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From the Wall Street Journal:

Democrats' New Worry: Their Own Rich Voters

By JONATHAN WEISMAN, Wall Street Journal

JULY 20, 2009
 
A group of Democrats elected in recent years from some of the country's richest congressional districts have emerged as a stumbling block to raising taxes on the wealthy to pay for President Barack Obama's ambitious health-care overhaul just as the plan has begun to meet increasing resistance over its cost.

Friday, two freshmen representatives -- Dina Titus, from suburban Las Vegas, and Colorado's Jared Polis, representing Boulder, Vail and some of the tonier suburbs of Denver -- joined Republicans to vote against Mr. Obama's top-priority health-care overhaul when it faced a vote in their House Education and Labor Committee. One reason was a one-percentage point-surtax on couples earning between $350,000 and $500,000 -- gradually increasing to 5.4 percentage points on earnings more than $1 million -- to pay for it.

The bill passed the committee anyway, but if the number of Democratic defectors grows it could pose a serious obstacle to the president.

Also on Friday a busload of freshmen Democrats went to the White House to plead their case against sharp tax increases with the president and his chief of staff, Rahm Emanuel. The organizer was Rep. Gerald Connolly, the president of the freshman class whose Northern Virginia district is the richest in the U.S. as measured by median household income.

"There could come a time," said Rep. Michael McMahon, a freshman Democrat from New York City's borough of Staten Island, when Democrats are in open rebellion. "We will certainly see in the next few weeks where we are going."

Election gains in some of these affluent regions have helped give Democrats big majorities in the House and Senate. Of the 25 richest districts, 14 are represented by Democrats, according to Congressional Quarterly. In 1995, Democrats represented just five of those districts.

Recently elected Democrats from higher-income areas also have been cautious about legislation that would make it easier for labor unions to organize, and about legislation imposing tough new rules on banks. Republicans have savaged the new Democrats for supporting legislation to stem global warming by capping greenhouse-gas emissions, then forcing polluters to purchase and trade emissions credits -- a "cap and tax," the GOP says.

But planned tax increases are likely the source of the toughest intra-Democratic tensions. The president wants to allow George W. Bush's income-tax cuts to expire in 2011 for families earning at least $250,000 and to stop the estate tax from being repealed next year. Mr. Obama also campaigned on putting an additional payroll tax of two to four percentage points on incomes above $250,000 to help put Social Security back on solid footing. As the president confronts a surging budget deficit and presses his ambitious agenda, all those tax increases may be necessary to make ends meet.

All together, Democratic plans could push the top tax rate to 47%, the highest level since the tax code was rewritten in 1986.

Republicans remain strongly unified in their opposition to the president, who has promised not only to create a national health-care plan, ease the nation away from fossil fuels and overhaul education, but also to pay for it all -- largely through higher taxes and other fees.

Strong Democratic majorities, especially in the House, give the White House plenty of latitude. But if wary freshmen team with the more seasoned centrists in the fiscally conservative Blue Dog Democrat coalition, who are threatening the health bill in the House Energy and Commerce Committee, the coalition could be formidable.

The White House defends its approach. "The bottom line is that I think the president believes that the richest 1% of this country has had a pretty good run of it for many, many, many years," said White House spokesman Robert Gibbs.

Mr. Connolly, the Northern Virginia representative, has a different calculation. Households earning at least $200,000 represent 14% of his district, "and they all vote," he said.

"They're just hanging themselves," says Republican Rep. Sam Graves, who last year beat back a spirited challenge in his northwestern Missouri district, which includes suburban Kansas City, and said he is looking forward to a race on taxes in 2010.

The tax issue is presenting many new Democrats with a quandary as they struggle to get their political footing. "These members are going to have to make their own determinations on how to balance these interests," said Maryland Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee and himself a representative of the affluent suburbs of Washington.

The issue of taxes has long bedeviled Democratic candidates, but in 2008, Mr. Obama took control of it. He campaigned hard on tax cuts for the middle class, savaged as a tax increase Republican Sen. John McCain's proposal to subject the value of health-insurance benefits to income taxation, and convinced most Americans they would be unaffected even as he said he would allow taxes to rise on the rich.

But as Democrats who served in Congress in 1994 will attest, the game changes when abstractions on taxing the rich turn to reality. President Bill Clinton's 1993 deficit-reduction plan largely focused tax increases on the rich, but the collateral damage on Democrats was broad. And nobody wants to be the next Marjorie Margolies-Mezvinsky, the suburban Philadelphia House freshman who cast the deciding vote on the Clinton budget, only to be swept from office the next year.

"I never should have been asked to take that vote, ever," said Ms. Margolies-Mezvinsky, who now runs Women's Campaign International, a Philadelphia-based group with a mission to empower women politically.

Since the 1994 GOP sweep, districts like Ms. Margolies-Mezvinsky's have swung back to the Democrats. For 14 years, Republican Tom Davis represented most of Northern Virginia's Fairfax and Prince William counties. Now, Fairfax and Prince William belong to Mr. Connolly. Rep. John Hall took over the Hudson River Valley suburbs of New York after defeating veteran Republican Sue Kelly in 2006.

Boulder's Mr. Polis authored a letter on Friday, signed by 21 freshmen and one sophomore, Rep. Paul Hodes of New Hampshire, opposing the surtaxes. "Especially in a recession, we need to make sure not to kill the goose that will lay the golden eggs of our recovery," they declared.

For now, most freshmen aren't saying how they will vote on the House health-care bill. Mr. McMahon, whose New York district also includes parts of Brooklyn, said there is no open revolt, but there have been two meetings with House Speaker Nancy Pelosi, and there was the White House meeting Friday with Messrs. Obama and Emanuel. Taxes dominated what Mr. Connolly described as a cordial but inconclusive discussion.

"I spend all my time here making the case that the profile of the rich doesn't stand in my district," Mr. McMahon said. "People feel that they're getting hit from all sides."

http://online.wsj.com/article/SB124804459318663479.html#mod=todays_us_page_one

From CNN:

July 20, 2009

Pelosi weighs limiting new surtax to million-dollar households

4:00 PM ET

House Speaker Nancy Pelosi said Monday that she is considering a major adjustment to House Democrats' health care bill

(CNN) — An aide to House Speaker Nancy Pelosi confirms to CNN that, in attempt to quell a revolt among conservative Democrats, she is considering changing House Democrats' health care bill so that it only taxes families making $1 million or more.

"The Speaker has said several times she would like to squeeze more savings out of the system, and if we can do that we can reduce the number of people affected by the surcharge," said Brendan Daly, a spokesman for the Speaker.

To raise revenue to pay for reform, the House Democrats health care bill would impose a surcharge on individuals making $280,000 or more and families making $350,000 or more.

Pelosi is now suggesting starting that surtax at individuals making $500,000 and families making $1 million.

Pelosi: Make millionaires pay

By: Mike Allen, POLITICO

July 20, 2009 

Trying to sell a historic health bill to a balky caucus, House Speaker Nancy Pelosi told POLITICO in an interview that she wants to soften a proposed surcharge on the wealthy so that it applies only to families that make $1 million or more.

The change could help mollify the conservative Democrats who expect to have a tough time selling the package back home. Their support is the single biggest key to meeting the speaker’s goal of having health care reform pass the House by the August recess.

The bill now moving through the House would raise taxes for individuals with annual adjusted gross incomes of $280,000, or families that make $350,000 or more.

“I’d like it to go higher than it is,” Pelosi said Friday.

The speaker would like the trigger raised to $500,000 for individuals and $1 million for families, “so it’s a millionaire’s tax,” she said. “When someone hears, ‘2,’ they think, ‘Oh, I could be there,’ because they don’t know the $280,000 is for one person.

“It sounds like you’re in the neighborhood. So I just want to remove all doubt. You hear ‘$500,000 a year,’ you think, ‘My God, that’s not me.’”

Pelosi also told POLITICO she will push to “drain” more savings from the medical industry — hospitals, pharmaceutical companies and health insurers — than they have given up under current health-reform agreements with the Senate and White House.

Asked whether she believes the industry players will wind up contributing more to the package, Pelosi replied: “I don’t know. I know they can, to the extent that the special interests are willing to cooperate. ... They could do much better. ... Frankly, I think all the money [to pay for health reform] could be drained from the system, if they were willing to do that.”

The speaker said she will try to wring more concessions, setting up a potential battle with health care players who torpedoed President Bill Clinton’s health-reform efforts but have been eager participants in the negotiations this time around.

Pelosi said she is open to other changes — that she is taking an “agnostic” approach to getting a bill, rather than working from a “theology” of reform: “You have to just judge it for: Does it lower costs, improve quality?”

Pelosi now faces more pressure than she ever has in her career — obligated to repeatedly deliver tough votes for an ambitious and popular president, but anxious to minimize the midterm election losses that traditionally befall the party holding the White House.

The speaker professed bemusement at the persistent question she gets about whether it was better to be speaker with a Republican president or a Democratic president.

“Oh, please!” she replied. “Why do people ask that question? Do you have any idea? Like night and day. When people ask it, I think: Would you think that it would be easier to have a Republican president who doesn’t share your values? No, no, no.

“Nothing is easy. It’s challenging to get the job done and live up to the expectations and the hopes of the American people, as the president has taken them all to a new height. ... But ... it’s like having a 1,000-ton anvil lifted off your shoulders.

“People would ask, ‘Now, you’re not going to be the No. 1.’ And I say, ‘This is what I’ve hoped, prayed, dreamed and worked for.’ And it absolutely goes beyond my expectations of what it could be.”
Some House members are concerned that they’re being asked to take a tough vote that may be for nothing if the Senate doesn’t follow through. Some Pelosi advisers had considered keeping the House in session into August so that leaders could be sure the Senate was going to vote before House members take the risk themselves.

But Pelosi is plunging ahead. “We’re just staying on our own course, and we hope that the Senate will stay on a parallel course, to have this done by [early August]. Whatever it is, we will be ready. ... As I always say, we’re going forward when we’re ready. And I’m sure we’ll be ready.”

Pelosi said she has felt a certain “serenity” ever since she became speaker and says she’s “ready for all of this.” Ticking off the year’s remarkable agenda, she praised the stamina of her members, chairs and leaders, calling the Democratic team a “partnership.”

“I have the confidence when I go down a path that we are going down that path together,” she said. “It is a heavy lift, sometimes. But it one based on respect for the members. So we’ll take the time, have the conversations, do what needs to be done. ... It’s such a tremendous honor to be speaker of the House. To be able to serve with Barack Obama is really a joy. He’s a great leader ... with a vision, a strategic approach to it and the eloquence to take it to the American people.”

Pelosi said White House chief of staff Rahm Emanuel, a former chairman of the Democratic Congressional Campaign Committee who has tight relationships throughout the House, is “doing an excellent job.”

“He’s great, and I knew he would be,” she said. “The only thing is, I certainly would still like to have him here. There’s no question about that. But I’m so proud of him. I take some level of pride in his success, having appointed him to the DCCC, only in his second term, and as a member of the Ways and Means Committee.”

POLITICO spoke with Pelosi on Friday afternoon in her suite of offices on the West Front of the Capitol, overlooking the National Mall. She spoke proudly of that morning’s two committee votes on health care, starting in the wee hours with the Ways and Means Committee and continuing after breakfast with the Education and Labor Committee.

“It’s such a big day for us,” she said. “I don’t’ think anybody would have ever thought that would be happening on schedule, the way it is. So it’s pretty exciting. It’s historic.”

Her challenge now is to keep making history, against ever harsher odds. Despite the onus on her to turn President Barack Obama’s promises into legislation, Pelosi is relishing the pinnacle of a lifetime in and around politics.

Now, she’s arguably the second most powerful person in government, yet obliged to court fickle members, vote by vote. Some friends said the nail-biter vote for Obama’s climate-change plan was the most difficult thing she’d ever done. But she said health care would probably be “the most exciting.”

“Every single person in America is an expert on his or her health care,” she said. “The differences among members are regional, they’re generational, they’re ethnic — concerns that are really not necessarily political, partisan. We want this to work for the country. So we have to listen to everybody.
© 2009 Capitol News Company, LLC 

http://www.politico.com/news/stories/0709/25144.html

The Speaker first raised the idea in an interview with Politico.

Last week, 22 Democratic House freshmen sent a letter to the Speaker saying they were "extremely concerned" about what the taxes in their party's health care bill would do to small businesses.

Rep. Gerry Connolly, a Democratic freshman from a conservative swing district in Virginia, told CNN he believes a surcharge could hurt his constituents.

“It’s important to remember that with the expiration of the tax cuts on the highest income level, folks over a certain income level are going to see their tax rate go from 35 percent back to 39.6 percent,“ Connolly told CNN.

"To add to that a 5.4 percent tax to finance health care, on top of other fees and so forth that are being discussed, I think is wrong."

But he said Pelosi's idea to eliminate the tax on any individuals making below $500,000 helps.

"It narrows the number of people who would be affected. I think it probably goes a long way in protecting the small businesses we were concerned about and it puts more pressure on our House colleagues who are writing the bill to identify more in savings." Connolly told CNN.

As for Republicans: House GOP Conference Chairman Mike Pence, R-Indiana, slammed the surtax in any form. "It almost boggles the mind that the majority in Congress would continue headlong down a pathway toward increasing the tax burden on anyone at a time when our economy is shedding hundreds of thousands of jobs per month," said Pence.

http://politicalticker.blogs.cnn.com/2009/07/20/pelosi-weighs-limiting-new-surtax-to-million-dollar-households/


From POLITICO: