NEWSMAKER-Top Senate Republican key figure in U.S. debt deal

* McConnell teamed up with old friend Biden

* Aims to protect economy, his party

* Tea Party jeers McConnell deal, Wall Street likes it (Updates with Senate vote, details)

By Thomas Ferraro

WASHINGTON, Aug 2 (Reuters) - Senate Republican leader Mitch McConnell displayed his skills as a dealmaker to avert an unprecedented debt default that could have blown a hole in the U.S. economy and stung his party in next year's elections.

With polls showing Americans see the Republicans as more stubborn and unwilling to compromise than President Barack Obama's Democrats, McConnell reached out last week to an old friend, Vice President Joe Biden, and Obama to end a prolonged stalemate and find common ground.

Thanks largely to McConnell and Biden, the Senate gave final congressional approval on Tuesday to the deal that they helped broker to raise the debt ceiling to avert a default while cutting spending. McConnell hopes it also shields his Grand Old Party from voter backlash.

"Mitch is very, very smart and very, very good at politics," said Ted Kaufman, a former Biden aide and Democrat who served with McConnell in the Senate. "I think McConnell's top concern is 'How do I save the Republican Party?' If the GOP goes down, Mitch McConnell goes down."

Depending on how things work out, McConnell, 69, first elected to the Senate in 1984, could get his wish and run the Senate in 2013 -- provided Republicans pick up at least four seats next year to take control from the Democrats.

The soft-spoken, hard-driving McConnell will also have to survive the ire of members of the conservative Tea Party movement, many of whom opposed any rise in the debt limit.

"He has neither courage nor convictions," groused Judson Phillips, founder of Tea Party Nation, one of the movement's biggest groups.

The deal was welcomed by Wall Street, however, where investors see McConnell as "one of the needed adults in the room," said Chris Krueger, an analyst at brokerage MF Global.

JUMP-STARTED TALKS

The deal, which won approval of the House of Representatives on Monday, would cut at least $2.1 trillion from the deficit while raising the debt limit by about the same amount.

McConnell became the key Republican in debt-limit talks after his counterpart in the House, Speaker John Boehner, failed to obtain an agreement that would tackle long-term deficits by cutting spending and raising revenue.

McConnell prodded Obama to take the lead and spell out his parameters to jump-start negotiations, which led to a flurry of telephone calls with Obama and Biden that helped forge a deal.

McConnell has been a key figure in a number of bipartisan deals. In December, he and Biden held secret talks that led to an extension of Bush-era tax cuts for millions of Americans.

Last month, McConnell and Senate Democratic leader Harry Reid drafted a plan to authorize Obama to raise the debt limit, with Congress having the power to block it only with a two-thirds majority vote. Their proposal would have also created a 12-member deficit-cutting congressional panel.

The McConnell-Reid measure was never drafted into formal legislation, but parts of it it surfaced as key elements in the final deal that the Senate Republican negotiated primarily with Biden.

Shortly before the Senate vote on Tuesday, McConnell voiced thanks to a number of people, including Obama and Biden.

They "believed, as we did, that despite our many difference, we could all agree that America could not default on its obligations," McConnell said.

STOP OBAMA RE-ELECTION

While McConnell is a friend of Biden's, he has been a thorn in Obama's side, routinely using Senate rules to block the president's initiatives. He drew fire last year when he declared that his top goal was to deny Obama a second term.

The White House sees McConnell as a tactician more interested in furthering his party than making policy.

Earlier in the debt and deficit talks, they were disappointed that he seemed unenthusiastic about striving for a "grand bargain" on the budget. But administration officials said in the end, McConnell's keen grasp of how the Senate works helped lead to a deal.

While Tea Party members see McConnell as not conservative enough, he shares their goal of balancing the federal budget.

But unlike the Tea Party, McConnell fretted that a U.S. default could push up interest rates, roil financial markets and perhaps send the United States into another recession.

And McConnell feared voters would pin Republicans with much of the blame and punish them on Election Day 2012.

A Reuters/Ipsos poll last week found that 31 percent of respondents held Republican lawmakers responsible for the debt impasse while 21 percent blamed Obama and 9 percent blamed Democratic lawmakers.

Appearing last month on a conservative talk show, McConnell explained his desire to cut a deal and avert default.

"If we go into default he (Obama) will say that Republicans are making the economy worse and try to convince the public, maybe with some merit," McConnell said.

"That is very bad positioning going into (an) election." (Additional reporting by Caren Bohan, Deborah Charles and Andy Sullivan; editing by Anthony Boadle and Mohammad Zargham)