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* Political fortunes in better shape than predicted
* Speech to set tone on jobs, deficit, cooperation
* But fiscal hawk image may be tough sell
By Matt Spetalnick
WASHINGTON, Jan 21 (Reuters) - His poll numbers are on the rise after a tough year, he has recaptured some of his old oratorical magic and a few pundits are even debating whether he’s becoming the new “comeback kid.”
But the stakes will be high on Tuesday when President Barack Obama tries to convince Americans he has a plan to tackle the economy, joblessness and deficits all at once -- a daunting challenge crucial to his 2012 re-election chances.
Obama’s State of the Union address will be a chance not only to set the tone for the second half of his term but also to reinforce his shift to the center since his Democrats were routed in the November congressional elections.
And his nationally televised speech to lawmakers will be a test of whether gridlock or compromise will prevail between Obama and a divided Congress, and whether calls for civility in U.S. politics following the Jan. 8 Arizona shooting rampage will have any lasting effect.
“This speech will be an important scene-setter for the next two years,” said Ross Baker, a political scientist at Rutgers University in New Jersey and a former congressional aide. “It will also be a difficult balancing act.”
In last year’s State of the Union, Obama declared job creation his “No. 1 focus,” then spent much of 2010 on other priorities like overhauling healthcare and Wall Street rules.
With the elevated 9.4 percent unemployment rate still ranking as Americans’ top concern, there is little doubt jobs will again be the centerpiece of Obama’s speech. [ID:nN06134458]
But more than ever before, Obama is also expected to use the annual address to cast himself as more of a fiscal hawk, possibly a tough sell for a leader presiding over trillion-dollar-plus annual budget deficits.
Republicans won the House of Representatives and weakened the Democratic majority in the Senate by tapping into public anxiety over a broad expansion of government under Obama, whom they painted as a big-spending liberal. [ID:nN01179745]
Absorbing the lessons of his electoral “shellacking,” as he put it, Obama has made business-friendly staff changes and retooled his agenda, hoping to win back moderate voters who swept him into office two years ago but deserted his Democrats in November. [ID:nN21150090]
OBAMA‘S POLITICAL FORTUNES
When Obama stands before a joint session of Congress next week facing a newly empowered Republican opposition, he will still be in better shape politically than almost anyone would have predicted just two and a half months ago.
Since then, his public approval rating, which hit new lows just before the midterm elections, has edged up to 50 percent or above in a number of recent polls. [ID:nN11158770]
This followed a string of legislative successes in December’s “lame duck” congressional session, including a compromise tax-cut package with Republicans and repeal of the ban on gays serving openly in the military.
That led Washington Post columnist Charles Krauthammer, usually one of Obama’s sharpest critics, to liken him to former President Bill Clinton, deemed the “greatest of all comeback kids” for his ability to rebound from his troubles.
Other pundits said it was too early to draw such a comparison, but Obama still seems to be getting back in stride.
His poignant eulogy for victims of an assassination attempt on lawmaker Gabrielle Giffords in Tucson won glowing reviews. The president, who has sometimes struggled to connect with Americans, seemed to regain some of the oratorical footing that helped propel him into the White House. [ID:nN12290493]
But Obama’s State of the Union speech, businesslike by its very nature, will be judged more for substance than rhetoric.
Obama has cast a wide net for new ideas, meeting corporate executives, economists and labor leaders.
Douglas Holtz-Eakin, a former Congressional Budget Office chief who advised Republican John McCain in the 2008 campaign, suggested a coherent strategy still appeared to be lacking.
“There’s no reason to question his intellect or his intentions,” said Holtz-Eakin, who participated in one of Obama’s meetings. “I just can’t figure out literally what his principles are. Where does he draw the lines?”
Obama and his aides have stepped up rhetoric about tackling long-term deficits but have been short on specifics. Whatever he commits to on Tuesday will be couched in the concern that cutting spending too deep, too fast could hurt the fragile recovery.
Obama faces serious challenges, not least of which is the clout that may be wielded by newly elected Republican Tea Party ultraconservatives resistant to spending compromises.
With a battle already brewing over Republican demands for deep spending cuts in exchange for raising the national debt limit, the Obama administration is scrambling to depict itself as just as fiscally minded as the other side.
In his speech, Obama is widely expected to propose some form of tax reform as a way to reach out to Republicans.
A risk for Obama is alienating key liberal constituencies already angered by concessions he has made to conservatives.
While foreign policy traditionally plays only a small part in State of the Union speeches, Obama is certain to address the unpopular war in Afghanistan, telling Americans that U.S. troops are on track to start withdrawing in July as promised.
But no matter what Obama says, analysts agree the state of the economy and the unemployment rate will ultimately decide whether he gets re-elected.
“He rises or falls on jobs, jobs, jobs,” said Bill Schneider, an expert at George Mason University in Virginia. (Editing by Xavier Briand)