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This year’s mid-term elections in the United States have been the most intensely watched in recent memory. All seats in the House of Representatives are up for a vote, as are a third of the seats in US Senate, along with most state governorships.  And the fundamental direction of the country at a critical moment is on the line.

As the Economist noted in its cover story this week, the nation is in an angry mood. Not only are President Barack Obama’s policies unpopular – few Democrats have advertised their support for health care reform during their campaigns – but Washington and Wall Street are regular targets of attack. The Tea Party movement has been the most powerful expression of such a populist, anti-establishment sentiment.

With unemployment steady at nearly 10 percent, and underemployment over 17 percent, the economy is the main issue. Many Americans have not felt the so-called “recovery.” They fear that the United States is losing ground in a fiercely competitive global economy. Government policies, including the economic “stimulus,” have not delivered what they promised.

Since the Democrats are in charge of the White House and Congress, they are most vulnerable. The chances are that they will lose control of the House and barely hold on to the Senate. As of January, when the new Congress begins, the political outlook will differ dramatically from the one today.
Obama, who was the champion of change just two years ago, is now the victim of change. His poll numbers are around the mid-40s and he remains personally popular, though his priorities – health reform, for example – seemed out of sync with the main concerns of most Americans. There is sense that he should have focused on jobs instead of health care and energy. No one doubts his intelligence and communication skills, but he has proved to be a less effective politician than many had expected. Surprisingly, he has not been able to sell his achievements to the US public.

Obama has especially lost support among the growing numbers of independent voters. Two years ago Obama got 52 percent of their vote, whereas today that level has dropped to some 40 percent. For this group, the country’s mounting deficit and debt are increasingly important concerns. Political opponents have defined Obama as a “liberal” who favors higher taxes and spending. The left of the Democratic Party sees Obama as too timid, not enough of a fighter for progressive ideals, including immigration reform. The environment in Washington is more partisan and polarized than when Obama came to office pledging to bridge the political divide.

Few political observers expect it will be easy to pursue a bold policy agenda over the next two years. Moderates are likely to be replaced by extremes of both sides of the spectrum. Obama could try and address more modest, less controversial, issues that could bring Democrats and Republicans together. Education reform and even trade agreements – including the pending one with Colombia — are two possibilities, though progress on these will depend on the profile of the new Congress. The risks of continued political nastiness and gridlock are high.

But both parties stand to lose from such paralysis. The polls show that most of the US public wants Washington to address the country’s problems and get things done. If the Republicans take control of the House, and possibly the Senate, there will be pressure on them not just to block the Democrats but to come up with alternative policies. Creating jobs should be at the top of the agenda.