His signature issue in trouble, Obama will play up budget panel 

One week out from his first State of the Union address, President Obama is short a super-majority in the Senate, his agenda and signature legislative issue are in peril, and the economy is stuck in the doldrums.

Obama was unable to leverage his personal appeal into a win for Democrat Martha Coakley in Massachusetts, and Republican Scott Brown's election to the Senate portends a swift demise for his health care reform effort.

White House officials were quick to say they got the message.

"I think there's a general sense of discontent about the economy and there's a general sense of discontent about this town," White House senior advisor David Axelrod told MSNBC. "We are committed to doing something about it."

In a nod to both the need for the two parties to work together and an acknowledgment that the nation's record-high deficit is a problem, the Obama administration is finalizing plans for creation of a new budget panel to devise spending cuts, tax hikes and other ways to reduce federal red ink.

Even so, the timing of panel's conception is problematic. Obama is set to release a new federal budget on Feb. 1, five days after his Jan. 27 State of the Union address.

That means any cuts or other remedies devised by the group would be far in the future -- while the act of creating the panel could give the administration political cover to avoid making tough choices in the meantime.

In any case, the new commission is likely to be a centerpiece of Obama's televised national address, taking the place of health care reform.

The commission would be an 18-member panel appointed by President Obama with the power to draft legislation on taxes and spending that would then be presented as a whole to Congress. The White House cut a deal with Democratic leaders in Congress to create the panel as voters were heading to the polls in Massachusetts

Republicans and Democratic budget hawks had sought a more powerful panel made up of members of Congress with the requirement that their proposals to trim the $1.4 trillion budget deficit and $12 trillion national debt be voted up or down by Congress.

Republicans, hoping to build momentum to the fall midterm elections, have their own challenges in the next few months. In order to prevail, they must show voters a clear policy alternative to the Democrats, rather than just ideological opposition.

House Minority Leader John Boehner of Ohio said Brown's victory had its origins in last summer's angry town hall meetings over health care reform.

"But we have to remember, this is not just about health care. It's about the stimulus plan that isn't working. It's about the cap- and-trade bill. It's about the trillion-dollar deficits for as far as the eye can see," Boehner said. "What we need to do is work together to get our economy going again and get people back to work."


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