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* Seeks to claim some Republican turf, irks liberal base
* Call for civil discourse could resonate after shooting
ANALYSIS-By Matt Spetalnick, Reuters
President Barack Obama's midterm shift to the centre is gaining momentum as he tries to strike a more business-friendly, deficit-conscious tone and steal some of the Republicans' thunder to boost his 2012 re-election chances.
Facing a newly empowered Republican opposition, Obama is moving to retool both his staff and his message, hoping to win back moderate voters who swept him into office two years ago but deserted his Democrats in the November congressional elections.
Obama's strategy promises greater efforts to bridge the partisan divide but at the same time seeks to claim political turf that Republicans thought they had staked out as their own.
"No doubt, this administration will be trying to sound as tough on debt and spending as any Republican," said Terry Madonna, a political scientist at Franklin and Marshall College in Pennsylvania. "It's a fight for the hearts and minds of independents."
Republicans won the House of Representatives and weakened the Democratic majority in the Senate by tapping into public anxiety over a broad expansion of government under Obama, who they painted as a big-spending liberal lacking a viable plan to heal the economy or reduce joblessness.
Despite the new balance of power, Obama appears to have found a way to recover some lost ground — by taking a page from fellow Democrat Bill Clinton's "triangulation" playbook.
After suffering a similar midterm rout in 1994, Clinton turned the tables on the Republicans and embraced traditional conservative themes like balanced budgets and welfare reform, riding those issues to resounding re-election two years later.
Absorbing the lessons of his own electoral "shellacking," Obama started his move to the middle last month when he forged a compromise tax-cut package with the Republicans over fierce objections from his liberal base.
Since then, his public approval rating, which hit new lows just before the November elections, has edged higher, recently touching 50% in one Gallup poll.
A dose of modestly favourable economic news — Friday's government report of a drop in unemployment to 9.4% from 9.8% in December — could give him another boost.
PRO-BUSINESS RESHUFFLE
Just back from his Hawaiian vacation, Obama is seeking to build on a new political dynamic that produced several legislative successes in the final days of December's "lame duck" congressional session.
Though Republicans now hold greater clout on Capitol Hill, they seem to have been caught flat-footed by Obama's political agility after having outmaneuvered him for much of the past year.
Obama even came close to upstaging the Republicans' ceremonial takeover of the House last week with the unveiling of his biggest staff shake-up since taking office.
His appointment of Treasury aide Gene Sperling as his top economic adviser and JPMorgan Chase & Co executive William Daley as chief of staff promise fresh thinking in his inner circle as he grapples with the new Congress while pushing a job-creation agenda seen as crucial to getting him re-elected.
Both are pragmatic veterans of the Clinton years, an era of economic prosperity, and their Wall Street connections could help repair Obama's frayed relations with the business world.
In the aftermath of an acrimonious congressional election, Obama has also insisted he wants to move past ideological differences and find ways to cooperate across party lines.
His call for a return to more civil public discourse could take on new resonance after a shooting rampage in Arizona on Saturday in which Democratic U.S. lawmaker Gabrielle Giffords was seriously wounded and six people were killed.
Some have suggested that a climate of political vitriol in Arizona — where a firestorm has raged over immigration and other divisive issues — may have played a role.
National politicians across the spectrum united in condemning the attack, and Congress put off its agenda for the week, including a vote on the repeal of Obama's contentious healthcare overhaul.
NO BUDGETARY SACRED COWS
With a battle already brewing in Washington over Republican demands for deep spending cuts in exchange for raising the national debt limit, the Obama administration is scrambling to depict itself as just as fiscally minded as the other side.
Obama spoke in his Saturday weekly radio address of the need to "wrestle with a challenging budget and long-term deficits," and top aides have taken to the airwaves to talk up fiscal restraint — though they've offered few specifics.
In recognition of growing sentiment in Washington that even defence spending is no longer a sacred cow, the Pentagon on Thursday unveiled plans to cut $78 bln in spending over five years, including a reduction of up to 47,000 troops.
How to address the $1.3 trln deficit will be a big part of the political debate in the second half of Obama's term, and he is mindful that he must show he is on the right side of it.
Obama will offer his own fiscal vision when he gives his State of the Union speech later this month and he could propose some form of tax reform as a way to reach out to Republicans.
A risk for Obama is alienating key liberal constituencies already angered by concessions he has made. But analysts say he is unlikely to go far enough to provoke a serious presidential challenge from the left.
"Liberal Democrats will yell, but they will stay with him. Where else could they go?" said Stephen Wayne, a political scientist at Georgetown University.
