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New House Democrats wary on taxes, bailout

New House Democrats, especially those elected from Republican-leaning districts, are wary of tax increases and of a taxpayer-funded bailout for the Big Three U.S. automakers.
Image: Montgomery, Ala., Mayor Bobby Bright
Montgomery, Ala., Mayor Bobby Bright, a Democrat, won what had been a Republican seat in Alabama's 2nd Congressional District.Danny Tindell / AP file
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A mandate for change for President-elect Barack Obama? Sweeping enactment next year of the long-delayed Democratic agenda? A tax hike on those earning more than $250,000 a year, as Obama indicated during the campaign?

Not so fast, say some of the newly elected Democrats who gathered at the Capitol Monday for their orientation to the House of Representatives.

Political reality looks different if you’re a new Democratic member from Montgomery, Ala., rather than, say, San Francisco, home of House Speaker Nancy Pelosi.

For Democrat Bobby Bright, the mayor of Montgomery, the themes in his first day at the Capitol as a member-elect were no new taxes and no bailouts.

“I am not in favor of any tax increase. The people of this nation are taxed enough,” he said. “Right now, the economy is in such bad shape, we don’t need to start hitting our average citizens — I don’t care what level they are.”

Bright won the 2nd Congressional District, which had been represented by retiring Republican Terry Everett.

Hyundai at home in Alabama
The district is home to a Hyundai manufacturing plant and a number of supplier firms. Just across the state line in Georgia will be a new Kia plant where many of his constituents will find jobs. There are 6,500 auto and auto-related jobs in his district.

Bright and his constituents take a dim view of the proposed taxpayer bailout of Hyundai’s competitors — General Motors, Chrysler, and Ford — which Pelosi and other Democratic leaders have pushed.

“I don’t look favorably on it at all,” he said. “Generally I came up the hard way and no one ever bailed me out. I always had to stand on my own two feet.” He also opposed the bailout of financial firms that Congress enacted last month.

Asked about Obama and his mandate, Bright noted that “he got 39 percent in Alabama. He’s got a lot of work to do to gain the support and confidence of the people of district 2. I’m not saying he can’t do that. I think he can.”

Representative-elect Michael McMahon, the New York Democrat who won the seat that had been held by scandal-plagued Republican Rep. Vito Fossella, also sounded doubtful about tax increases.

“I represent Staten Island and Brooklyn where a lot of people work on Wall Street,” McMahon explained Monday as he took a break from the new members’ orientation. “Some have already lost their jobs. Some are facing the probability of losing their jobs.”

Tax increases in New York City
On top of this, he said, “People in New York are facing real property tax increases, state and city income tax increases. Both the city and the state face incredible budget deficits, the biggest in a generation. People want the economy to get going again to deal with all those issues.”

So is this a good time for an increase in federal taxes?

“That would be a real problem,” McMahon replied, “People would be very upset about that — given all the other tax increases we’re facing right now.”

Even if the tax increases were limited to those earning more than $250,000 a year?

“The problem with that is in my district couples, two working people, can make close to $250,000 and still be part of a very hard working middle class. So there’s a real suspicion about that proposal.”

McMahon also said he is skeptical about the proposed bailout of the Big Three automakers. He warned against supplying taxpayer aid to companies “that are not taking the steps to correct themselves.”

He added, “In any industry that is hanging on by its fingernails, both management and the workforce are going to have to take cuts in pay, cuts in benefits, to keep it going.”

Conservative areas
Despite winning his election with 61 percent of the vote, McMahon said his district is not becoming more Democratic in character. “In my district, John McCain won, 52 percent to 48 percent. That’s in the city of New York. When people hear that, they’re pretty surprised. Staten Island and Brooklyn are still voting pretty conservatively.”

While the bailout that Congress passed in October was unpopular in many parts of the country, it is "less unpopular” in McMahon’s district, he said, “because Wall Street is so much a part of our lives, so many people work on Wall Street. Generally people were in favor of government action to help out, but people are starting to second guess. They’re wondering what the heck was done. Credit is not being loosened up. People are not seeing the real results of what happened.”

Pelosi will have more than 255 members in her caucus as a result of the election, which grew the Democratic advantage by at least 20 seats. The margin over Republicans is large enough that Pelosi will be able to pass legislation without the support of some newly elected members of Congress, such as Bright and McMahon. She can give them a free pass to vote “no” on some sensitive issues, such as tax hikes or gay rights.

Another Democrat who appears to have won in what had been a Republican district is Virginia’s Tom Perriello. Although the state Board of Elections has not yet certified his victory, Perriello is 745 votes ahead of the Republican incumbent Rep. Virgil Goode out of more than 300,000 votes cast.

Like some of his fellow Democratic freshman, Perriello is a skeptic about the Big Three bailout: “I think we’ve done too much rewarding the status quo instead of rewarding innovation. I’d much rather see a stimulus package that rewards whatever company comes up with a 100 miles-per-gallon car and 40-miles-per-gallon truck first.”

Could Hyundai get the prize? “I think we should do it for American companies. I think we want the auto industry in America to be reborn,” he said.

Who will pay for recovery?
Representing a solidly Democratic district in Colorado anchored by Boulder, newly elected Democrat Jared Polis was less categorical in rejecting a tax increase.

“I look forward to seeing President-elect Obama’s proposal,” he said Monday. “We need to make sure we don’t finance our recovery on the shoulders of future generations by increasing our legacy of debt, but we do have to have a discussion of how we can have fiscal responsibility while we also stimulate the economy.”

Another new Democrat from Colorado is Betsy Markey, who defeated Republican Rep. Marilyn Musgrave. Markey said Monday she did not support an idea floated by Obama in the campaign of raising the tax on capital gains from the sale of stocks and other investments. “This is a time when we need to invest in our economy, and I don’t want to take any measures that will stifle that.”

“What I read (about Obama’s intentions) is that in the midst of a recession we probably would not have any tax increases,” said Representative-elect Dan Maffei of New York.

“I campaigned frankly somewhat more to the conservative side of Obama,” Maffei said.

Families earning $250,000 shouldn’t necessarily pay higher taxes, he said. “Middle-class people even in my district, two-earner families, can often make more than that. And they’re certainly not wealthy. So I think we have to look at tax policies, but certainly now is not the time to be raising taxes on capital gains and other things that might generate growth in the economy.”

Learn from Hoover's mistakes
Hearkening back to President Herbert Hoover’s errors during the Great Depression, Maffei said: “We don’t want to make the same mistakes that Hoover made… We want to make sure we continue to make investments and allow investments on the private side.”

Maffei, who won a seat in Syracuse, N.Y., that had been held for 20 years by Republican Rep. Jim Walsh, said the economy is his district is “pretty dismal,” but he added, “The one advantage we’ve got now is that we’ve dealt with a lot of layoffs and plant closings for years, actually for decades. So for us in some ways we’re better off than a lot of places that are just encountering the bubble bursting. We never had a bubble to burst.”

If GM, Ford or Chrysler were to enter bankruptcy proceedings, Maffei said, there is one plant in his district that would be directly affected: a facility in East Syracuse formerly owned by Chrysler which is now owned by Magna, a Canadian firm. “They still do a lot of business with General Motors and Chrysler,” he said.

Can Congress wait until January to enact a bill to provide funding for the Big Three U.S. automakers?

“Whether they can or not, they shouldn’t,” Maffei said. “We need to put something together quickly. But just a money bailout, throwing money at the problem, I don’t think is the solution either.”

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