

Rep. Steve Israel (D-N.Y.), chairman of the Democratic Congressional Campaign Committee, told The New York Times earlier this month that changing the mindset of his colleagues is the first step to winning the majority.

“I will sign an affidavit that it is going to be razor close — razor close. And the razor is going to be sharpened or dulled based on the resources, the recruits and the message we have. The House is absolutely, clearly, unequivocally in play, which is a quantum leap from where we were a year ago,” he said.

Republicans argue that raising taxes on income above a million dollars hits many small businesses and job creators.

Senate Republican Leader Mitch McConnell (Ky.) said Thursday that President Obama is the one who ended up looking bad in the payroll tax imbroglio because he took the opportunity to score political points instead of working constructively with Republicans.

“The president’s statements castigating House Republicans have thus amounted to the kind of unhelpful political opportunism Americans are tired of,” McConnell said.

But neutral observers and even conservatives thought Democrats won the standoff over the payroll tax cut, and predicted it could have consequences for Republican control of Congress.

The Wall Street Journal editorial page warned this past week that Republican handling of the payroll tax debate risked their control of the lower chamber.

“At this stage, Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly. Then go home and return in January with a united House-Senate strategy that forces Democrats to make specific policy choices that highlight the differences between the parties on spending, taxes and regulation,” the Journal counseled. “The alternative is more chaotic retreat and the return of all-Democratic rule.”

“It was gross mismanagement. If there were a lawsuit to be filed, it would be filed against the Republican leadership. They misplayed their hand dramatically,” said Ross K. Baker, a professor of political science at Rutgers University.

Baker said he thinks Democrats can pick up the 25 seats they need to recapture the House majority, and credits the payroll tax fight as a game-changer.

“Prior to this past week I wouldn’t have wagered on Democrats making a steadfast stand,” he said.

Baker cautioned, however, that Democrats could see their political message undercut if the economy improves, as it has shown signs of doing in the past week.

“If economy improves greatly, the sentiment for socking it to the rich may be reduced,” he said. “Takes a lot out of the argument that the rich aren’t paying their share and need to be squeezed.”

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