New York Rep. Steve Israel, chairman of the DCCC, told POLITICO in an interview that the committee will be debt free by the end of this month. The DCCC’s initial projection was that the debt from the 2009-2010 cycle would not be cleared until the end of the first quarter of 2012. Israel took over as DCCC chairman at the start of this election cycle.

“It frees up resources to invest in races instead of a bank,” Israel said, adding that Democrats were able to save tens of thousands of dollars in interest payments thanks to paying off their loans early. “I have been very pleasantly surprised by our entire fundraising plan. We are ahead of expectations; we’ve outraised the [National Republican Congressional Committee] by close to $4 million. Our fundraising has been a pleasant surprise.”

As of its most recent public report to the Federal Election Commission, the DCCC was still $1.33 million in debt.

In addition to Israel’s efforts, the improved Democratic financial picture is due, in large part, to Minority Leader Nancy Pelosi (D-Calif.), who has raised more than $25 million for the committee, Democratic incumbents and challengers so far this cycle.

Democrats also note that expected GOP gains from redistricting have not materialized. Following the 2010 elections, when Republicans had a 63-seat gain and ended a short-lived, four-year Democratic majority, some political analysts had predicted that Republicans could gain another 10 to 15 seats via the redistricting process.

But as of now, Democrats are expecting redistricting to be a wash or even a slight gain for their side.

“We’ve gone from depression and doubt to a realistic sense that the House is in play, all within a year,” Israel added. “The majority of our [Democratic] colleagues believe we are in range and it’s going to be close.”

The New York Democrat, though, acknowledged that GOP-allied super PACs and other outside groups are expected to dump millions of dollars into House and Senate races in 2012. Israel insists that won’t happen this election. Both House and Senate Democrats have launched super PACs to help their candidates and incumbents, although Democratic donors also face the challenge of raising money from donors who are also getting a strong push to plunge money into President Barack Obama’s reelection effort.

“In 2010, they unleashed a tsunami of outside money against us, and we hardly had any response,” Israel said. “In 2012, there will be a robust response from our allied groups. We got caught short in 2010; we will not get caught short in 2012.”

Political analysts like Stu Rothenberg and Charlie Cook are not, at this time, predicting a Democratic takeover of the House next year, at least based on the state of the U.S. economy, continued high unemployment and Obama’s lack of strength in public-opinion polls.

However, a controversial choice for the GOP presidential nominee could endanger Republican control of the House, most election experts acknowledge.

NRCC officials dismissed the Democrats’ fundraising success as impressive but essentially meaningless. Republicans insist they will keep control of the House no matter how much money the DCCC raises, and they assert that Pelosi remains too politically toxic for voters to back her return as speaker.

“Give Nancy Pelosi credit for aggressively pursuing her neurotic fantasy of returning to the speaker’s chair,” said Paul Lindsay, the NRCC’s communications director. “Give Steve Israel sympathy for knowing that every dollar [Pelosi] raises for him will be spent on a fruitless effort to defend House Democrats from the albatross of the Obama-Pelosi job-killing agenda.”

Coming off its huge victory in 2010, the NRCC started the cycle $10.5 million in debt. But as of the Oct. 31, the committee was only $500,000 in debt, and GOP officials expected the NRCC to be debt free in the very near future.