The Democratic Party is Trying to Face a Republican Party

Fearing a New Shellacking, Democrats Rush for Economic Message

By DAN DAVIDSON and ELLEN M. LIPPERT / December 26, 2011

WASHINGTON—For the past five months, House Democrats have been working to rewrite a series of bills that have become mired in a House deadlock over how to proceed with Obamacare. Democrats insist they will stick with legislation that would eliminate the mandate that Americans purchase insurance, thus cutting trillions from the deficit, while Republicans say the party will not agree to any such fix.

Now, three House Democrats are saying they will support a Democratic proposal that would impose a tax on Wall Street banks and hedge funds, which is a key component in the Democratic plan. But the idea of a tax on the banks has been greeted with skepticism, and at least one member of the House has been cautious: Representative Steve Israel, a Republican from New York who chairs the House Subcommittee on Domestic Monetary Policy.

What’s happening in Congress right now could be a microcosm of how a Democratic Party that has dominated Washington for two decades is dealing with a potential economic and political crisis.

On both sides of the aisle, the Democratic leadership says it must confront a Republican Party that, in turn, can’t seem to keep its word. To be sure, there are many reasons why voters have moved to the right, and the party of the “Washington Consensus” had an effective message and set of policies that resonated with voters. But while the base of the party is clearly moving in that direction, the rest of the party seems stuck in a rut.

The message from Washington Democrats hasn’t been getting much traction. The House Democratic leadership says House Speaker Nancy Pelosi has not engaged in backroom talks and is refusing to entertain any new talks with Republicans. Her spokesman says the speaker plans to take up a tax plan — a key component of the House Democratic plan — on or before Jan. 4.

But a Democratic leadership aide tells TIME that Pelosi isn’t being stubborn, but has been working from a position of “extreme caution.” The aide says that when Democrats are talking about a tax increase on the banks when

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