Significance: The Democrats' mid-term election mauling might have marked the end of President Barack Obama's bold agenda, but against the odds he has seen some of his most prized objectives clear Congress.

Implications: The victories were made possible by cracks in the Republicans' unity, a promising sign for Obama as he mulls how to deal with Congress next year. His own stature has been boosted by the success of the high stakes gambles he made, and internal party dissent should die down.

Outlook: The year 2010 may be ending on an unexpected high note for the administration, but the political challenges are as formidable as ever looking ahead to 2011.

Gambles Pay Off

President Barack Obama has a habit of proving the nay-sayers wrong. There was of course his remarkable ascent to the presidency itself, and in office he has seen several key objectives such as healthcare reform escape the jaws of defeat. The past few days have added a raft of new achievements to this list:

New START: The Senate yesterday ratified a major nuclear arms control agreement with Russia by 71 votes to 26. The deal commits both sides to curbing their arsenals, but it is most important as a signal of deepening co-operation between the erstwhile Cold War enemies. Just a matter of days ago, the treaty's chances in the current session of Congress looked remote. Key Republicans had come out against it, arguing that the United States had given away too much and that there had been insufficient time to study the details. The required two-thirds Senate majority was nonetheless achieved after a vigorous campaign by top Democrats and senior military figures to win over Republican moderates. Additional assurances were given on issues such as missile defence and nuclear stockpile modernization, but the core treaty text signed by Obama and his Russian counterpart, Dmitry Medvedev, earlier in the year was passed untouched. The treaty is viewed by Obama as an important step in his bigger quest to rid the world of nuclear weapons. Given the fight that was required for New START, prospects for further landmark treaties appear limited.

Don't Ask, Don't Tell: Yesterday also saw Obama formally repeal the so-called "Don't Ask, Don't Tell" policy covering gays in the military, a milestone that has been compared to key civil rights legislation of previous decades. Introduced in 1993, the rule meant that homosexuals were allowed to serve, but only if they did not disclose their sexuality. Critics argued that the rule made little sense and amounted to government-sponsored discrimination. There was fierce Republican opposition to the repeal, with lawmakers citing concerns about the impact on battle readiness and asking for further study of the issue. In the end, sufficient moderate Senate Republicans were won over after passionate arguments against the rule by senior military personnel and a detailed study that showed only limited concern within the military about the effects of repeal. Obama's decision to push ahead with repeal was a major political risk as some Republicans warned that this would cost their support for the New START treaty.

9/11 Responders: Republican opposition to a US$4.3-billion bill that would set up a healthcare fund for first responders to the 11 September 2001 terrorist attacks melted away yesterday. Many of these firefighters, police officers, and other personnel have contracted serious health problems and face heavy costs for their treatment. Republicans initially opposed the measure on the grounds that it set a dangerous precedent and was too expensive. Compromises were made on the size of the fund and it became increasingly difficult politically for Republicans to be seen blocking help for those who they had frequently lauded in the past. Criticism from the usually pro-Republican Fox News helped shift the balance.

Food Safety: Final Congressional approval for a major overhaul of the U.S. food safety system was achieved yesterday, when it had looked increasingly unlikely. Sufficient Republicans had already agreed to support the new system (which gives the Food and Drug Administration greater preventative powers), but an earlier Senate vote was invalidated by a technicality. This meant the Senate having to pass a new version, followed by approval by the House of Representatives. This was a considerable legislative manoeuvre when so much else was going on. The House ultimately voted 215–144 in favour, and Obama will soon sign the measure into law.

Tax Compromise: This was no unequivocal victory for the administration, but Obama managed to reach a compromise with Republican leaders on a major package of tax cuts and extended unemployment benefits earlier this month. This amounts to a major new economic stimulus and contains a lot of what Obama was after. He did have to relent, however, on tax cuts for the wealthiest Americans; these were slated to expire while all the other Bush-era tax cuts would be extended. In the event, the full set of cuts was extended for two years. This deal effectively unlocked all the other achievements listed above; Republicans had threatened to block all other business if the administration did not bow on tax cuts.

Not everything went Obama's way, however. Rejection of the Dream Act, a relatively modest immigration reform that would have given some children of illegal immigrants a path to citizenship, sets back Obama's wider reform hopes. Republicans also rebuffed a giant US$1.2-trillion spending plan, forcing the administration to rely on a stop-gap measure instead to keep government running. This business will have to be taken up again in the New Year.

Obama Adjusts to New Political Realities

Come January, the Democrat ranks will be much depleted in Congress. The November mid-term elections saw them lose control of the House of Representatives and their precarious majority in the Senate was eroded. This means they can no longer go it alone—although this was barely possible even in 2009—and will have to co-opt a substantial number of Republicans to get any legislation through. The Republican leadership is emboldened by its victories and espouses a strongly conservative agenda. The rapid ascent of the Tea Party movement has pushed the Republican Party significantly to the right, which seemingly makes bipartisan compromise more difficult than ever. However, in Obama's favour, the past few days have shown that there is a good number of Republican moderates willing to defy the party leadership. Such cracks in the Republicans' unity are likely to grow as moderates resist the Tea Party and fret over electability come 2012. Also, by virtue of controlling the House, Republicans have a shared responsibility for government with the President. Simply blocking all Democrat-originated legislation is a risky strategy among voters tired of politicking in Congress. This improves the chances of bipartisan initiatives, so long as Obama is willing to compromise far enough and pick his priorities carefully.

Obama's standing within his own party has been bolstered by the new victories. He was facing growing internal dissent after the mid-term elections, particularly from liberals who argued that he was too ready to compromise on key principles. There have been mutterings of primary challengers in the build-up to 2012, but if Obama continues to stamp his authority and push priorities through Congress, such threats will recede. Obama said yesterday: "If there's any lesson to draw from these past few weeks, it's that we are not doomed to endless gridlock. We've shown in the wake of the November elections that we have the capacity not only to make progress, but to make progress together." However, he added, "I'm not naïve. I know there will be tough fights."

Outlook and Implications

The remarkable victories give Obama and the Democrats an unexpected spring in their step as they enter 2011. However, with Congress significantly pushed to the right, this is unlikely to last long. Obama will have to carefully choose issues where there is some bipartisan appeal. Such opportunities may include, firstly, action to rein in the gaping budget deficit. There are signs of bipartisan momentum behind a rewrite of the tax code and spending restraint. Another area where progress is possible is education reform. Obama wants to revisit George W. Bush's No Child Behind Law, but his preferred alternatives are arguably more attractive to Republicans than they are to Democrats. What progress there is in the next Congress will probably have to come in the early months. It will not be long before the protracted 2012 election build-up overshadows all else and sharpens partisan divisions.