Writing in Politico, Democratic consultants Kristian Denny Todd and Steve Jarding have this advice for Democrats in 2010: "If you want to win -- deliver the goods and prove you can govern. This isn't 2008, and to voters, you no longer represent a beacon of hope, change and a brighter day. Instead, 12 months into your 'mandate to change,' Americans see you as a card-carrying member of the arrogant political establishment that they increasingly believe is out-of-touch at best and self-serving at worst." 

ARKANSAS: Political handicapper Stu Rothenberg moves Sen. Blanche Lincoln's seat to "Lean Takeover," citing her low favorability ratings and losing poll numbers against lower-tier GOP challengers.

And more incumbent trouble in Arkansas: "Speaking on a local radio show, [Democratic Rep. Marion] Berry said it is his "intention" to run in November. But he wasn't willing to go much further. Asked whether he, Rep. Mike Ross (D-Ark.) or Sen. Blanche Lincoln (D-Ark.) might join Rep. Vic Snyder (D-Ark.) in retiring, Berry said anything can happen," The Hill writes.   
 
FLORIDA: In "the latest development in a will-he-or-won't-he drama over Jeb Bush's endorsement," Jeb's son George P. Bush announces his support for Marco Rubio over Gov. Charlie Crist. "While George P. Bush's backing is nice, it could signal that his father isn't getting involved. The senior Bush would make a bigger splash with a Rubio endorsement, but he could also irritate certain elements of the national GOP," The Hill reports.   
 
ILLINOIS: Two Democratic and Republican contenders for President Obama's former Senate seat traded barbs yesterday over the Supreme Court corporate campaign finance ruling: "Alexi Giannoulias, the freshman state treasurer, criticized Republican Senate candidate Rep. Mark Kirk, saying Kirk has taken more corporate money in his time in office 'than just about any other politician.' Kirk's campaign countered with its own statement, saying Giannoulias took more than $500,000 from corporate and union special-interest committees during his treasurer bid in 2006," the Chicago Tribune writes.   

MICHIGAN: Former state Treasurer-turned-Major League Baseball executive Robert Bowman, a Democrat, is exploring a gubernatorial run.   
 
MISSOURI: While telling the Washington Post of his efforts to "prevent further bleeding" within the Democratic party in light of Tuesday's Republican special election upset, DSCC Chairman Sen. Robert Menendez (D-NJ) likened Missouri Secretary of State and Senate hopeful Robin Carnahan's campaign strategy to that of Scott Brown, who defined himself as a political outsider despite being a state legislator for the past decade. Menendez said Carnahan was "someone who has so far successfully presented herself as a change agent, despite coming from a family of politicians," the Washington Post writes.   
 
NEW HAMPSHIRE: The conservative Daily Caller writes that the New Hampshire Senate election results might closely mimic those of Massachusetts, due in no small part to the large amount of independent voters in the state: "These voters factor huge in New Hampshire, as they represent more than a third of the electorate. And in Massachusetts, they factored huge in Brown's victory. This hard swing among New England independents could put the breaks on the Democrats' rise in New Hampshire… No doubt a deeper concern for many New Hampshire Democrats is the fact that none of them begins 2010 with footing as firm as Martha Coakley enjoyed at the beginning of the Massachusetts special election."

From NBC's Mark Murray
Well, it's not going to be Scott Brown...

First Read has learned that GOP congressional leaders have tapped Virginia Gov. Bob McDonnell (R) to deliver the Republican response to President Obama's State of the Union address next week.

McDonnell won election last year -- in blow-out fashion -- in a key battleground state Obama carried in the 2008 presidential election.

McDonnell becomes the latest Virginia politician to give the SOTU response -- ex-Gov. Tim Kaine (2006) and Sen. Jim Webb (2007) have all given SOTU responses recently.

From NBC's Athena Jones 
WASHINGTON --  President Obama announced new rules designed to limit the size of financial firms and the activities they are allowed to carry out, part of a comprehensive set of proposals aimed at preventing a future financial collapse.

Under the new rules, expected to affect the nation's largest financial institutions, banks or firms that own banks would not be allowed own, invest in or sponsor a hedge fund or private equity fund or to engage in proprietary trading for their own profit. Financial firms would also be subject to an updated set of caps on their share of insured deposits and on non-deposit funding, a rule designed to limit consolidation in the financial sector.

"Never again will the American taxpayer be held hostage by a bank that is too big to fail," Obama said during a brief speech in the Diplomatic Reception Room on Thursday. "Limits on the risks major financial firms can take are central to the reforms that I've proposed."

Since the campaign, Obama has repeatedly stressed the need to update the rules governing the financial system to meet 21st century challenges. Last year, the administration proposed a set of new regulations to prevent risky practices by large firms. They included establishing a consumer protection agency, new regulations of derivatives markets that have been outside the purview of regulation; changes to the way big financial firms are supervised, higher capital standards and liquidity requirements and new resolution authority that would allow the government to wind down big firms that threatened the entire system, like AIG.

While the House of Representatives passed a financial regulatory bill, the Senate has not yet done so and the details of the new proposals must also worked out with Congress.

"My message to members of Congress of both parties is that we have to get this done and my message to leaders of the financial industry is to work with us and not against us," Obama said, acknowledging that the industry had already sent teams of lobbyists to Capitol Hill to block his proposals. "If these folks want a fight, it's a fight I'm ready to have."

Obama was joined at the announcement by former Federal Reserve Chairman Paul Volcker, who heads the President's Economic Recovery Advisory Board (PERAB). Volcker is a long-time advocate of these restrictions. In fact, Obama dubbed the limits on proprietary trading The Volcker Rule.

Also present were former SEC Chairman Bill Donaldson, Chairman of the House Financial Services Committee Rep. Barney Frank (D-MA), Senate Banking Committee Chairman Sen. Chris Dodd (D-CT), Vice President Biden and several members of Obama's economic team.

Today's proposals come a week after the president announced plans to tax large firms to recoup taxpayer money loaned to them under the unpopular Troubled Asset Relief Program during the height of the financial crisis.

One senior administration official said that today's reforms target proprietary trading by firms because there is a conflict of interest frequently between companies doing trading and the interests of their clients and that financial firms that own banks or are banks themselves have access to discount window in a moment of crisis through the Federal Reserve and have federal deposit insurance. The administration argues it is inappropriate for such firms to do proprietary trading for their their own profit, as opposed to a client's benefit, while retaining access to these taxpayer-supported government safety nets. The president expanded on that argument in his remarks.

"The fact is these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong," he said. "We simply cannot accept a system in which hedge funds or private equity firms inside banks can place huge risky bets that are subsidized by taxpayers and that could pose a conflict of interest and we cannot accept a system which shareholders make money on these operations if the bank wins but taxpayers foot the bill if the bank loses."

As for the limits on the size of any one firm in relation to whole financial system, the aim is to develop "a strong, tough rule, not subject to evasion" to make sure that firms do not become overly concentrated in the sector.

From NBC's Shawna Thomas, Domenico Montanaro and Mark Murray
There aren't many options on health care. But the idea of the day that is being floated is passing the Senate bill without changes in the House.

But House Speaker Nancy Pelosi, who sets the agenda, today said the votes just are not there for that.

"I don't see the votes for it at this time," Pelosi said at a Capitol Hill news conference.

But Pelosi saying that she doesn't have the votes -- right now -- isn't suprising. House aides told us the same thing yesterday. The question is whether the votes might be there a week from now.

From NBC's Mark Murray
With today's Supreme Court's decision -- and especially Chief Justice John Roberts' decision to re-hear a case to broadly challenge a 20-year precedent on campaign finance -- it recalls Roberts' promise at his 2005 confirmation hearing to act like a umpire "to call balls and strikes and not to pitch or bat."

Yet by re-hearing this case, Roberts clearly stepped into the batter's box.

Here's what he said in 2005:

Judges are like umpires. Umpires don't make the rules; they apply them. The role of an umpire and a judge is critical. They make sure everybody plays by the rules. But it is a limited role. Nobody ever went to a ball game to see the umpire... I will remember that it's my job to call balls and strikes and not to pitch or bat.

From NBC's Mark Murray
Breaking News: In a 5-4 decision, per the AP, the "Supreme Court has ruled that corporations may spend freely to support or oppose candidates for president and Congress, easing decades-old limits on their participation in federal campaigns... The justices also struck down part of the landmark McCain-Feingold campaign finance bill that barred union- and corporate-paid issue ads in the closing days of election campaigns."

Time to hunker down, a la New Hampshire circa Jan. 2008… Obama hints he might want to scale back the health reform measure… The president's bank proposal… Scott Brown's day in Washington… Is that big SCOTUS campaign-finance decision coming?... John Edwards admits he's the father of Rielle Hunter's child… Blanche Lincoln's poor poll numbers… And Mark Sanford's final State of the State address.

From Chuck Todd, Mark Murray, Domenico Montanaro, and Ali Weinberg
*** Hunker down: One of the key qualities that helped Barack Obama and his team survive all the ups and downs during the nearly two-year-long presidential contest was their ability to never get too high in good times and too low in bad ones. And now with health-care hanging by a thread after Tuesday's special election in Massachusetts, they'll need that quality more than ever. All the folks who have NEVER been big Obama fans are now coming out of their "I told you so" holes. ("I'm pretty close to giving up on Mr. Obama, who seems determined to confirm every doubt I and others ever had about whether he was ready to fight for what his supporters believed in," Paul Krugman blogs.) The White House's view on how to deal with this setback is akin to how it dealt with its devastating loss in New Hampshire in Jan. 2008: hunker down, regroup, let folks take out their frustrations for another day, and then see what truly can be done. Remember that New Hampshire and the long Democratic primary actually turned out to be a blessing for Team Obama. Of course, there's a fine line between this attitude and Kevin Bacon's character in "Animal House," "Remain Calm! All is well!"

*** Scaling it back? But to make lemonade out of Tuesday's big lemon, Obama will need to demonstrate plenty of leadership, given that House Democrats don't want to pass the Senate bill and that Democratic senators don't want to have to take another tough vote. The president gave some clues in how to proceed in his interview yesterday with ABC. "Now I will tell you, and I've said this before, that the House and the Senate bill overlap about 90 percent. And so, it does seem to me that there should be a way of, after all this work and all this pain, there should be a way of taking what's best in both bills and going ahead and getting that done." He also said this, which prompted Krugman's criticism: "I would advise that we try to move quickly to coalesce around those elements of the package that people agree on. We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don't, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families."

*** Doing SOMETHING: One thing it seems congressional Dems and the Washington elite will want to see from the Obama White House is, well, some change. Maybe it's personnel; maybe it's a change in focus. But they are going to want to see SOMETHING to stop the rhetorical bleeding. But what will the White House feed to these Washington wolves? A staffer? Unlikely. This is a very loyal group and they don't believe the first year was a failure. They believe they didn't sell what they DID well, but they're impressed with how much they got done, and they believe the team of Rahm/Ax helped make that happen. The more likely path will be using the idea of a so-called "shakeup" of sorts to send a message to voters, not Washington. So maybe it's more anger on the flagging economy; maybe it's calling the economic team on the carpet (and shaking up THAT group); maybe it's the addition of an outside seasoned hand on the issues of jobs. Whatever they do, there is this Washington hunger -- led by skittish congressional Democrats and activists -- who will want to see the White House do SOMETHING.

*** Just askin's: If Republicans didn't see Barack Obama's election and Democrats' supermajorities as an indicator that they should compromise, why are Democrats supposed to compromise because of a special election in Massachusetts?... Now that Democrats don't have a filibuster-proof majority, will GOP recalcitrance be a bigger story?... And did Obama really say he hasn't talked enough to the American people? "If there's one thing that I regret this year, is that we were so busy just getting stuff done and dealing with the immediate crises that were in front of us, that I think we lost some of that sense of speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values," he told ABC. "And that I do think is a mistake of mine."

*** Obama's day: At 11:40 am ET, joined by Presidential Economic Recovery Advisory Board Chair Paul Volcker, President Obama "will publicly propose giving bank regulators the power to limit the size of the nation's largest banks and the scope of their risk-taking activities," the New York Times reports. "The proposal will put limits on bank size and prohibit commercial banks from trading for their own accounts — known as proprietary trading." This is an approach that Volcker has long championed. Also today, at 2:00 pm ET, President Obama addresses U.S. Conference of Mayors at the White House. The president is expected to talk about the economy and job creation.

*** Mr. Brown comes to Washington: The man of the hour -- Scott Brown -- today is in Washington, where he meets with John McCain at 10:10 am ET, with John Kerry at 10:30 am, with outgoing Sen. Paul Kirk at 11:00 am, and with Senate Minority Leader Mitch McConnell at 11:45 am. There will be a photo-op during each meeting. And don't miss today's great New York Times piece, which chronicles how Republicans quietly began laying the groundwork for an upset in Massachusetts and how Democrats (including Coakley's campaign) were asleep at the wheel.

*** Big SCOTUS decision coming? In a very unusual move, per NBC's Pete Williams, the U.S. Supreme Court is expected to hand down its decisions today -- a Thursday -- which it almost never does. This makes it almost certain we'll get the big campaign finance decision, Citizens United vs. Federal Election Commission. The Washington Post: "The case, first argued last spring, was reargued in September to consider whether it was unconstitutional for Congress to forbid corporations and labor unions to use their treasuries to bankroll ads for and against candidates. Those who advocate greater government control over campaign contributions say a court decision in the affirmative would revolutionize the way political campaigns are funded. Corporations and labor unions now are required to fund their political activities through contributions raised by their political action committees."

*** John Edwards' admission: On "TODAY" this morning, NBC's Lisa Myers reported that John Edwards, for the first time, has publicly acknowledged that he is the father of his mistress' daughter, Frances Quinn Hunter. "I am Quinn's father," he said in a statement. "I will do everything in my power to provide her with the love and support she deserves. I have been able to spend time with her during the past year and trust that future efforts to show her the love and affection she deserves can be done privately and in peace." More Edwards: "It was wrong for me ever to deny she was my daughter and hopefully one day, when she understands, she will forgive me. I have been providing financial support for Quinn and have reached an agreement with her mother to continue providing support in the future. To all those I have disappointed and hurt these words will never be enough, but I am truly sorry." Myers also reported that Edwards began giving financial support to his daughter a year ago, and that Elizabeth Edwards learned last summer that her husband was Quinn's father.

*** More midterm news: The bad news keeps coming for the DSCC: In Arkansas, a new poll shows Blanche Lincoln (D) with a 34%-57% fav/unfav and with just 38% of likely Arkansas voters approving of her job. (By comparison, Democratic Gov. Mike Beebe has a 76%-14% fav/unfav, and an 82% approval rating… In Iowa, former Gov. Terry Branstad (R) officially announced his bid to challenge incumbent Gov. Chet Culver (D), becoming the latest ex-governor trying to win back his old job… And in South Carolina, with five Republicans running this year to replace him, embattled South Carolina Gov. Mark Sanford (R) gave his final State of the State address last night, in which he once again apologized for his affair with an Argentine mistress. "After this speech, those of you who have grown weary of my apologizing rest easy, because I won't do it again," Sanford later added. "I am compelled to say that I'm sorry, one more time, for the situation I created."

Countdown to IL primary: 12 days
Countdown to TX primary: 40 days
Countdown to Election Day 2010: 285 days

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Mr. Brown goes to Washington: Sen.-elect Scott Brown is making his way to the Hill today to make the rounds. He's meeting with Sens. John McCain, John Kerry and Minority Leader McConnell.

The Boston Globe's six-column banner headline: "A new political landscape."

Sen. Brown (T-MA?): The Globe also has this on its front page: "Tea Party shows its muscle in Bay State." The anger driving this loose coalition of activists, united by a distrust of government, helped vault a little-known Republican state lawmaker into the Senate seat held for 47 years by liberal icon Edward M. Kennedy. As Scott P. Brown's populist message began making inroads into Democrat Martha Coakley's commanding lead, the call went out online, via e-mail and in chat rooms, drawing Tea Party activists to Massachusetts to woo its famously liberal electorate."

The New York Times chronicles how Republicans quietly laid the groundwork for Brown's upset and how Democrats (especially the Coakley campaign) were asleep at the wheel. "The two-week period that upended the politics of Massachusetts and the nation may well be remembered as the moment that undid the signature initiative of the Obama presidency, his health care bill. It is a story, based on interviews with more than three dozen people involved in the race, of missed opportunities and tensions among Democratic power centers here and in Washington."

More: "But it also heralds the coming of age of the Tea Party movement, which won its first major electoral success with a new pragmatism, and the potential of different elements of a divided Republican Party to rally around one goal."

And, as we noticed on election night, the Boston Globe writes that the suburbs and lower turnout in the cities carried Brown to victory. That should be a warning to Democrats this year and potentially for Obama in 2012.

So what's next for Martha Coakley? "Stung by her crushing loss to Republican Scott Brown in the US Senate race, [she] will return to work this week and seek reelection in the fall, aides said yesterday." Her loss disappointed lawyers in the state and Secretary of State William Galvin who all were thought to want to replace her. And it has emboldened Republicans to take her on in the fall.

"Internal debates over the direction of the Democratic Party intensified Wednesday following a devastating electoral loss in Massachusetts," The Hill writes. "In the aftermath, liberals immediately began to argue that Scott Brown's win shows the party has not delivered on the change promised by President Barack Obama, while centrists and conservatives worried the result shows voters are disillusioned with leftward moves made by Congress."

"With the rubble of the Democratic collapse in Massachusetts still smoldering Wednesday, House Democratic leaders paused to let the smoke clear and assess the damage to their already-weakened political prospects," Roll Call adds.

"Like a dazed boxer taking an eight-count, Democrats say they need time to recover from the devastating blow they suffered when Republican Scott Brown defeated Democrat Martha Coakley on Tuesday," The Hill writes. "They made clear on Wednesday, however, that they are not giving up. House Majority Whip James Clyburn (D-S.C.) said on CNBC Wednesday that healthcare reform is 'not dead by any means.'"

Let the walk backs begin: Barney Frank, who said health care was "dead" now that Republicans have a 41st vote on health care, took it back. "I have realized that my statement last night was more pessimistic than is called for, although I still regard the fact that the Republicans have now elected a 41st Senator as a serious obstacle to getting health care done," Frank said in a release, per The Hill.

Call it the Senate bill plus reconciliation option? Clyburn seemed to indicate that reconciliation should be used. And the AFL-CIO supports it. "One scenario under consideration would have House Democrats pass the Senate bill as is, paired with a separate bill formed under reconciliation rules carving out changes to the healthcare bill that House and Senate Democrats had previously negotiated," The Hill writes.

Roll Call writes that the reconciliation option is gaining steam, and notes that Max Baucus could be central again.

"Eight of the nation's largest banks spent nearly $26 million lobbying federal lawmakers in 2009, during one of the most tumultuous periods in financial history. The banks spent nearly 6 percent more on federal lobbying last year compared with 2008, according to a review of congressional lobbying records," The Hill writes. "The banks spent $25.8 million on lobbying in 2009 and $24.4 million in 2008, the two years at the heart of the worst financial crisis since the Great Depression."

Schumer's approval erosion? "The poll had Schumer's negative rating at 42 percent, where it has been for months in Marist -- but his approval rating was at 51 percent, one of his lowest in that survey in recent years, and down from 58 percent in September," the New York Post writes, adding, "Insiders say Schumer is watching the national trend for any implications for himself -- and in a clear signal of anxiety, he was one of the first out of the box with a statement after the Massachusetts election acknowledging the anger among voters at the ruling party."

The New York Daily News' DeFrank says, "Obama's presidency is at a crossroads." He adds, "[T]here's the no-fear factor. In the LBJ years, the perception in Democratic cloakrooms was that if you told Lyndon Johnson no on a critical vote, you might not live to tell your grandkids the story. Obama doesn't instill such dread. Ask Joe Lieberman, Ben Nelson and other legislators who watered down his health bill without penalty. One thing's for sure: With his once-promising presidency hanging in the balance, Obama doesn't have the luxury of waiting until the economy recovers to get well. It's time to crack heads, especially among Democrats, or risk being reduced, in Richard Nixon's pithy phrase, to a pitiful, helpless giant."

Time's Joe Klein asks, "Can Obama revive his agenda?"

The New York Post interprets Obama's ABC interview as "Bam: I fell out of touch."

The New York Daily News calls Obama's interview "a remarkable confession."

And the RNC releases a Web video on Obama's first year.

ALABAMA: One month after Rep. Parker Griffith announced he would switch from the Democratic to the Republican Party, he faces new opposition from his state's GOP, CQ Politics reports. "The Limestone County GOP Executive Committee is expected to take up a resolution Thursday that would oppose including Griffith as a Republican on the 5th district primary ballot this June. The 15-point resolution essentially states that while Griffith may now call himself a Republican, he has done little to prove that he truly belongs in the Grand Old Party."

CALIFORNIA: "Republican gubernatorial candidate Meg Whitman's campaign spent nearly $19 million in 2009, according to figures provided by her advisers. The former EBay chief executive donated an additional $20 million this week to her gubernatorial effort -- bringing her personal contributions thus far to $39 million."

DELAWARE: "As we await Beau Biden's decision on running for Senate, it's important to note Rep. Mike Castle (R-Del.) quietly announced a strong quarter in recent days," The Hill reports. Castle raised $1.1 million in the fourth quarter, which the Hill called "a nice head start in case Biden does decide to run."

FLORIDA: "You'd think these guys were best friends with Scott Brown," an observer said of the push by both Republican Senate candidates, Gov. Charlie Crist and Marco Rubio, to draw parallels between themselves and the Massachusetts special election winner. Campaigning on Wednesday, Rubio stressed his efforts to raise $42,000 for Brown, while Crist told supporters he called Brown soon after his election to congratulate him.

MISSOURI: This has become a common refrain in midterm races nationwide: "[Rep. Roy] Blunt (R) and Missouri Republicans have sought to connect [Secretary of State Robin] Carnahan (D) to positions Democrats have taken in Washington on health care and economic issues, a strategy that worked in Brown's defeat of Coakley… Carnahan's campaign has already sought to undermine any bump Blunt may get from Massachusetts by painting him as 'part of the problem in Washington.' Look for that push to intensify as Election Day approaches."

NEVADA: "Lt. Gov. Brian Krolicki is strongly reconsidering a run for the U.S. Senate against Sen. Harry Reid, he told the Las Vegas Sun on Wednesday, a move that would shake up a crowded Republican primary… Asked about Krolicki, Sen. John Cornyn, who heads the National Republican Senatorial Committee, tapped his coat pocket to indicate that he had the Republican's phone number and would be calling. 

President Obama is heading to Nevada for Harry Reid again next month. http://bit.ly/8Za08m

NEW YORK: Right next door to this fall's special election site in New York's 23rd district, Republican Richard Hanna has announced he is running – again -- to unseat Rep. Michael Arcuri (D) in NY-24.

NORTH DAKOTA: Bribes? Back-room deals? Sen. Mitch McConnell says he will give Gov. John Hoeven (R) two plum spots on the Appropriations and the Energy and Natural Resources Committees should Gov. Hoeven win the seat being vacated by retiring Sen. Byron Dorgan (D).

OHIO: Democratic Senate hopefuls Lt. Gov. Lee Fisher and Secretary of State Jennifer Brunner will face off in a debate this evening. While Fisher is the favored candidate of the Democratic establishment, his poll numbers are almost even with the lesser-known Brunner: he has 24% to Brunner's 22%, the Cincinnati Enquirer reports.

TEXAS: "Former President George H.W. Bush will endorse U.S. Sen. Kay Bailey Hutchison in the Republican primary for governor, a source close to the Hutchison campaign said Wednesday night," the Austin American Statesman reports.

From NBC's Michelle Perry
So what did National Republican Senatorial Committee Chairman John Cornyn take from Scott Brown's (R) win last night?

In an interview on MSNBC's "Andrea Mitchell Reports," Cornyn told Mitchell that when it comes to health care, the message voters were sending was, "Slow down and work together, and listen to us and our concerns. Don't just try to pass something and ignore our disapproval of what you are trying to do."

Mitchell also asked Cornyn about John McCain's announcement that Sarah Palin will campaign for him.

Cornyn said McCain is "smart enough that he is not going to leave anything to doubt" in this unpredictable political environment. "All incumbents, Republicans as well as Democrats, all incumbents have to be very, very careful this year. Absolutely. I think that anybody representing the establishment, whether you are Republicans or are Democrats, ought to wake up."

Here's the full video.

A brief clip is below...

Visit msnbc.com for breaking news, world news, and news about the economy

From NBC's Ali Weinberg
Both the liberal and conservative blogospheres weigh in on the whispers -- which First Read wrote about this morning -- that Republican Rep. Mike Pence of Indiana is considering challenging Sen. Evan Bayh (D). And while liberal writers and bloggers see Republican Sen.-elect Scott Brown's victory as a sign to ignore Republican gains, cease calls for bipartisanship and simply start passing legislation, conservatives see his win as a door-opener to future victories and Congressional clout.

Red State's Brian Faughnan comments that a potential Pence move, which he writes might inspire strong Republican contenders in other vulnerable districts: "If Pence gets into this race, Bayh will have a top-notch opponent who can raise money, and who's in tune with the mood of the voters. In a state that looks likely to be deep-red again, Bayh will face all he can handle. And in the next few weeks, we'll likely see many more top-notch GOP challengers emerge for many races." 

On the liberal end of the spectrum, The Washington Independent's David Weigel says a Pence move against Bayh is "the sort of thing the GOP needs -- credible threats against incumbent Democrats to scare them into voting down their party's agenda. Bayh, who's never lacking for a platform to trash his party for not governing in a 'moderate' enough way, is a good target for this."

And the Center for American Progress' ThinkProgress blog has this to say of Bayh: "Bayh is using the Massachusetts special election to tack to the right and lash out at the 'left.' In an interview with ABC News yesterday, Bayh called Brown's win 'a wake-up call' that moderates and independents 'don't believe the answers we are currently proposing are solving their problems.' Whenever you have just the furthest left elements of the Dem party attempting to impose their will on the rest of the country -- that's not going to work too well,' said Bayh." 

Christian Heinze at GOP12 picks up on a new post-Brown victory Internet phenomenon. He excerpts from an article by The Hill's Bob Cusack: "Several Scott Brown-for-president domain names have been purchased over the last week. The rights to scottbrownforpresident.com were bought last Friday, while scottbrown2012.com and scottbrown2016.com were acquired on Tuesday." But Heinze points out that Brown's pro-choice and pro-civil union positions were already GOP-tested during former New York Mayor Rudy and 2008 candidate Rudy Giuliani's campaign, and failed.

Citing the early political setbacks of several other presidents, Jim Geraghty argues that President Obama's pre-White House career never afforded him an opportunity "when the voting electorate has given them the thumbs-down and [he] recalibrated, taking a more thorough measure of what the public thinks....

"Now the public is yelling, as loud as it can, to Obama to stop and reverse direction. Can Obama move back to the center? He might, and for all our sakes, I hope he does. But unlike many, many other folks who have sat in his office, he's never had to do it before."

The Nation's Katrina Vanden Heuvel on the Democrats' best strategy going forward: "This special election is a wake up call and should lead to a course correction. The Democratic party can no longer run as a managerial and technocratic party. Going populist is now smart politics and good policy… here's a no-brainer: Isn't it time to give up on that faith in genteel post-partisanship when the GOP knifes you at every turn? Nice isn't going create more jobs or get health care reform. Before pivoting to a laser-like focus on jobs and the economy, passing the strongest possible healthcare bill as quickly as is feasible is a top priority."

More: "What comes next will test the President's willingness to learn the lessons of this last year. Get tough, get bold, kiss 'post-partisanship' goodbye and fight hard for jobs and a just economy of shared prosperity. And put yourself squarely back on the side of working people."

From NBC's Domenico Montanaro
The prognosis for health-care reform appears grim.

Democrats are really spooked all over the place, seem to be staggering and appear not to know exactly what to do.

First, Jim Webb said no way should there be a vote before Scott Brown is seated (invoking glee in Mitch McConnell). (And Evan Bayh, up for re-election in 2010, warned that Massachusetts should be a wake-up call.)

Then Sen. Dianne Feinstein says Democrats should go "slower": "I can tell you the situation has changed dramatically. And I think it's a sweep across the country and I think that the (White House Economic Adviser) Larry Summers's of the world have to see it, the administration has to see it and we have to see it. And therefore everything is jobs and the economy and education. People are worried about education. You see anger. People are worried. And when they're worried they don't want to take on a broad new responsibility."

Forget climate change and immigration, most likely too, she says, until the economy gets better.

"I think we do go slower on health care," she said. "People do not understand it. It is so big it is beyond their comprehension. And if you don't understand it when somebody tells you it does this or it does that and It's not true, you tend to believe it, even though it isn't true. It's hard to debunk all of the myths that are out there. In my view when people are earning, when their home is secure, when their children are going to school, and they are relatively satisfied with their life and there's a problem like health care -- they want it solved. It doesn't threaten them. The size of this bill threatens them. And that's one of the problems that's got to be straightened out." 

And call it the Massachusetts Senate Collapse Inquiry Commission? DSCC Chair Bob Menendez promises: "We're going to conduct a forensic examination of each of our campaigns and our candidates. That doesn't mean a shift to the right or the left or the center, it just means making sure that they're calibrated to the volatility of this electorate." 
 
Will one of the findings be that terrorism/the KSM trial mattered more than health care? Brown's top spokesman (and Mitt Romney's) Eric Fehrnstrom thinks so. (Brown also, by the way, apparently raised $12 million online during the election.) 

But back to health care... Wanna pass the Senate bill out of the House? No way, say lots of House Democrats, including Barney Frank. And no way, says the AFL-CIO. Fine, but what about the teachers? Randi Weingarten head of the American Federation of Teachers, goes all Zach Morris and wants a timeout: "Look, I think that everybody is taking a big pause button today in terms of trying to figure out, you know, what goes forward and what doesn't," Weingarten said. "I think any -- any conclusions right now are premature."
 
OK, so wanna go the Olympia Snowe route? Uh-uh, Snowe says. "I never say anything is dead, but I think that clearly they're going to have to revisit the entire issue. I think that was true from the outset ... I think there were a lot of concerns that ultimately, collectively manifested themselves in yesterday's vote."
 
OK, how bout Susan Collins? Um, "scratch" that, too: "I hope what the White House will do is start from scratch," Collins said. "There are many provisions in this bill that have bipartisan support. The way to proceed is to start from scratch."

Democrats' health bill appears to be on life support. Will the president wind up pulling the plug? After all this time, all the changes, all the close votes, delay tactics, tea party town halls and on and on, it seems almost inconceivable that Democrats get nothing. But the options don't even look few and far between -- they look non-existent.

*** UPDATE *** White House Press Secretary Robert Gibbs just now at the press briefing: "We are working our way through the best way forward. ... health care continues to be a priority of the president."

Abandoning health care isn't an option, it sounds like. OK, what then? Breaking it into pieces? Reconciliation?

Gibbs had no answer -- yet. He said, they'll decide on the best way forward in the next few days.

*** UPDATE 2 *** An earlier version of this post incorrectly noted that Evan Bayh, like Jim Webb, declared that there should not be a vote before Brown is seated.

"There's going to be a tendency on the part of our people to be in denial about all this; if you lose Massachusetts and that's not a wake-up call, there's no hope of waking up," Bayh told ABC yesterday, adding, "The only we are able to govern successfully in this country is by liberals and progressives making common cause with independents and moderates. Whenever you have just the furthest left elements of the Dem party attempting to impose their will on the rest of the country -- that's not going to work too well."

From NBC's Luke Russert
Minority Leader John Boehner said today, "The people of Massachusetts stood up and said enough is enough. While the people of American continue to speak, it is clear that the Democratic Leadership continues to ignore them and is looking for some way to press this healthcare bill to a vote. You've heard what the Speaker said yesterday and what the Majority Leader said, we are going to find some way to push this over the line.

"It's that arrogance that has the American people ready to pull their hair out to vote every Democrat out of here. This is not just about healthcare, it's about the stimulus plan that isn't working, it's about the cap and trade bill, it's about trillion dollar deficits for as far as the eye can see. The American people want us to get our economy moving again because they continue to ask: where are the jobs?"

NOTE: "Arrogance" seems to be the word of the day for the GOP. They are attacking Democrats for what they perceive to be arrogance in shutting them out of the process and correlating that into the idea that the American people also felt slighted and want their elected representatives to work together.

Republicans will tout "the ready to work together" message for the rest of the week.

Here are a few highlights from the House GOP Leadership presser:

Mike Pence (R-IN): "We urge the President and this Congress to scrap their government take over of healthcare and come together with Republicans to work on incremental solution that will lower the cost of healthcare without growing the size of government. This isn't so much a good day for Republicans, it's a good day for the American people."

Eric Cantor (R-VA): "The election last night in Massachusetts for Senate elect Brown, was much about an election that rejected arrogance, much like David and his fight against Goliath, David won because he was able to do so and fight in his own way, the American people, the people of Massachusetts last night, have rejected the arrogance, they are tired of being told by Washington how to think and what to do. The message has been sent to the Democrats, listen to the people and heed their priorities."

Cantor on Steny Hoyer: "I look back a few months ago when I met with Majority Leader Hoyer. I guess that this morning that perhaps he's thinking that he should have paid a bit more attention to our meeting. Because at that meeting I put forth our Republican plan on healthcare to bring down cost. There is a way for us to work together."

From NBC's Ken Strickland
In a passionate and fiery speech on the Senate floor, Sen. John McCain played the history card as he celebrated the election on Republican Scott Brown to the U.S. Senate. And he warned Democrats to "stop this unsavory sausage-making process called health-care reform."

"I believe it was Lexington and Concord in which a shot was fired around the world," he said. "Last night a shot was fired around this nation. A shot was fired saying no more business as usual in Washington, D.C. Stop this unsavory sausage-making process called health-care reform, where special favors are dispensed to special people for special reasons in order to purchase votes."

McCain also addressed reports that Democratic leaders may ask the House to pass the Senate's version of the health-care bill, keeping the Senate from having to take another vote.

"Now the rumors are they'll jam this proposal through the House of Representatives and then bypass what has always been the normal legislative process," he said. "They should not do that! The American people have spoken! The people of Massachusetts have spoken for the rest of America. Stop this process!"

From NBC's Mark Murray
With health care hanging by a thread -- and with prominent liberal health-care voices like Jon Cohn and Jacob Hacker urging the House to pass the Senate bill -- some in the progressive community are ... still fighting for the public option.

MoveOn, Democracy for America, and the Progressive Change Campaign Committee commissioned a Research 2000 poll of more than 2,000 Obama voters in Massachusetts after the polls closed last night. Among the findings: Of the 500 Obama voters who voted for Scott Brown, 82% said they preferred a choice of a public option, only 36% said that the health-care bill goes far enough, and only 31% believe Obama and the Democrats in Washington DC are delivering enough of the change Obama promised.

Yet, as Ben Smith points out, the poll doesn't exactly prove that a lack of a public option was the reason why these Obama voters for Brown. (Indeed, what the poll did find is that only 13% of these Obama/Brown voters said Martha Coakley did a better job on the issue of the economy.)

Here's perhaps the most interesting result from the poll: "2774 Obama voters from 2008 who voted Tuesday were reached -- of which 2274 (82%) voted for Democrat Martha Coakley and 500 (18%) voted against her."

*** UPDATE *** PCCC's Adam Green responds, "What this poll definitively does prove is that the conventional wisdom held by many scared Democrats on Capitol Hill is wrong. Voters who supported Obama and then supported Brown absolutely did not do that because the health care bill over-reached -- 82% want the public option and 57% say Obama and Democrats are not 'delivering enough on the change Obama promised.' People are angry, sure...but they are angry because they want more populism, not less of it. Democrats are on the verge of learning exactly the wrong lesson from this election. The right lesson: They need to be bolder."

From NBC's Janet Shamlian and Domenico Montanaro
Sarah Palin will seek to flex her conservative muscle with campaign stops for Texas Gov. Rick Perry and later Sen. John McCain.

Perry is embroiled in a bitter GOP primary battle with Sen. Kay Bailey Hutchison. Perry's campaign announced that Palin will campaign for the governor on Feb. 7 in the Houston area.

"I look forward to standing with Sarah to promote our shared conservative values of limited government, low taxes and individual freedom," Perry said in a statement. "Gov. Palin is a true conservative leader whose priorities and message resonate with Texans, and I am honored to have her in Texas supporting my campaign."

Reuters reports: "Palin, the former Alaska governor who was McCain's vice presidential running mate last year, will campaign for McCain's re-election bid as a senator from Arizona in March, the senator said in a statement on Wednesday."

*** UPDATE *** Here's McCain's statement from the McCain 2010 campaign: "I'm looking forward to getting back on the campaign trail with my former running mate, and I know my fellow Arizonans will welcome her as well," said Senator John McCain. "Sarah energized our nation and remains a leading voice in the Republican Party."

From NBC's Pete Williams
In a very unusual move, the U.S. Supreme Court will hand down decisions tomorrow -- a Thursday -- which it almost never does.

This makes it virtually certain we'll get the big campaign finance decision, Citizens United vs. Federal Election Commission, tomorrow.

From NBC's Ken Strickland
In his first public remarks since the election of Scott Brown in Massachusetts, Senate Majority Leader Harry Reid said he will "continue to leave a seat at the table for our Republican colleagues." Reid also said he plans talk to Senator-elect Brown later today.

Here's some of what he had to say:

"Some elections go your way, some elections go their way. It's the nature of democratic politics in a diverse nation," Reid said in opening remarks on the Senate floor. "But regardless of their outcomes, as I've said many times, the American people demand that we work together as partners, not partisans, to improve their lives. ...

"We should all be united within the walls of this chamber, not defined by the aisle that divides its desks." ...

"By and large, those in the minority has so far shown far too little interest in working with us. More importantly, they have shown far too little interest in working in the interests of their constituents."

From NBC's Domenico Montanaro
Below is a rush transcript of White House adviser David Axelrod's and Press Secretary Robert Gibbs' appearance this morning on MSNBC's The Daily Rundown with Chuck Todd and Savannah Guthrie.

Axelrod said the loss was about the economy -- and seemed to acknowledge a messaging failure on what the administration has done to try and rectify the jobs situation in the country. Unemployment sits at 10%. "Health care," he said, "was part of it."

"I would note that Sen. Brown didn't run one ad on health care in the entire campaign," Axelrod said, adding, "And he supported a health care reform similar to the one that the president was and is committed to in Massachusetts, and said during the campaign that he wouldn't repeal it.... I mean, there are messages here.  We hear those messages, but there is a tendency in this town -- not that you guys would do it --  but to overblow things, even beyond their importance. And I don't think it's about that one particular issue. I think there's a general sense of discontent about the economy and there's a general sense of discontent about this town. That's why we were elected. We are committed to doing something about it." 

Full transcript after the jump:

CHUCK TODD:  Republican Scott Brown's stunning victory means the Democrats' eight month super majority in the Senate is now gone.  Is the President's health care bill gone with it? 
 
Robert Gibbs is the White House Press Secretary.  David Axelrod is the President's Senior Advisor.  They're here now for a DAILY RUNDOWN exclusive, together.  We believe it's your first joint interview since you've been in that lucky --
 
DAVID AXELROD, SENIOR ADVISOR TO PRESIDENT OBAMA:  It may be our last. Let's see how it goes. 
 
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  We may take it on the road, Chuck.  We may be making , you know, a few cities. 
 
TODD:  Fair enough.  So, David, I'm going to put this first question to you.  
 
How much responsibility does the White House accept for Martha Coakley's -- for the Democratic Party's loss in Massachusetts? 
 
AXELROD:  Look, Chuck, there's an unbecoming habit in this town of trying to defray a responsibility, point in other directions.  And so let me say it was Robert's fault and I'm bitter about it.
 
            (LAUGHTER)
 
AXELROD:  No, look, seriously.  You know, I'll let others assess responsibility.  I think the main thing that we saw in Massachusetts was the same sense of concern on the part of middle class folks about the economic situation, about their wages being stagnant, about jobs being lost, about their economic security that's been in jeopardy.  And this is something that predated the big recession that we're going through.  And that's something that we have to pay a great deal of attention to.  It is the focus of this President's attention at all times.  And we have to convey that. 
 
SAVANNAH GUTHRIE, MSNBC ANCHOR:  But, David and Robert, how can you interpret this in any other way that it is a total rejection of health care reform, given the fact that the candidate that won resoundingly, would sign his autograph, "41."  The 41st vote against health care reform. 
 
How can you interpret it in any other way? 
 
AXELROD:  Well, I -- do you want to -- I mean, I will just tell you this, Savannah.  I think that there were a lot of elements to the message yesterday.  Health care was part of it. 
 
I would note that Senator Brown didn't run one ad on health care in the entire campaign.  I'm sure you know that.  And he supported a health care reform similar to the one that the President was and is committed to in Massachusetts, and said during the campaign that he wouldn't repeal it. 
 
So I wouldn't make - I mean, there are messages here.  We hear those messages, but there is a tendency in this town -- not that you guys would do it --  but to overblow things, even beyond their importance.  And I don't think it's about that one particular issue.  I think there's a general sense of discontent about the economy and there's a general sense of discontent about this town.  That's why we were elected.  We are committed to doing something about it. 
 
TODD:  Now, Robert, in our NBC/"Wall Street Journal" Poll, we asked sort of at this one-year mark, you know, has the President accomplished a lot, or a great deal, or only some, or very little?  I was struck that a majority of the country doesn't believe the President accomplished a lot.  Look, you guys have a lengthy list of legislative achievements.  Clearly, health care's not one of them, but you have gotten a lot of things passed. 
 
Why do you think the public doesn't view it as accomplishing a lot in this first year? 
 
GIBBS:  Well, Chuck, I think for a lot of reasons.  The first of which is change takes a long time to happen, certainly in this town.  And it takes even longer for the American people to feel that.  The president didn't have a first-year agenda, he has a first-term agenda.  So while today marks the end of the first year and the beginning of the second, it's not even really a hallmark holiday. 
 
I would say this too, building off of what David said, there are things that the President has accomplished, whether it's a credit card bill of rights, whether it's a recovery plan that's led to the first quarter of economic growth in more than a year, that same sort of anger and frustration that the President saw when he traveled in Iowa, and throughout this country for more than two years is still very pervasive today. 
 
I think that's what we saw most of all coming out of Massachusetts, is there's a tremendous amount of anger and frustration about where people are economically and whether this town is fighting for their economic well-being or fighting for the special interests well-being.  I think that's what's ultimately going to define more about the coming political battles and the upcoming election. 
 
Look, health care is an aspect of it, but this is far broader than that.  There's an anger and a real frustration.  People's jobs are being shipped overseas.  As David said, they're working harder, they're working longer, they're more productive, yet their wages are going down.  That leads to the type of isolation and economic frustration that we felt for quite some time. 
 
GUTHRIE:  David, we're running out of time.  So I assume you're not going to cede today right here on THE DAILY RUNDOWN that health care reform is dead.  So, let me ask you, what is your next step? 
 
Are you going to ask the House to pass the Senate bill as is?  Or, are you going to try to jam it through the Senate fast, notwithstanding what Senator Jim Webb, a Democrat from Virginia has said, saying that he thinks everything should stop, all action on health care suspended until the new Republican senator is seated? 
 
AXELROD:  Well, you're right, Savannah.  I'm not going to discuss tactics here. 
 
I will say this.  You know, the President traveled this country for two years and he heard from people all over this country and about their struggles with the health insurance system.  He believes that there's a real crises, and that's part of what middle class people are struggling with.  He believes we have to deal with that crisis. 
 
But we also have to take into account what voters were saying yesterday and what we've heard from folks around the country.  We will take that into account and then we'll decide how to move forward.  But it's not an option simply to walk away from a problem that's only going to get worse. 
 
TODD:  Evan Bayh said if you don't hear this wake-up call, then, you know, he doesn't know what else can be done. 
 
Do you guys hear this wake-up call?  Do you believe this was a wake-up call to maybe, whether it's to retool your message, whether it's to get your message out there better. 
 
Do you hear a wake-up call on what happened yesterday? 
 
GIBBS:  Look, Chuck, again, I don't think what Senator Bayh would argue is that we somehow abandon our pursuit on things that are important to the middle class.  How to make college more affordable.  How to make retirement more secure.  How to create an environment for good-paying jobs in this country. 
 
Look, we won Indiana for the first time since 1964, because we understood the frustration, the anger that was out there, particularly about economics and economic isolation.  We were with Senator Bayh in a lot of those events. 
 
I think we all agree that we have to work even harder on that and have the American people understand that the focus of the Presidents day from the very  beginning to the very end is on their economic situation.  He wakes up in the morning and he goes to bed at night thinking about how to make people's lives better, how to create that environment for creating jobs.  How to get this economy moving again for real working people.
 
GUTHRIE:  All right.  Robert Gibbs, Press Secretary over at the White House.  David Axelrod, Senior Advisor. 
 
Thank you for your time.  And we appreciate that you seem to have coordinated your outfits this morning.
 
TODD:  Yes, well done.
 
GUTHRIE:  Looking good there on the White House front lawn.
 
TODD:  Tough to deal with Robert's pastels.  I know that, David.
 
GIBBS:  I've set the high bar for him.
 
AXELROD:  Hard to compete.
 
GUTHRIE:  Thanks so much for your time.
 
GIBBS:  Thanks.

There's lots going on on the Hill today, including hearings on the failed Christmas Day terrorist plot and the Fort Hood review. But, yes, also up there today are the Salahis, the party-crashing couple. They were subpoenaed to appear before the House Homeland Security Committee.

But they're reiterating that they'll plead the Fifth.

NBC's Shawna Thomas sends along on a statement from the Salahis' attorney:

"We also understand the Committee received our attorneys' letter and our attached declaration indicating that, based on advice of counsel, we intended to assert our Constitutional Right to remain silent and decline to answer any questions if we were to be supoenaed to appear before the committee.

"We find it unfortunate that the Committee nonetheless required us to appear in person to invoke our Fifth Amendment Right under the United States Constitution to remain silent, even though it is against the Ethical Rules of the DC Bar to do so. Indeed Congressman Waxman chastised this exact conduct in another hearing. We reiterate that, on advice of counsel, we respectfully invoke our right to remain silent and will decline to answer any questions surrounding the circumstances around the events of November 24, 2009."

*** UPDATE *** NBC's Andrew Gross has more on the hearing:

Party crashers Tareq and Michaele Salahi refused to answer any relevant questions posed by members of the the House Homeland Security Committee at a hearing today on the security breach at the White House State Dinner in November.

Chairman Thompson said his committee has an important interest in how two ordinary people were able to defeat the White House security. Ranking member King blasted the White House for not making social secretary Desiree Rogers available to the committee for questioning. That was pretty much the breakdown on party lines -- the Democrats blamed the Salahis for their actions, and the Republicans hammered away at the White House for enabling this whole mess in the first place.

To the hearings... For their part, the Salahi's were peppered with questions about being invited, being questioned by the secret service at the gate, etc.. and to all they took the Fifth. But, Michaele Salahi did say, "Yes," to a question about whether they would return to the committee and explain everything once the criminal invesitgation against them is completed.

Rep. Souder pointedly asked the committee about the role of the media. "Where is Bravo?" he said. "Where is the company that filmed them? Why isn't NBC here? Was there cooperation in the American media to do a scam?"

The constant invoking of the Fifth seemed to finally get under the skin of at least one member, Rep. Pascrell, who asked with exasperation, "Did you wear a tuxedo? Did you go to the White House? Are you here today? Are you gonna ask your attorney for an answer to that"?

After the hearing, the glam couple hit the stakeout camera outside the hearing room, where their fired-up attorney, Stephen Best, announced that the hearing was a charade and a public flogging and claimed that the committee refused to accept important information about the case. He said his clients are innocent,  committed no criminal act and that it was not a stunt, that "they believed in their hearts they were invited to a white house event." He concluded with, "They are proud Americans."

*** UPDATE 2 *** I 'respectfully decline'... MSNBC producer Dan Hosea tallied that The Salahis "respectfully declined" to answer questions from the Committee on Homeland Security at least 32 times. Tareq Salahi "respectfully declined" at least 27 times. (He was interrupted by Pascrell midway through one "respectfully." Michaele "respectfully declined" to answer five times.

From NBC's Mark Murray
In this morning's "First Thoughts," we asked what's next for Democrats after Scott Brown's (R) victory last night.

Longtime Democratic Capitol Hill lobbyist Billy Moore offers his two cents to First Read:

My guess: There is very little sentiment for abandoning health care reform -- giving up could have greater negative electoral consequences for Democrats -- but there is also little support for jamming the Senate proposal through the House with correcting legislation to follow. What appears most likely is a process that  divides the legislation into separate proposals and putting them a vote, perhaps by title (an insurance reform bill, one for Exchanges and subsidies -- and revenue would likely travel on this bill, others for Medicare-Medicaid, delivery reform and prevention). Reconciliation could play a part on some of the pieces, but not all.

What do Democrats do next after Brown's victory last night?... Is the Dem belief that failure isn't an option still true today?... The White House and Democratic Party have an indie problem… Brown's victory isn't necessarily a victory for combative Republicanism… Matching what Obama said a year ago today at his inaugural with what Americans said in our new NBC/WSJ poll… Finally, Obama's pick to head the Transportation Security Administration withdraws his nomination.  

From Chuck Todd, Mark Murray, Domenico Montanaro, and Ali Weinberg
*** What's next? All of President Obama's speeches on health care, the marathon negotiations, the countless committee and floor votes, and the very long debate over the public option -- will they all be for naught? That's the question the political world is now asking after Scott Brown's (R) stunning win over Martha Coakley (D) last night, which ends the Democrats' eight-month-long filibuster-proof majority in the Senate. Right now, Democrats appear to be divided on how to proceed. On the one hand, Harry Reid and Nancy Pelosi maintained that they are committed to passing health care, one way or another. "While Sen.-elect Brown's victory changes the political math in the Senate," Reid said. "We remain committed to strengthening our economy, creating good paying jobs and ensuring all Americans can access affordable health care." Meanwhile, Pelosi said this, per the San Francisco Chronicle: "Regardless of Massachusetts, it will happen." 

*** All eyes are on the Democrats: On the other hand, moderate Democrats were urging restraint and suggesting that last night's result was a warning sign. "If you lose Massachusetts and that's not a wake-up call, there's no hope of waking up," Indiana Sen. Evan Bayh told ABC. And Virginia Sen. Jim Webb released this statement: "In many ways the campaign in Massachusetts became a referendum not only on health care reform but also on the openness and integrity of our government process… To that end, I believe it would only be fair and prudent that we suspend further votes on health care legislation until Sen.-elect Brown is seated." Of course, the real action in the next few days will come in the House, since the most likely "Plan B" is for the House to pass the Senate bill, and sweep any fixes and compromises into a future piece of legislation. All along, what has propelled health-care reform -- through all its ups and downs -- was a sense among Democrats that failure isn't an option. The most important story right now is whether that sentiment still exists after last night. If the House voted on the Senate bill TODAY or TOMORROW, it would NOT pass. The question is whether the White House can somehow convince wavering House Dems over the weekend. 

*** Indie flick: Over the last few weeks, there has been a debate within the Democratic Party about how they should try to minimize likely losses in this year's midterms -- move to the left and turn out the Obama "surge voters" (minorities, people under 30, etc.), or try to reclaim the center and appeal more to independents? Well, after last year's elections in New Jersey and Virginia and after last night's special election in Massachusetts, it's pretty clear that Democrats have a problem with independents. Last night, 2.25 million turned out in Massachusetts, which was great than the turnout in Nov. 2006. And given that turnout, you have to assume that there were A LOT of Obama voters who ended up voting for Brown. (Indeed, Brown won more votes in Massachusetts last night than John McCain received in 2008.) To win in 2010 and 2012, Democrats have to get those folks back.

*** Brown's message: As for Brown, he insisted on "TODAY" his victory wasn't a rebuke on President Obama. "No its bigger than that," he said, per NBC's Danielle Weisberg. "For us in our area, we have three speakers that were indicted; three senators that have resigned in disgrace. We have out of control taxation spending in Massachusetts. You couple that with what's being proposed nationally, people are angry." In fact, this serves as a bit of a warning for national Republicans: Chris Christie, Bob McDonnell, and now Scott Brown won not by attacking Obama, but rather by downplaying their GOP ties and riding an anti-incumbent wave. None of them went out of their way to attack Obama; the national party wants the media to believe this is a referendum on Obama, but the campaigns themselves were referendums on the political process -- whether in Washington, Richmond, Trenton, or Beacon Hill.

*** 59 is still a pretty big majority: While we've discussed what it means that Democrats are now at 59 Senate votes, it's worth pointing out that Democrats actually began the year at 58 Senate votes (before Arlen Specter switched parties) and then stood at 59 votes (before Al Franken finally was seated). Indeed, as the Washington Post's Ezra Klein noted yesterday, 59 is the second-largest Senate majority since the 1970s (after Watergate). 

*** Collateral damage: For the political world focused on the 2010 midterm elections, the fallout everyone is watching is on the two Rs: retirements and recruiting. House Democrats are bracing for more retirements and worried that some veteran lawmakers who they thought were running in 2010 have second thoughts -- think older members who probably only have another term or two in them anyway. Then there's the other "R," recruiting. House and Senate GOPers believe they'll have a MUCH easier time finding candidates. On the Senate side, this means Indiana, Wisconsin and Washington, in particular, might suddenly have a shot at being put into play by the NRSC. Already we're hearing whispers in Indiana that national Republicans think they can convince House GOP leader Mike Pence to channel his presidential ambition via an Evan Bayh challenge.

*** A year ago… : To understand the White House's current troubles and future challenges, it's instructive to look back at the inaugural address Obama gave exactly a year ago -- and match what he said to our new NBC/WSJ poll. "On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics." In our poll, only 40% give Obama good marks in uniting the country, and just 30% give him a good score on changing business as usual in Washington. "The state of our economy calls for action, bold and swift. And we will act, not only to create new jobs, but to lay a new foundation for growth." Per the poll, 16% say they're satisfied with the state of the U.S. economy, compared with a whopping 83% who say they're dissatisfied. (However, 65% believe Obama inherited the economic situation he currently faces.)

*** … And what the public is thinking today: Obama also said this about health care: "We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost." Yet just 33% say the president's health care plan is a good idea, while 46% say it's a bad idea -- a 20-point increase from April, when the public supported it, 33%-26%. "The question we ask today is not whether our government is too big or too small, but whether it works." But 48% believe the government is doing too many things, versus 43% who think it should be doing more things. That's a turnaround from the survey taken immediately after Obama became president, which found the public supporting a greater role in government, 51%-40%.

*** A problem for Democrats on terrorism? And there was this: "As for our common defense, we reject as false the choice between our safety and our ideals." But the NBC/WSJ poll shows that a whopping 67% think that suspected terrorists should not receive all the same legal rights as people being tried in the U.S. court system. As NBC/WSJ co-pollster Bill McInturff told First Read, "I don't know how many Democrats will run on trying terrorists in federal courts" in this year's midterms. In fact, "terror" (not taxes or health care) was the first term Scott Brown said in his interview on TODAY in explaining the issues that propelled him to victory last night.

*** 'Greatness is never a given': However, in his inaugural, Obama also reminded America that his yes-we-can agenda wouldn't be easy. "Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this America:  They will be met." And he said this, noting that greatness is NEVER a given. "In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted, for those that prefer leisure over work, or seek only the pleasures of riches and fame." 

*** Southers discomfort? Finally, Erroll Southers, Obama's pick to head up the Transportation Security Administration, withdrew his nomination this morning. We'll have more on that later today.

Countdown to IL primary: 13 days
Countdown to TX primary: 41 days
Countdown to Election Day 2010: 286 days

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The Boston Globe's banner front-page headline: "Big win for Brown." The paper's lead: "Republican Scott P. Brown pulled off one of the biggest upsets in Massachusetts political history last night, defeating Democrat Martha Coakley to become the state's next US senator and potentially derailing President Obama's hopes for a health care overhaul. The stunning, come-from-behind victory caps a dramatic surge in recent days as Brown, a state lawmaker from Wrentham once thought to have little chance of beating a popular attorney general, roared ahead of Coakley to become the first Republican senator elected from Massachusetts since 1972."

The final tally was Brown 52%, Coakley 47%. Here are town-by-town results.

"Voter anxiety and resentment, building for months in a troubled economy, exploded like a match on dry kindling in the final days of the special election for US Senate," the Globe writes in its news analysis. "In arguably the most liberal state in the nation, a Republican -- and a conservative one at that -- won and will crash the Bay State's all-Democratic delegation with a mandate to kill the health care overhaul pending in Congress."

The New York Times' Nagourney: "[W]hat happened in Massachusetts on Tuesday was no ordinary special election. Scott Brown, a Republican state senator for only five years, shocked and arguably humiliated the White House and the Democratic Party establishment by defeating Martha Coakley in the race for a United States Senate seat. He did it one day short of a year after President Obama stood on the steps of the United States Capitol, looking across a mass of faces that celebrated the potential of his presidency." 

"Republicans in Washington and around the country yesterday said Scott Brown's victorious Senate campaign in Massachusetts is a harbinger of a broader party surge, calling it a repudiation of President Obama's agenda that gives them renewed confidence for the 2010 midterm elections," the Globe's Kranish writes. "But analysts said there are dangers if the GOP misinterprets the meaning of the Massachusetts results. Stuart Rothenberg, editor of the nonpartisan Rothenberg Political Report, said Republicans may be mistaken if they presume that Brown's win in Massachusetts means that voters fully back a Republican agenda. Coakley made a number of gaffes in her campaign, while Brown ran a better-than-expected race that took advantage of the negative political environment for Democrats. 'There is a danger that ... Republicans will simply hunker down and attack, that they will grow arrogant' as a result of recently winning governorships in Virginia and New Jersey, which served as political precursors to the Massachusetts race for the US Senate, Rothenberg said.
 
"Rothenberg said that after Brown's victory, Republicans 'need to understand that their own ratings are still very low, and they need to temper their criticism of Democrats and the Obama administration and at least convince the American public that the Republicans are willing to work with the White House and Democratic congressional leaders. If their attitude is, 'what the hell, Obama's days are numbered, we will run roughshod over them,' they will look just as crass and partisan and arrogant as they say the Democrats have looked.'"

And here's a wrap of some of the day's front pages:
The Boston Herald: "Yes He Did!"
The New York Daily News: "One big Mass. kickin'"
The New York Post: "Mass. Revolt!" with "Boston Tea Party" above it.
The New York Times: "G.O.P. surges to Senate victory in Massachusetts."