Gerald Seib: Obama Seeks Way to Right His Ship - Exiting 2013 in His Weakest Political Position, the President Faces a Basic Strategic Choice

Gerald Seib writes in The Wall Street Journal:

By almost any measure, 2013 was, as Democratic pollster Peter Hart put it, "a terribly ragged year" for the president, who saw his approval ratings plunge and his agenda stall.

Mr. Obama's main consolation is that Republicans continue to fare even worse in public estimation. Indeed, his political high point in 2013 came when congressional Republicans shot themselves in the foot by allowing the government to shut down in October in a dispute over funding the president's health law.

Republican leaders were so singed by the experience that they moved swiftly this month to strike the compromise budget plan that will keep the government funded through next year. Then, House Speaker John Boehner (R., Ohio) forcefully quashed complaints by the party's tea-party wing that the new deal didn't cut spending sufficiently.

The emergence of a large bloc of House Republicans who voted in favor of that compromise has created the possibility that Mr. Obama may be able to work out at least a few deals on other issues.

"The jury's still out on whether or not the budget agreement was a one-off or a sign of things to come," says Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee.

Mr. Van Hollen says an early test will come when the parties try to reach an understanding to raise the debt ceiling, due to be hit around the beginning of March.

If there is a new phase of cooperation, he says, that might open the door to deals on more infrastructure spending, corporate tax reform and, crucially, an overhaul of immigration laws.

Rep. Kevin McCarthy, the third-ranking Republican in the House, says the budget deal "does allow us to get more done," but adds that compromises are more likely between House and Senate leaders than with the White House. He predicts much of Mr. Obama's effort in the new year will be on keeping Democratic supporters from abandoning him as he tries to get his new health program working better.

That brings Mr. Obama to his key strategic choice: Does he focus on trying to craft compromises with Republicans to show skeptical voters he is making Washington work? Or does he work around Congress, striking out on his own with executive actions, while attacking the GOP for failing to cooperate?

The question of whether more deals with congressional Republicans are possible is "perhaps the question when it comes to predicting how 2014 will play out," says a senior White House official. "Our approach will be to test as much as possible for principled compromise where Republicans are willing, but also to push ahead with nonlegislative solutions where Congress stonewalls."

Some observers wonder whether the president's decision in recent days to hire former White House chief of staff John Podesta, who has championed a muscular use of executive actions to pursue Democratic policies, suggests he is preparing for more confrontations with congressional Republicans.

The question will be complicated by electoral calculations. Midterm elections in November will determine whether Republicans can take control of the Senate as well as keep the House, and leaders of both parties will be under pressure to demonize the other side.

That means Mr. Obama "is really in a box here," says Kenneth Duberstein, White House chief of staff for Republican President Ronald Reagan. He has an opportunity to move to the center to take advantage of the new willingness of Mr. Boehner to challenge tea party groups, he says, but some Democrats will instead want him to emphasize more liberal policies to excite core Democrats. "The base doesn't want him to compromise," Mr. Duberstein says.

One area Mr. Obama is sure to emphasize, starting with his State of the Union address on Jan. 28, is his argument that steps are needed to reduce the level of income inequality in the U.S.

A central plank in that program, an increase in the minimum wage, may not lend itself to bipartisan compromise. But Mr. Hart, the Democratic pollster, argues that inequality is one subject where Mr. Obama can "bring the passion back to his administration."