Republicans have a very real shot of retaking the Senate next year.  Combined with likely controling  the House and the possibility of winning back the presidency in 2012 Republicans have much to be optimistic about.  But Republicans are no means a lock for winning the Senate next year.  Controversial issue after issue has embroiled their control of the House and they are very weary, especially Senate Republicans, of taking tough and controversial votes.  As the end of the year approaches and election year nears they now face a predicament.  What to do about the payroll tax cut that expires on January 1st, 2012.

Republicans have been squeezed into a box by Democrats on the issue.  Republicans in the minority almost whole-heartedly embraced and voted for the legislation to spur the economy last year.  But now Republicans are being forced to extend the cuts but at the cost of increasing taxes on those making $1 million or more.  Though the surtax may be a small 3.25% it would violate the GOP’s “No new taxes” pledge and surely demoralize their supporters less than a year out from the election.  Furthermore, Speaker of the House John Boehner vowed that the tax cut, if extended, would be deficit neutral without raising taxes. 

Republicans have been looking for a way out on the issue and thought they had found it.  Republicans have a plan pending in the Senate that would extend the cuts for a year and make them deficit neutral.  The federal worker pay freeze would be extended for three additional years, 10% of federal workers would get the boot and several other budgetary items would be targeted to extend the plan.  Democrats have rejected the idea as preposterous and claim that the GOP is only representing the rich.  And in this Democrats have an easy message and sound byte to use on the issue.  Update: Both the GOP and Democratic plans in the Senate failed to even come close to the 60 vote cloture margin last night.

Republicans are largely hoping to the win the Senate back on a solid majority of the vote from white working class voters.  Many of the seats they are targeting such as Missouri, Nebraska, Montana, Virginia, Florida, and North Dakota are full of them.  For various reasons white working class voters have never fully fit into the GOP economic policy and have largely come back to Democrats at times due to this argument.  Republicans protecting the wealthy is a play on income and social inequality.  For Democrats, this message still resonates to some white working class voters.

Democrats may have finally hit on the GOP’s weakness in the run-up to the 2012 elections.  The GOP’s “No new taxes pledge” allows them to make their base happy but at the same time it allows the Democrats to use this stance to paint them as “Protecting the rich.”  Afterall, it is only an extra 3.25% on income over a million.  Surely even the GOP should see the wealthy can afford this?  Republicans are quick to counter that many small businesses would be affected however, as would individuals hired by those who earn over $1 a year.

Exploiting these obvious schisms within the GOP has to make Democrats giddy.  Turmoil was once recently so great within the GOP, at least in the Senate, that moderate Republican Susan Collins (R-ME) authored her own version of the plan that would exempt small businesses (50 employees or less) from the higher surtax but they would also be allowed to take the payroll tax cuts.  To pay for it a surtax is imposed on the wealthy.  Republicans know that the narrative Democrats can create on the issue will be deadly.  In a conference call to GOP members of the House, Speaker Boehner is on record saying “If you don’t thinking extending this thing is politically beneficial then you are crazy.” 

But Republicans are still tied down by their no new tax pledge and the fact they need a plan that can pass the GOP controlled House and win 13 Democratic votes in the Senate.  The one conciliation the GOP may be able to take is that Democrats likely do not have the votes in the Senate to even pass their version.  Democrats such as Joe Manchin and former Democrat turned Independent Joe Lieberman have expressed reservations with the Democratic plan.  Regardless, Republicans find themselves in a bond on the issue and they do not yet have a way to resolve it.

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