Will Obama’s lame-duck dealmaking survive in the new year?

Even with the deep partisan divide, Obama and Congress worked together in the lame-duck session. But pressure on the president from the left and right will grow in the new year.

President Obama and Congress proved during the lame-duck session that they can work together to resolve big and thorny issues, but that remarkable show of bipartisanship in all likelihood will be short-lived.

The Democrats don’t own the House anymore, and their Senate majority is smaller. In securing the $858 billion tax-cut and unemployment-benefit package, Mr. Obama cashed in his one big bargaining chip with the Republicans: allowing the Bush-era tax cuts to continue even for the wealthiest taxpayers. He also infuriated his liberal base.

“He doesn’t have much to bargain with come January,” says historian Julian Zelizer, at Princeton University.

Caught between an empowered right and a balky left, Obama appears to be in a bit of a box. But predictions of total gridlock in the 112th Congress may be premature. In fact, analysts say, Obama and the Republicans both need to accomplish two things: show they can govern while also drawing lines in the sand. So over time, expect a combination of collaboration and conflict. Obama can also avoid Congress altogether, changing policy by executive order and using the bully pulpit to try to shape public opinion.

The early going may be particularly telling. The conservative tea party movement, which fueled the tsunami that wiped out many Democrats in the midterms, will be watching the new GOP members closely – as well as established Republicans who may be deemed insufficiently conservative and therefore deserving of a primary challenge in 2012. That bodes ill for compromise. At the same time, the new House speaker, Rep. John Boehner (R) of Ohio, will need to assert his own authority over his much-expanded caucus, including the tea party faction.

So even as both parties are laying down ideological markers, Obama and the Republican leadership will be looking for areas of common ground, such as on education and trade. The just-concluded trade agreement with South Korea could be an early test case – both between the parties, and within each party. The populist left and some tea partyers are not big fans of international trade agreements, which they say export jobs, and they could face internal conflicts as the two parties collaborate.

Students of divided government argue that recent history will be instructive to both Obama and Mr. Boehner. The deep partisan divide of 1995 – the year following the last GOP takeover of Congress – led to a legislative impasse on funding and two government shutdowns, with Republicans taking a big hit in public opinion. President Bill Clinton emerged the victor. Thus was born a willingness to compromise, which led to welfare reform and budget deals.

“That convinced people that divided government could work,” says Jim Kessler, vice president for policy at Third Way, a centrist Democratic think tank in Washington. “It served everybody’s interests. Republicans kept their congressional majority, and Clinton swept reelection.”

Fast forward to today: “Boehner and other Republicans worked very hard to get their majority back,” says Mr. Kessler. “Their No. 1 concern is keeping the Republican majority, not electing a Republican president.”

That flies in the face of Senate Republican leader Mitch McConnell’s post-midterm election statement that his top goal is to prevent Obama from winning a second term. Senator McConnell doesn’t have a majority to protect, so perhaps he more than Boehner can afford to look baldly partisan. Besides, his caucus already has excellent election prospects in 2012, with many more Democratic senators up for reelection than Republican.

Having won multiple bipartisan victories during the lame-duck session, Obama clearly wants more of the same in the new Congress. In his pre-Christmas press conference, the president called the lame-duck Congress a “season of progress” that reflected the message voters sent in the November midterms.

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That message, he said, was: “It’s time to find common ground on challenges facing our country. That’s a message that I will take to heart in the new year, and I hope my Democratic and Republican friends will do the same.”

Obama already appears to have been rewarded by the public for reaching across the aisle. Even if most Americans weren’t happy that the Bush-era tax cuts were extended for the wealthiest taxpayers, they liked the bipartisan dealmaking.

“This is not lost on him,” says Bruce Buchanan, a presidential scholar at the University of Texas, Austin.

A Gallup poll released Dec. 23 showed Obama’s approval rating rose nine points in the previous two weeks among centrist Republicans and independents who lean Republican, hitting 29 percent.

At the same time, analysts warn, Obama has to be careful about alienating his progressive Democratic base.

“The outlook he’s taken is he doesn’t [have to worry about liberals], and what’s more important is moderate voters, and the left will come out for him when they see the choice in 2012,” says Mr. Zelizer of Princeton. “But that’s a dangerous posture to take. He needs the Democrats in Congress to protect health-care reform and at least try to move the legislation he gives them. He needs Democrats to make the case for why he should be reelected.”

There have been rumblings that Obama will make deficit reduction – a topic rife with risks on Obama’s left – a major focus of his State of the Union message. If the perception is that Obama is prepared to scale back elements of the social safety net, such as Social Security, he could face open revolt. The tax-cut deal has already shaved a few points off his job approval among liberal Democrats.

If Obama decides he doesn’t like the bargain Republicans are offering him, he can go around them, suggests John Podesta, President Clinton’s chief of staff and director of Obama’s transition to the presidency.

“Congressional gridlock does not mean the federal government stands still,” writes Mr. Podesta in a recent report for his think tank, the Center for American Progress. The report, called “The Power of the President,” suggests multiple avenues for making and implementing policy that don’t involve Congress: executive orders, rulemaking, agency management, convening and creating public-private partnerships, commanding the armed forces, and diplomacy. On energy, for example, the report proposes a temporary $2-per-barrel fee on imported oil. That would discourage oil imports, encourage moves toward energy independence, and raise money that could be applied to deficit reduction.

On the economy, the report proposes acceleration of the Small Business Jobs Act, legislation Obama signed in September aimed at boosting the liquidity of small businesses and spurring job creation. On education, the report proposes an “educational productivity” initiative that measures outcomes based on dollars spent and helps school districts use taxpayer money more effectively.

Already, rulemaking by federal agencies faces increased scrutiny following the revelation that Medicare reimbursement for end-of-life counseling – dubbed “death panels” by conservatives – was included in the new Medicare fee schedule. This month, the Environmental Protection Agency begins regulating the emission of greenhouse gases, a move conservatives are challenging as a job-killing, unconstitutional power grab.

In Obama’s ideal world, he would be exercising all the levers of power at his disposal, including working with Congress. After all, during his campaign he said he aspired to be a transformational leader like Ronald Reagan. Obama is unlikely to scale back and play for small victories.

“If I had to choose one big, difficult issue he might tackle next, I’d say the looming fiscal crisis,” says Ed Gresser, president of the centrist Democratic Leadership Council. “The public I think is intuitively nervous and aware that we have a problem. Convincing the public of the detail – here’s what we need to do – will be difficult. But there are significant long-term benefits.”

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