NY Times

By DAVID M. HERSZENHORN, SHERYL GAY STOLBERG and ROBERT PEAR

WASHINGTON — With Democrats reeling from the Republican victory in the Massachusetts special Senate election, President Obama on Wednesday signaled that he might be willing to set aside his goal of achieving near-universal health coverage for all Americans in favor of a stripped-down measure with bipartisan support.

He continued: “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. Those are the core, some of the core elements of, to this bill.”

Mr. Obama’s remarks came as the White House and Democratic congressional leaders fumbled for a way forward with their major health care overhaul, and struggled to digest the reality that their top legislative priority had been derailed by the outcome in Massachusetts.

The White House insisted that Mr. Obama still preferred passage of a far-reaching health care measure, and Democratic leaders said they were weighing their options. But some lawmakers in both parties began calling for a scaled-back bill that could be adopted quickly with bipartisan support.

As the full Congress returned to Washington to start a new legislative year — on the first anniversary of Mr. Obama’s inauguration — their options were limited. House leaders signaled that they had effectively ruled out the idea of adopting the Senate bill, which would send it directly to the president for his signature.

The victory in Massachusetts on Tuesday, by the Republican candidate, Scott Brown, denies Democrats the 60th vote they need to surmount filibusters and advance a revised health measure. And Senate leaders said they would not risk antagonizing voters by trying to rush a bill through before Mr. Brown could be sworn in.

Democrats also grappled with the implications of losing their 60-vote majority for their wider legislative agenda, including efforts to tighten regulation of the financial system and to combat global warming, even as they sensed new urgency to turn their full attention to creating jobs and improving the economy.

At the White House and at the Capitol, high-level Democrats seemed stunned by the turn of events, though it had been clear for several days that they could lose in Massachusetts. “Bottom line,” said one Democrat who is close to the White House, “In the first 24 hours there is literally no good option.”

Democrats, from Mr. Obama on down, however, made a concerted effort to portray the results in Massachusetts as a reflection of long-simmering populist anger, and not a referendum on the health care legislation or on the year-old administration, which came into office facing steep challenges.

“Here’s my assessment of not just the vote in Massachusetts, but the mood around the country: the same thing that swept Scott Brown into office swept me into office,” Mr. Obama said in the interview on ABC. “People are angry, they are frustrated. Not just because of what’s happened in the last year or two years, but what’s happened over the last eight years.”

The Massachusetts race and the ensuing unease among Democrats also threatened to complicate any chance the White House had of winning passage this year of legislation to curb global warming through an emissions trading system.

But the outcome might put further impetus behind efforts to bring down the budget deficit, a topic the White House has become more visibly active in addressing in recent days. On Tuesday, the administration and Congressional Democrats agreed on a plan to create a commission to recommend ways of attacking the deficit and the national debt.

At a news conference at the Capitol, the Senate majority leader, Harry Reid of Nevada, made a concerted effort to minimize the health care issue in relation to other concerns among the American public, particularly about jobs and the economy. But he made clear that Democrats did not see a clear path forward.

“The election in Massachusetts changes the math in the Senate,” Mr. Reid said. “But it doesn’t change the fact that people are hurting.” Pressed about the health care legislation, Mr. Reid said, “The problems out there -- it’s certainly more than health care.” Pressed again, he said: “No decision has been made.”

Several senior Democrats said they did not know if the health care legislation could be salvaged.

Republicans showed no new signs of willingness to work with the Democrats. Asked what he would be willing to work on with majority, the Senate Republican leader, Mitch McConnell of Kentucky, offered meek praise for Mr. Obama’s strategy in Afghanistan but did not offer a single example on domestic policy.