"I don't think the Republicans ran particularly on a Republican message in Virginia and New Jersey," Axelrod said, arguing that the most important lesson from yesterday's contests is that "their party is deeply divided."
Axelrod described New Jersey Republican Chris Christie and Virginia Republican Bob McDonnell as "moderate or moderate sounding" candidates who avoided "the themes that you hear from Washington Republicans."
The GOP-backed candidate who lost, conservative party candidate Doug Hoffman (who was running for an upstate New York House seat), is the one who embraced those themes, he said.
"They've got a deep problem in their party, and they better heal it or they're going to continue to lose market share," argued Axelrod.
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The White House adviser said the House race, in which the moderate Republican candidate, Dede Scozzafava, withdrew amid poor poll and fundraising numbers, was "telling and instructive" because it showed how a "civil war" had erupted in the Republican Party.
Axelrod said the message to moderate Republicans from the contest was that "there's no place for you in this party." He pointed to the fact that Tim Pawlenty, the potential 2012 GOP presidential candidate, had been critical of moderate Maine Republican Olympia Snowe as further evidence.
The Democrat acknowledged that "turnout was not good" in New Jersey and Virginia but argued that the results don't have "great predicative value in terms of looking at future elections."
"There was great enthusiasm about the race that centered on national issues," he said in reference to the House race. "Not so much so state races. And those races were very much determined by how people related to candidates and factors that were local in nature."
"Corzine's vote was higher than his job approval rating, and he was 15 points behind in the summer, so I think the president ended up rallying the troops," added Axelrod.
He said he hoped Democrats would look to the race run by Democrat Bill Owens, who defeated Hoffman for the House seat, for guidance.
Owens "ran on the Obama platform and got elected," Axelrod said, saying he hopes Democrats "will be encouraged by that."