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Obama to focus hard on economy after Democratic loss

By Ed Henry, CNN Senior White House Correspondent
President Obama delivers remarks on financial reform Thursday.
President Obama delivers remarks on financial reform Thursday.
  • Top aides say President Obama will make strong pivot toward jobs and the economy
  • Move comes after Republican wins Senate race in Massachusetts
  • Three themes emerge ahead of upcoming State of the Union, including scaled-back heath plan

Washington (CNN) -- President Obama already was planning to put a heavy focus on jobs and the economy in next week's State of the Union address, but his top aides are signaling that pivot is going to be even sharper in the wake of the Democrats' stunning election defeat in Massachusetts.

White House press secretary Robert Gibbs noted the president has been dealing with the financial crisis long before Tuesday's Senate race, but he acknowledged the administration could have done a better job of conveying that message to the public and will now redouble its efforts.

"The president works each and every day on making our economy stronger and putting us in a position to where we're creating jobs, businesses are hiring again," Gibbs said. "I can certainly assure the American people that that is the chief focus of the president of the United States."

That message, however, was at least partially obscured by Obama's heavy focus on overhauling health care for much of his first year.

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At least three key themes are emerging ahead of the State of the Union to help reframe the second year.

1. The president is pushing a more scaled-back health plan, which might be fleshed out in next Wednesday's address.

One option would be for the House of Representatives to take up the Senate-passed bill that would give health coverage to an estimated 31 million people who are uninsured.

But such a move would be contingent upon the Senate passing a second piece of legislation to make major changes to the first bill. That could be a major wrinkle, and House Speaker Nancy Pelosi already is balking at this approach.

That's why White House aides have been privately floating a second option that would be much less ambitious.

The emerging plan would cobble together several basic insurance reforms that many Republicans have expressed support for, including a ban on excluding people for pre-existing conditions and stopping insurance companies from dropping coverage if you get sick.

Such a plan would be reaching out to Republicans by dialing back the $1 trillion price tag of Obama's original health care push, so it would need to be sweetened for disappointed liberals.

One way to do that is adding an expansion of Medicaid to cover a few million people who are uninsured, far short of Obama's original goal but something that might be sold as a strong step forward.

"I would advise that we try to move quickly to coalesce around those elements of the package that people agree on," Obama told George Stephanopoulos of ABC News.

But look out, there's some lightning coming from the left. Paul Krugman, the liberal economist and New York Times columnist, ripped into the president after the ABC interview for allegedly abandoning major reform.

"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," Krugman blogged.

2. Look for a series of presidential events on jobs and the economy, starting Friday when Obama heads to Lorain County, Ohio, outside Cleveland.

Obama, a huge sports fan, will visit the Riddell sporting goods factory to witness the production of baseball and football helmets, but the trip will be serious business because it's one of the hardest-hit parts of the country in terms of unemployment.

The highlight of the visit is likely to be a town hall meeting at a community college, giving Obama a chance for an "I feel your pain" moment. But there's also political risk from a town hall meeting so quickly after the Massachusetts results because this could be a chance for average citizens to vent on the president.

But Gibbs noted the president will be prepared to face angry voters because the economic anxiety is not a new phenomenon. He said Obama saw it on full display as a presidential candidate, so it did not just start with Republican Sen.-elect Scott Brown's victory this week.

"When we go to Ohio ... you are going to talk to real people that haven't lost their -- some of them may have lost their jobs since the Massachusetts election, or may have even lost their jobs since Massachusetts called a special election," said Gibbs. "But the circumstances that exist in this country that cause anger and frustration about their economic situations isn't new."

3. The final major theme to expect is Obama as Wall Street-basher as he steps up his push for major financial regulatory reform.

Big banks are deeply unpopular, making them a fat target for the president. Last week he rolled out a new fee on big banks to recoup taxpayer bailout funds, and then Thursday he unveiled tough new regulations to limit the risk from large banks.

The point is to try and prevent Wall Street from operating under the same rules that nearly led to a depression, but the message is more direct: Obama is ready to stand up for the little guy against the barons on Wall Street.

"If these folks want a fight," Obama said defiantly, "this is a fight I'm ready to have."

Obama also railed against the "binge of irresponsibility" and declared: "We simply can't return to business as usual."

It's a new crisp message from a president vowing to shake up Wall Street. He's talking about jobs on Main Street, while putting the muddled health care debate a bit on the back burner.

Some of Obama's supporters may be wondering: What took him so long?

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