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The Political Year In Review

Republicans will set the agenda when Congress returns to town in January, thanks to election gains that could also put them in good shape heading into the 2004 campaign and President Bush's campaign for re-election.

Voters often punish officeholders for an ailing economy and sagging stock market, but that didn't happen this year. National security trumped all else, and voters rallied behind a popular wartime president to elect most of the candidates he campaigned for.

The biggest change was in the Senate, where the Republicans gained two seats and took control from the Democrats. The GOP padded its majority in the House, a rarity for the president's party in midterm elections.

Though the Democrats made gains in governors' elections, the Republicans still have a 26-24 majority. And they held Florida despite an all-out Democratic effort in a state that could be important again in the 2004 presidential race.

Still, the election results were hardly one-sided, and the Republicans' congressional wish list, which includes cutting taxes, approving conservative judges and drilling for oil in the Alaska wilderness, will not be filled easily.

When the new Congress convenes on Jan. 7, Republicans will control the Senate with 51 votes - well short of the 60 needed to stop a Democratic filibuster or other delaying tactics. And the Democrats were cheered by Sen. Mary Landrieu's re-election run-off victory on Dec. 7 in Louisiana, a win she managed in the face of hard campaigning by the president.

In the House, Republicans are assured of at least 229 seats, a gain of six from last session and 11 more than needed to control the chamber. Most incumbents of both parties were protected when House districts were redrawn to reflect population changes in the 2000 census.

One House race - in Hawaii - remains undecided.

Nov. 5 marked only the third time in a century that the president's party improved its position in the House at midterm and was the first midterm Senate gains in two decades.

Democrats, criticized for not having an effective national message, say they are determined in the new year to craft clear proposals that distinguish them from their colleagues across the aisle.

They also are counting on new House leadership and a handful of gubernatorial wins in swing states to give them a better chance in the 2004 presidential election and a stronger voice in domestic policy.

"Hopefully, we can find a great deal of common ground with the Republicans. But where not, we will put up a fight," Rep. Nancy Pelosi, D-Calif., said after she was chosen as House Democratic leader.

Still, the White House is excitedly at work with the feeling that this election has given Mr. Bush the mandate he lacked after his narrow and disputed 2000 victory. On the other hand, the administration is also mindful of the possible political fallout in two years if deficits continue to grow or the economy worsens under Republican leadership.

"The bad news for Republicans is they're in charge," said Rep. Martin Frost, D-Texas. "They can't say, 'Oh, it's those terrible Democrats who prevented us from doing something."'

Mr. Bush's first move to control political damage from the sputtering economy was to fire Treasury Secretary Paul O'Neill and top economic adviser Larry Lindsey after Thanksgiving. Harvey Pitt resigned on Election Day as chairman of the Securities and Exchange Commission.

Democrats pointed to the Cabinet shake-up as evidence that Mr. Bush's tax-cutting economic policies had hurt the economy.

Mr. Bush scored a post-election victory with the creation of the Homeland Security Department, which he initially opposed. Facing criticism from Democrats, he embraced the concept in June and used it as a political issue in the midterm election campaign. He also won passage of a bill that would reimburse the insurance industry up to $100 billion in any future terror attack.

The administration hopes to use the Republicans' election gains to make permanent the $1.35 trillion in tax cuts that were enacted last year and are set to expire in 2010.

The White House also is eager to see more conservative judges on federal courts. After months of complaining that Democrats were holding up the president's judicial nominations, Republicans are planning ways to push dozens of candidates for judgeships quickly through the Senate.

Energy policies left in limbo because of disagreements between the House and Senate now will probably be decided along Republican lines - with more focus on energy production and less on conservation. Opening the Arctic National Wildlife Refuge to oil drilling may have gained more support, but Democrats still could block the plan with a filibuster.

As Democrats prepare for these and other battles, they will find it harder to raise money under new campaign finance rules.

The McCain-Feingold law, among other provisions, bans the national parties from accepting or spending "soft money," the previously unregulated and unlimited donations from corporations, labor unions and other organizations and wealthy individuals.

Both political parties raised huge sums for this year's elections. Mr. Bush collected over $140 million for GOP candidates, a record for presidential fund raising.

That, and his high approval rating, helped the GOP in close races.

In Missouri, former Rep. Jim Talent ousted incumbent Sen. Jean Carnahan. In Minnesota, Norm Coleman, Mr. Bush's recruit to challenge Sen. Paul Wellstone, narrowly defeated former Vice President Walter Mondale, the Democrat named to the ballot after Wellstone's death in a plane crash.

Gov. Jeb Bush benefited from frequent campaign visits by his brother in Florida, beating back the Democrats' strong effort to defeat him in the state that cost them the presidential election in 2000.

Still, the Democrats managed gubernatorial wins in the industrial swing states of Illinois, Michigan and Pennsylvania, which could help them in the 2004 presidential race.

The Democratic losses on Capitol Hill may deal setbacks to the presidential aspirations of Senate Democratic Leader Tom Daschle of South Dakota and Rep. Dick Gephardt, the outgoing House Democratic leader from Missouri.

Other Washington-based Democrats eyeing the presidency, including former Vice President Al Gore, his ex-running mate Sen. Joe Lieberman of Connecticut, Sen. John Edwards of North Carolina and Sen. John Kerry of Massachusetts, may also be affected by the losses and their party's minority status.

Democrats also need to fire up their party's base to draw more people to the polls, analysts say. Turnout of all eligible voters was at about 39 percent this year, up 4 percent from 1998, the last non-presidential election.