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Pelosi + Bush = compromise politics?

Editor's note: Portions of Mike's analysis were excerpted in First Read, the NBC blog that covers politics 24/7. Here's the rest of it.

Many aides and lobbyists believe that President Bush and Democrats -- should they take control of the House -- will have at least a few areas where compromise is possible over the next several months before the 2008 fight begins in earnest. The following is gleaned from several conversations at the end of last week.

To the extent that Democrats will have a "mandate" should they win control of one or both houses of Congress, surely it would be to do something to force the president's hand on Iraq policy. To a lesser extent, if Democrats try really hard they might be able to read a rejection of Bush's Social Security plan into the election results.

But this appears to be a protest election... more a rejection of President Bush than an endorsement of Democrats. As such, Democratic "political capital" won't be available to be squandered. So the president and Rep. Nancy Pelosi, D-Calif., will essentially be faced with the same choice over the next year, before the 2008 race overwhelms everything: they can start that battle now, pick fights to fire up the base and "win by losing" legislatively. Or they can find some areas of common ground and "triangulate" to pass a few high profile items.

Several top Democratic aides and lobbyists polled last week think it will be a bit of the former, but more of the latter. For the president's part, what do he and his legacy have to gain by politics as usual? Why not take what chance you have to avoid the grim prospects of spending the next two years ceding the limelight to presidential hopefuls in the Senate while your agenda languishes?

For the Democrats, those in-the-know see a third message from voters come Wednesday: We are sick of partisan gridlock. If true, then the time is right for compromise.

So what issues constitute the middle ground between the president and Democrats? One obvious issue is immigration policy, where the votes will certainly be there to pass the president's goal of a path to citizenship and a guest worker program. Another might be extension of some of the tax cuts passed in Bush's first term that are set to expire after 2010, the $1,000 per child tax credit and "marriage penalty" relief, for example.

The Democratic caucus is likely to remain about 70% liberal, and the base that they represent will be calling for payback for 12 years of oppression at the hands of the GOP. But don't expect people like Rep. Henry Waxman, D-Calif., who is in line to head the premier investigative committee in the House, to overreach. Every Democrat that I spoke with on this topic over the last days has mentioned the name Dan Burton, by way of illustrating what they would like to avoid: turning the committee room into a circus. Having said that, investigations into Halliburton's Iraq contracts is an obvious and likely place for them to start, given the amount of attention Waxman has given to this topic over the past three years.

Neither base will be happy with Bush and Pelosi making nice. But as a matter of politics and strategy, this is what many smart people both on and off the Hill are expecting for the coming year.